Nine surges as events unit sale leaves it free of debt

Thursday, Apr 16, 2015

Nine Entertainment Co. surged by the most in seven weeks after the Australian broadcaster agreed to sell its events business to Affinity Equity Partners Ltd. funds for A$640 million ($491 million).

The stock rose 3.7 percent to A$2.23 at the close in Sydney, the most since Feb. 26. The shares earlier gained as much as 9.8 percent. Selling the ticketing and exhibitions unit will leave Nine debt-free for the first time since a 2006 buyout.

The deal is Affinity’s largest solo acquisition and its second in Australia in the past 12 months, according to data compiled by Bloomberg. Nine said it will have “significant balance sheet flexibility” to explore options including increasing returns to investors through dividends and buybacks.

“The media landscape’s changing and it just gives Nine more firepower,” Simon Rutherfurd, a senior portfolio manager at Harper Bernays Ltd., said by phone from Sydney. “There’s always something happening in the media space.”

The sale will be completed July 31 and result in net proceeds of about 64 cents per share, Sydney-based Nine said in a statement Thursday. Nine Live comprises the Ticketek ticket-sales business, sports events and exhibitions, and the Allphones Arena venue in Sydney’s Olympic Park.

Nine could acquire rural broadcasters Southern Cross Media Group Ltd. or WIN Corp. if media regulations change, Fraser McLeish, an analyst at Credit Suisse Group AG in Sydney, wrote in a Dec. 11 note to clients.

Apollo, Oaktree

Hong Kong-based Affinity was involved in groups that bought into Kyobo Life Insurance Co. and United Test & Assembly Center Ltd. for $1.07 billion and $1.43 billion respectively, and paid A$336 million for about a one-third stake in Virgin Australia Holdings Ltd.’s frequent-flier program in October.

Nine’s largest shareholders are U.S. funds Apollo Global Management LLC and Oaktree Capital Group LLC. They took control of the country’s second-largest free-to-air broadcaster in a 2012 debt-for-equity swap, which wiped out most of the A$5.75 billion invested by CVC Capital Partners Ltd. in buying the company from billionaire James Packer’s Publishing & Broadcasting Ltd. in transactions starting in 2006.

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