Leon Black’s Apollo Global Management and Howard Marks’ Oaktree Capital have played an integral role in Nine Entertainment’s restructuring.
Australian national television and media giant Nine Entertainment Co. (“Nine”) has just announced it is taking full control of a digital media company, “ninemsn”, which until now it has held 50:50 with Microsoft, by buying the 50 per cent stake owned by Microsoft. Nine will take full ownership of the company, which will now be called “Mi9”, on November 1st, 2013.
Under the deal Microsoft will remain a partner with the business, meaning its advertising and technology platforms will remain an integral part of Mi9, Nine said on Monday.
Ninemsn was established by Microsoft and Nine in 1997, operating news and entertainment websites and consumer and advertising data services.
“This agreement…strengthens the platform for Nine Entertainment’s growing digital video business and ultimately allows us to control 100% of our digital future, ” Nine Entertainment’s Chief Executive Officer David Gyngell said in a statement.
Nine has reportedly agreed to pay around A$40 million (about US$37.5 million) for the stake in Mi9.
Mi9 operates multiple services, including Hotmail, Bing in Australia and the news web site: news.ninemsn.com.au, which is followed by millions of Australians. It runs advertising platforms and social media and has about 380 employees, according to Mi9. Its news sites reached a combined 2.9 million unique viewers in the month of August, according to Nielsen.
Mi9 CEO Mark Britt will continue manage the company. “This is an exciting time for us at Mi9. Nine has always been a fantastic shareholder, so this is business as usual for us, ” Britt said
The announcement comes as Nine continues to prepare for a hoped for initial public offering now thought likely to take place later this Fall. Nine is reported, by the legal web site Law360 and by the Wall Street Journal, to have appointed UBS, Morgan Stanley, Commonwealth Bank of Australia and Macquarie Group to jointly lead manage such an offering, with Deutsche Bank and Nomura Holdings as co-managers.
The national television broadcaster was reported to be considering selling between A$500 million (about US$460 million) and A$1 billion (about US$920 million) worth of shares in a flotation that, if achieved, could value the company at close to A$3 billion (about US$2.75 million), according to press reports in August when the possibility was first aired by the company.
Nine is today 95.5% owned by U.S. private equity funds Apollo Global Management and Oaktree Capital. The two firms took control of the company last January under a major US$3.6 billion recapitalization scheme, converting loans they held into stock. This basically salvaged Nine from going broke at the time, and a receiver being appointed, as they were sagging under the weight of enormous debts. The previous owner hedge fund CVC Capital Partners who had purchased it in an LBO saw its ownership position radically cut back in the deal to just 1% losing all of its substantial earlier investment – reportedly the largest ever single hedge fund loss on a deal in the Asian market at the time.
If an IPO does proceed, the cash raised is expected to further pay down debt. CVC’s own purchase of Nine as an LBO, at the tail end of the last boom, and the current progress in its recapitalization represent yet another of the restorative balance sheet projects that private equity firms have been engaging in this year, and which indeed may not be the last.
About Apollo Global Management
New York-based Apollo Global Management was founded in 1990 to manage investment capital on behalf of groups of institutional investors. Its’ founder, Chairman and CEO is Leon Black.
The firm specializes in leveraged buyout deals and purchases of distressed securities involving corporate restructuring, special situations and industry consolidations.
Apollo has grown to become one of the world’s largest alternative investment managers. As of June 30, 2013, it had total assets under management of $113 billion, with a team of 660 people located in ten offices around the world, and its shares are listed on the New York Stock Exchange.
About Oaktree Capital
Oaktree Capital Management, headquartered in Los Angeles, is a global asset management company which was founded in 1995, and which specializes in alternative investment strategies. Its founder and Chairman is Howard Marks who is still today responsible for ensuring the firm’s adherence to its core investment philosophy.
Oaktree emphasizes an opportunistic, value-oriented, and risk-controlled approach to investments in distressed debt, corporate debt, control investing, convertible securities, real estate and listed equities. At the end of June 2013, Oaktree managed over US $76 billion, primarily on behalf of pension funds, foundations, endowments, and sovereign wealth funds. Oaktree Capital Group is listed on the New York Stock Exchange and has a team of 700 people in a dozen offices worldwide.