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 OZschwitz: The debt that ate PBL: demise of Packer's media empire

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RR Phantom

RR Phantom

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OZschwitz: The debt that ate PBL: demise of Packer's media empire Vide
PostSubject: OZschwitz: The debt that ate PBL: demise of Packer's media empire   OZschwitz: The debt that ate PBL: demise of Packer's media empire Icon_minitimeWed Aug 20, 2008 8:08 pm

The numbers look bad, say analysts.

CONSOLIDATED Media Holdings' earnings have only heightened speculation about the financial woes of PBL Media, the heavily indebted joint venture which runs the Nine Network and ACP Magazines.

Deutsche Bank and Citigroup joined ABN Amro yesterday in concluding the remainder of the late Kerry Packer's once-mighty media empire wasn't worth a cent anymore.

They cited PBL Media's $4.2 billion debt burden and slowing advertising markets, which would put pressure on profits and see it struggle to meet its interest payments.

PBL Media, controlled by CVC Asia Pacific, contributed just $7.5 million to CMH's earnings. The result implied "that operating cash flow … is barely covering the annual interest expense and highlights the potential that the [joint venture] may breach its debt covenants in the future," Deutsche Bank's Andrew Anagnostellis said. He reckons PBL Media will deliver a $2 million loss to CMH in 2008-09, which "would mean that there is a high risk of default on debt covenants".

CMH shares slumped 19c to $3.08 yesterday. PBL Media faces its quarterly covenant next month. In case of a breach, banks could demand an equity injection. But word is that James Packer's CMH has no obligation to add more capital - which could leave CVC to pick up the tab.
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