Oaktree executes MediaWorks takeover
By Paul McBeth
June 5 (BusinessDesk) - US hedge fund Oaktree Capital has completed its takeover of MediaWorks Investments, with filings to the Companies Office today confirming rumours it had taken 100 percent ownership of the media company.
Tokyo Opportunities BV, 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 today. The Los Angeles-based firm, which manages more than US$99.9 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 percent.
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, gradually buying out fellow shareholders Rabobank, Westpac New Zealand and Royal Bank of Scotland.
Oaktree embarked on a 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 Sept. 30, on sales of $246.9 million while costs were $221.8 million over the trading period. That was the first financial report for MediaWorks since the November 2013 recapitalisation of the company.
Last August it appointed former NZX boss Mark Weldon as chief executive, fuelling speculation the business is being readied for an initial public offering. The 2014 financial statements show the board and senior management have been issued as part of a $2,56 million incentive compensation scheme, which will be triggered on an "exit event".