Nine wins battle over creditors
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By Kylie Williams
SYDNEY, Dec 20 AAP - Broadcaster Nine Entertainment has won a legal battle against some of its creditors who were worried about the structure of $3.3 billion plan to stop the company going into administration.
A Federal Court judge on Thursday rejected calls by some of Nine's creditors to stop a meeting to vote on a debt-for-shares scheme designed to stop Nine's collapse.
Justice Peter Jacobson ruled that the meeting should go ahead and any issues between the parties be debated at that time.
If the plan is approved at the January 21 meeting, Nine will be free to carry out its $3.3 billion recapitalisation and avoid collapse.
Nine Entertainment - parent of the Nine Network, NBN Television and the Ticketek events ticketing business - faced going into administration if lenders owed $3.3 billion could not agree on how to divide up ownership of the company in return for their debt.
Nine owed $2.3 billion to US hedge funds Apollo and Oaktree and $1 billion to investment bank Goldman Sachs.
Chief executive David Gyngell in October managed to secure the agreement of lenders to swap their $3.3 billion debt, due to be repaid in February 2013, for shares in Nine.
The deal also gave Apollo and Oaktree once only directorship rights.
Nine told the court during a hearing earlier this week that the deal was supported by more than half of the senior beneficiaries holding more than 75 per cent of the value of the debt.
But several other senior beneficiaries, known as the par lender group, and parties involved in swap arrangements, opposed the deal.
They claimed the meeting could not go ahead because the rights given to Apollo and Oaktree were so dissimilar to theirs that they would not be able to consult together.
These lenders argued that Apollo and Oaktree's directorship rights would give them control of the board as they would have a total of five out of nine directors.
But Justice Jacobson said the directorship rights were for one annual general meeting only and were still subject to shareholder approval.
He also said it did not mean Apollo and Oaktree would not be able to consult with the par lender group at the meeting.
"It is a commercial reality that Apollo and Oaktree hold the majority of the senior debt," he said.
"There is no reason why this cannot be the subject for debate at the meeting of senior beneficiaries."
The par lender group and the swap parties also argue that they have not agreed to become shareholders in Nine and therefore cannot be forced to swap their debt for equity.
But Justice Jacobson found that the scheme did not require the consent of all the creditors.
The par lender group consists of Portigon, GE Capital Finance and Credit Industriel et Commercial while the swap parties include National Australia Bank, RBS, Cooperative Centrale Raiffeisen-Boerenleenbank, Rabobank, Credit Agricole and BNP Paribas.