MediaWorks gets $70m injection

Kerry McIntosh. Photo / Martin Sykes

Ironbridge Capital and an unnamed mystery shareholder have pumped an extra $70 million into MediaWorks.

The company runs TV3, C4 and half of New Zealand's commercial radio stations including RadioLive, The Edge, The Rock, More FM, Solid Gold and The Breeze.

The new equity and comprehensive restructuring of banking and interest payments takes pressure off the firm, whose chief executive, Brent Impey, exits at the end of the year.

Ironbridge New Zealand managing partner Kerry McIntosh said yesterday's changes put the company in a good position to capitalise on an improving advertising market.

McIntosh said funds advised by Ironbridge were paying $50 million of the new equity and would remain the majority shareholder. He declined to say who was contributing the remaining $20 million.

MediaWorks has struggled with heavy interest payments harking back to Ironbridge's purchase of the company for $790 million in 2007 - at the height of the private equity acquisitions boom.

McIntosh declined to say whether the structural change to the company was due to a breach of banking covenants, saying banking relationships were confidential.

He said the $20 million was paid funds and existing bankers who had previously invested in MediaWorks. They were taking equity directly in MediaWorks rather than through Ironbridge.

"[Ironbridge] believes MediaWorks is a high-quality business and that was a key driver of our decision to support the business and its senior management team by investing further funds."

He said the restructured banking arrangements would lower cash interest costs so the business could take advantage of the improved business conditions.

Staff are concerned about further budget cuts in the new year. The news division and spending on local content is seen as vulnerable.

But McIntosh said: "We see full service broadcaster in radio and television and had confidence in the business model for an advertising-funded free-to-air market."

Private equity typically buys with the intention of finding efficiencies and reselling within three to five years. But previous majority owner CanWest Global Communication was a notoriously frugal operator.

McIntosh said Ironbridge was not preparing the company for sale. "We want a fair recovery in the market and earnings before we consider a liquidity event."