Oaktree takes full ownership of MediaWorks

Oaktree Capital has been steadily building its stake in MediaWorks, which owns TV3. Photo / Dean Purcell

US hedge fund Oaktree Capital has completed its takeover of MediaWorks Investments, with filings to the Companies Office confirming rumours it had taken 100 per cent ownership of the media company.

Tokyo Opportunities, the Oaktree vehicle used to house its MediaWorks stake, bought the minority shareholdings of rival private equity firms TPG Capital and Bain Capital, according to Companies Office filings.

The Los Angeles-based firm, which manages more than US$99.9 billion ($140 billion) in assets, became a debt-holder of the free-to-air broadcaster in 2012, buying $125 million of the group's outstanding loans at a reported discounted of 50 per cent.

That was converted to equity when the media company's lenders seized control, and pushed out former owner Ironbridge Capital in 2013.

MediaWorks was restructured again through a receivership, which allowed the owners to strip out the assets and house them in a new entity to allow MediaWorks to break its commitments to buy programmes from international networks and shed itself of a potential $22 million tax liability over deductions claimed on convertible notes.

Since then, Oaktree has been building up its stake in MediaWorks, which owns TV3 and Four and reaches about half the commercial radio audience, gradually buying out fellow shareholders Rabobank, Westpac New Zealand and Royal Bank of Scotland.

Oaktree embarked on an investment strategy of buying distressed debt 25 years ago, which it says gives the firm "unusual opportunities for bargain purchases" and has expanded on that with a dual-track strategy it calls control investing, which it achieves by buying distressed debt or private equity.

In February, MediaWorks posted a profit of $12 million in the 10 months and 22 days ended September 30, on sales of $246.9 million while costs were $221.8 million over the trading period.

Last August it appointed former NZX boss Mark Weldon as chief executive, fuelling speculation the business is being readied for an initial public offering.