17 Jun 2013

TV3's owners in receivership

10:29 pm on 17 June 2013

The receivers for MediaWorks, the company that owns TV3, say no staff will lose their jobs and there will no disruption to broadcasting.

On Monday it was announced that KordaMentha would oversee the receivership of the company and its subsidiaries, including RadioWorks. MediaWorks operates TV3 and FOUR. Its radio stations include RadioLive, The Edge and More FM.

Brendon Gibson and Michael Stiassney, right, announcing the receivership in June.

Brendon Gibson and Michael Stiassney, right, announcing the receivership in June. Photo: RNZ

A director at KordaMentha, Brendon Gibson, says the amount of debt the company is in is not sustainable.

In 2007, Australian private equity firm Ironbridge bought MediaWorks and its debt, but got caught out by the global financial crisis and couldn't afford to pay the interest on the debt.

MediaWorks has $700 million of debt. A debt of $22 million to the Inland Revenue Department is being disputed.

Mr Gibson said the receivership process is simply a way to transfer the business to a new ownershp and a new capital structure that is much stronger.

"It's business as usual while this happens. All of the 1400 employees will keep their jobs and we will be moving to transfer those contracts to the new entities at the appropriate time."

Mr Gibson said the proposed new owners have agreed to buy the company for an undisclosed sum of money. He said secured lenders - the banks - have agreed to reduce the debt to $100 million in return for a stake in the new company.

Businessman Rod McGeoch is the proposed chairman of the company intending to buy MediaWorks. Television producer Julie Christie would also be on the new board.

The founding chief executive of MediaWorks believes the best thing new owners can do now is to split its TV and radio interests. Trevor Egerton, who left TV3 in 1992, said despite what the company says, he expects changes. He said its radio subsidiaries are doing exceptionally well and should be sold.

Prime Minister John Key does not believe the Government will be out of pocket and tax owed by MediaWorks would be paid. He said the Government got no prior warning about Monday's announcement.

Business commentator Brian Gaynor believes the change is positive. He said when MediaWorks was taken over Ironbridge it loaded the company down with debt.

"It's actually been trading very well, but the debt and the interest charges on the debt have really sunk it. So I think the outcome today is an excellent outcome because it business as usual except that there will be a change in the ownership structure of the company."

Mr Gaynor said there would big big loses for the private equity firm, but they are all overseas investors.

TV3 was previously in receivership in 1990, before being bought by Canada's CanWest Global Communications.