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Nine deal came with clock ticking

Reported by AAP
Friday, December 14, 2012
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Nine Entertainment Co was only four weeks away from breaching a key loan covenant when chief executive David Gyngell announced a deal had been reached with lenders, the broadcaster's accounts showed.

Nine said in its 2011/12 full year accounts filed with the corporate regulator it had been in compliance with all of its financial covenant requirements throughout the financial year, but was facing a breach during the first half of 2012/13.

"In the absence of an appropriate remedy, it is anticipated that the group will be in breach of certain financial covenants under the facilities as of 14 November 2012," Nine said in its accounts.

"At which time it is required to deliver a compliance certificate for the quarter ended 30 September 2012 to the facility financiers."

Mr Gyngell secured the agreement of lenders to swap their $3.3 billion debt for equity in the free-to-air broadcaster on October 17, 2012, less than a month before the anticipated breach.

The deal resulted in hedge funds such as Apollo Capital and Oaktree Global Management emerging with 95.5 per cent of Nine, while mezzanine debt holders led by Goldman Sachs would end up with 4.5 per cent.

Nine said it posted a $971.7 million loss in the 12 months to June 30, 2012, falling deeper into the red from a $427.8 million loss in the prior year.

The bulk of the net loss was due to an impairment charge of $719 million on the value of Nine's television licenses.

Revenue from continuing operations fell 1.3 per cent to $1.2 billion, Nine said in its 2011/12 accounts.

However, Nine recorded negative operating cash flow of $17.2 million, compared with positive operating cash flow of $44.9 million the prior year.

Nine's accounts for 2011/12 were filed with the Australian Securities and Investments Commission on November 9, but only made available on Friday after being processed.

23/11/2014 02:12Sydney, Australia. 23 November,2014
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