Administrators at the ready as Nine holds last ditch meeting to prevent collapse

Major stakeholders are meeting today to determine whether Nine Entertainment collapses as administrators wait in the wings.

The network must get its lenders, who are owed more than $3.2 billion, to agree on a capital restructure through a debt-for-equity swap, otherwise Nine has said it will be forced to appoint administrators.

Second-ranked mezzanine lenders have agreed to a deal which hands them a $150 million stake in the company but senior lenders, led by hedge funds Oaktree Capital and Apollo Global Management, are attempting to renegotiate the terms of the proposal.

Steve Allen, chief executive of media consultants Fusion Strategy, told SmartCompany today’s meeting between Nine’s chief executive, David Gyngell, its chairman, Peter Bush, and the Goldman Sachs-led mezzanine lenders was crucial to Nine’s survival.

“It’s a huge stand-off by two packs of masters of the universe, and yes that is derogatory but you would think they would come to their senses, the senior debt holders are saying the mezzanine debt is worth nothing,” Allen says.

“The problem is to recapitalise they have to get Goldman Sachs and the mezzanine lenders they represent to agree and they won’t agree unless they get something out of it.”

Allen says he is optimistic a deal will be reached.

“It does look like this morning that Bush and Gyngell’s work last night – along with the prospect of going into administration, which is in nobody’s interest – could be the catalyst for both sides to sober up and Goldman Sachs to agree to a lower percentage of equity.”

Allen says he is not surprised by reports in The Australian Financial Review that PPB Advisory has been lined up to act as administrators if the network does collapse.

“The directors have to protect themselves and they cannot continue to trade if the debts are not paid when they fall due,” he says.

“With a recapitalisation next February staring them down, they are being very prudent and saying this might not be an ongoing obligation.”

However, Allen warns if a collapse is not averted, things will get “dead ugly”.

“I think Bush and Gyngell are doing the absolute best by their staff and suppliers and by their final debt holders and they have played their cards very well this week. One just has to hope sobriety and pragmatism enters the room today as it will get dead ugly if they go into administration,” he says.

“An administrator will look at everything and Gyngell and Bush might walk plus all the program suppliers, including the recently concluded National Rugby League deal, which is due for payment before the start of the season, would all be up for review.”

SmartCompany contacted Nine Entertainment but no response was available before publication and Goldman Sachs declined to comment.