MediaWorks in receivership

MediaWorks New Zealand, the broadcaster whose stable includes TV3 and Four, and radio stations including Radio Live, the Rock and MoreFM, has been placed in receivership.

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Brendon Gibson and Michael Stiassny of KordaMentha were appointed this receivers this morning.

The receivership is understood to be part of a restructuring plan to switch assets into a new entity, write down the company's debt, and allow the broadcaster to continue operating. The new entity will be chaired by Sky City chairman Rob McGeoch, who will be joined on the board by reality TV producer Julie Christie.

The Auckland-based broadcaster has been looking at ways to reduce its debt burden after Australian private equity firm Ironbridge Capital bought CanWest's 70 percent stake in 2007 for some $741 million - lumbering around $700 million of debt onto MediaWorks in the process. Under today's deal, MediaWorks' debt will be reduced to around $100 million banks take over.

MediaWorks' holding company, GR Media Holdings, wrote down the value of goodwill by $241.6 million in a capital restructure last year that brought in US private equity investor Oaktree Capital Management holding a chunk of its debt.

That restructure was to see MediaWorks shuffled into a new holding company for a second time, a write down in the value of its existing debt, new finance facilities provided and lending covenant terms established.

The media company's lenders didn't pursue some $266.7 million owed by the previous holding company, HT Media Holdings, after agreeing to a restructure that gave them equity in the broadcaster, according to the company's first liquidator's report.

In a statement this morning Mr Gibson says the receivers will work with existing management on a plan to transfer the business to new ownership “suitable for the long term.”

He did not give details at this stage.

The proposed new structure will provide certainty for staff, customers and external stakeholders, he says.

“Everyone with an interest in MediaWorks can have confidence in the future.”

Mediaworks group managing director Sussan Turner says moving to a new structure was “inevitable”.

“Under receivership it will be business as usual as we transition to a new company with an appropriate, right-sized capital structure.”

The move comes after lenders led by Westpac Banking Corporation and RBS Group failed to strike a recapitalisation deal, the Australian Financial Review says.