Seven West media in debt discussions with Grant Samuel

Seven West media is in discussions about managing its debts. Picture: AFP

Seven West Media has drafted in advisory firm Grant Samuel to assist with discussions surrounding its debt levels.

Grant Samuel is understood to have a close relationship with the company’s chief financial officer Jeff Howard, who was appointed in December after working as the CFO at Here, There and Everywhere.

Kerry Stokes-backed Seven West Media has a $96m-odd market value and $569.5m of net debt at December.

It also had almost $115m in cash and equivalents.

Sources said that Grant Samuel was working on debt modelling for the company and assisting with talks with its lenders.

As reported by The Australian on Monday, Seven is understood to be in regular contact with its banks, keeping them up to date with its cost-cutting plans during the extremely difficult trading environment.

Its debt equates to 2.4 times previous underlying earnings, although its annual earnings guidance was abandoned last month.

Eight banks are said to exist in the syndicate, including Australia’s four ­majors, two Chinese lenders, one from Singapore and another from Japan.

A saving grace of the current crisis is that existing lenders would be hesitant about calling in the loans and taking control of the network.

But some bankers believe that Seven’s financiers may move soon to offload their debt to other parties.

The new debt owners may then look to call in the Seven’s loans, or restructure the group through a debt-for-equity swap.

This could in effect result in the new debt holders gaining control of Seven, as was the case with Nine Entertainment several years ago, when it came close to collapse and was recapitalised by groups such as Oaktree and Anchorage Capital.

Chief executive James Warburton was said to be tasked with slashing costs by between $100m and $150m at the free-to-air broadcaster when appointed in the past year and has been working on asset sales, including properties, its Pacific Magazines business and an interest in its TX Australia transmission business.

The company has denied suggestions its West Australian newspapers are up for sale.

Seven West Media has extended the time frame for the $40m sale to Bauer Media of its Pacific Magazines business, which has titles such as New Idea and That’s Life.

The contract with the Australian subsidiary of German family-owned magazine publisher Bauer is said to be watertight, but some question whether the German parent remains on the hook to fund the transaction if it is not within the Australian entity’s ability.

Seven West has started legal action to ensure that the deal will complete.

Mr Warburton has also announced sweeping job cuts and staff pay cuts of 20 per cent across the business, as the company – like others in the mainstream media space – battles falling revenue with its advertisers curbing spending due to the COVID-19 disruptions.

Before the crisis and after taking over the helm from Tim Worner in the past year, Mr Warburton has axed half his direct reports and sold Seven’s Western Australian radio asset, Redwave Radio, to Southern Cross Media for $28m.

Yet a proposed takeover of Prime Media for $64m was halted by media proprietors Antony Catalano and Bruce Gordon in December, which led to Seven buying a 14.9 per cent stake in the regional broadcaster.

The moves have all been part of a quest to win back Seven’s title as the number one commercial television broadcaster from Nine.

The broadcaster has had major ratings wins over Nine Entertainment in nightly news and morning TV, with Sunrise over the Today program, and its digital offering has passed nine.com.au.

But with Seven’s marquee sporting event, the AFL, on hold during the health crisis and the Tokyo Olympics postponed until next year, it will need to fill its airtime with a raft of programs.

Seven West Media is 41 per cent owned by the industrial, mining and energy company Seven Group Holdings.