Business Irish

Wednesday 17 September 2014

Anglo to 'park' private equity company's €80m loan in TV3 deal

Published 07/02/2012 | 05:00

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THE state-owned Anglo Irish Bank has agreed to let TV3's private equity owner make no repayments and incur no interest on an €80m loan until the TV network is eventually sold.

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Anglo's agreement to "park" the €81.1m of debt was confirmed by several sources last night, though some also stressed that the 2010 deal involved a broad debt restructuring that had also benefited Anglo in a one-off repayment of €9.1m.

But questions may still be asked about why a state-owned bank is riding to the rescue of TV3 when its owner, UK private equity giant Doughty Hanson, has billions under management and could have rescued TV3 itself.

A spokesman for the newly renamed Irish Bank Resolution Corporation said last night he had "no comment" to make on what was "a commercial, confidential matter for the bank and its client".

Informed sources rejected suggestions that Anglo's TV3 rescue was influenced by the Government's desire not to have a state-owned bank take control of Ireland's only independently owned TV network by installing a receiver.

The debt deal was struck at the end of 2010 after the economic collapse led to a "significant" reduction in TV3's profitability, the network's finance boss Aodha O'Connor said last night.

TV3 lost €165m in 2009 after a sharp downturn in the advertising market resulted in a €118.7m impairment of the group's goodwill. Advertising revenue recovered marginally in 2010, but remained well below boom-time highs.

Mr O'Connor said the TV station had been in negotiations with Anglo for "several months" and was "trying to find a solution [to the station's €140m debts] that would work for everyone".

At the time, about €100m of the debts were "senior" loans that had to be serviced with interest and regular capital repayments. Another €40m was "mezzanine" debt that had interest rolling up and was to be repaid in the future.

The deal left TV3 with just €51m of senior debt to be repaid over about five years, while another €81.1m was relegated to a "facility B loan" that would only fall due "in the event of a liquidity event", according to documents seen by the Irish Independent.

Mr O'Connor last night confirmed that the "liquidity event" referred to was a sale by TV3's private equity owners, something that is not being currently contemplated.

Until that sale goes through, TV3 does not have to make any repayments on the €81.1m loan and no interest accrues, Mr O'Connor confirmed. Accordingly, TV3 is carrying the loan at a value of zero.

The finance boss said the changes had significantly cut the annual debt burden of TV3, but insisted Anglo had not given the TV network an "easy" time.

Anglo got a €9.1m one-off repayment in late 2010 -- "more than they were getting from a lot of borrowers" -- Mr O'Connor said. The bank also got a higher rate of interest on the €51m of "normal" debt, while Doughty Hanson put in an extra €67.5m of equity to pay off various intergroup loans.

Mr O'Connor said TV3 had met all of its obligations since the 2010 agreement and was also enjoying improved earnings.

Irish Independent

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