A restructuring deal may allow it to worm out of a $22 million bill to Inland Revenue. Bankers have put the company into receivership. Those big lenders have formed a new company, and the debt's miraculously shrunk from $700 million to $100 million along the way.
This phoenix-from-the-ashes transition will be managed by receiver KordaMentha. It says under the new set-up a disputed $22m IRD debt before the courts probably won't be paid. That means taxpayers will carry MediaWorks. Again. Just like in 2010, when it scored a $43m govt loan to pay for radio licence renewals!
MediaWorks' most recent financial accounts show total liabilities of $698m, and KordaMentha says the current debt's about the same. It says a disputed debt to IRD before the courts over the use of Optional Convertible Notes is likely to be unpaid: "If it was to come home and be a legitimate debt, it will be very unlikely it will be carried across to the new company." Receivership was chosen as the means to restructure debts that had become unsustainable for Mediaworks: "This is a story about a debt structure that has killed a business."
But wind that thought back to Ground Zero, and one must ask: when a media giant operates two TV networks, and eight nationwide radio networks covering every possible demographic, how could it still not have been able to reduce these debts?
How did its debt grow from $561m (in 2007) into today's $700m? Surely its various repeated financial restructurings would have straightened things out? But no, MediaWorks seems to have performed like the proverbial bottomless pit!
No business can expect to run at such monstrous loss, and still be smiled upon benevolently. Either there've been inept hands at the tiller...or MediaWorks was just too damn greedy. Take your pick: there aren't too many other options.
Meantime, if you want to dodge a $600m bullet, that's how it's done!