omniture

Seven to Form $4 Billion Media Joint Venture With KKR

KKR
2006-11-20 12:13 1843

SYDNEY, Australia, Nov. 20 /Xinhua-PRNewswire/ -- Seven Network Limited

(ASX: SEV) today announced the execution of definitive agreements for the

formation of a joint venture with Kohlberg Kravis Roberts & Co. (KKR). The

new joint venture will be Seven and KKR's vehicle to pursue media

opportunities in Australia and New Zealand. The joint venture, the Seven

Media Group, will include Seven's television, magazines and online businesses

and values those businesses at A$4.0 billion.

Today's agreement underlines Seven's strong and competitive broadcast

television and magazines publishing businesses and rapidly developing Yahoo!7

partnership, which provides the platform for Seven's development in online

and new content delivery platforms.

Executive Chairman of Seven Network Limited Kerry Stokes said: "We have a

terrific partner in KKR. KKR is an astute and experienced investor in media

businesses, together we have the know-how to build and expand the strength of

the Seven media businesses. We share the same views on strengthening and

building Seven's competitive and financial performance. Today's agreement

delivers to Seven, our people and our shareholders a venture with the

strategic and financial flexibility to take advantage of the dynamics of the

Australian and New Zealand media landscape."

George Roberts, Founding Partner of KKR, said: "We are delighted to be

entering into partnership with Kerry Stokes and Seven. KKR is excited to be

joining a partner committed to media and building the Seven Media Group with

us. The business has tremendous momentum and is well positioned to benefit

from changes in the media environment. We are looking forward to working

with Seven's very impressive management team to continue to build the new

venture into Australia and New Zealand's leading media company."

Seven has established its Australian television market leadership in

total viewers and in advertising revenue share. It is rated number one in

prime time, news, public affairs and breakfast television.

KKR will invest approximately $735 million for a 50 per cent economic

stake in the venture, which will own Seven's television and magazines

businesses and its 50 per cent interest in the Yahoo!7 joint venture. The

Seven Media Group will also be subject to the requirements of the Yahoo!7

joint venture agreement, which will continue as the primary vehicle for

online interests.

The Seven Media Group has obtained underwritten financing from Morgan

Stanley, Mizuho, Goldman Sachs and Citigroup of which approximately $2.5

billion will be drawn on closing. Seven will receive cash proceeds of

approximately $3.2 billion and will retain a 50 per cent economic stake in

the joint venture. KKR's investment will initially be in the form of

convertible notes which may not be converted until after the recent

amendments to the Broadcasting Services Act ("BSA") are proclaimed to take

effect.

The Seven Media Group will not impact the employment of Seven's staff.

Seven will retain its holdings in Western Australian Newspapers Limited, its

34 per cent shareholding in Engin, its real estate interests in New South

Wales, Victoria and Western Australia, its Seven Asia business and various

non-core investments.

Seven will also retain its subsidiary C7 Pty Limited which, together with

Seven, are applicants in the C7 litigation which is awaiting judgment in the

Federal Court. Seven will also retain the benefit of the subscription

television rights for the 2007-11 seasons in the Australian Football League

and the forthcoming Olympic Games in Beijing in 2008.

Mr. Stokes will be the Chairman of the Seven Media Group and will retain

his role as Executive Chairman of Seven. The Chief Executive Officer of the

new venture will be Seven's Chief Executive Officer, Broadcast Television,

David Leckie, and the Chief Financial Officer will be Peter Lewis. Mr.

Leckie and Mr. Lewis will retain their current roles with Seven.

Following the amendments to the BSA taking effect, Seven and KKR will

each be entitled to appoint four members to the Board of Directors of the

Seven Media Group. In addition, the CEO and CFO will also be board members.

Completion is expected to occur in late December 2006. Seven will seek

the approval of its shareholders under the financial assistance provisions

(Section 260B) of the Corporations Act with respect to certain elements of

the financing, which is to be secured by a Seven Network Limited guarantee

until approval is obtained.

There are no material conditions to the transaction. It is expected that

documents related to the financial assistance approval will be dispatched to

Seven Network Limited shareholders within a week.

About Seven

Seven Network Limited is a multi-faceted media company in Australia -

with a market-leading presence in broadcast television, magazines publishing

and online and expanding new communications platforms in a joint venture with

Yahoo Inc in Australia. Seven's broadcast television platform reaches 98 per

cent of Australians. Seven's magazines publishing business, Pacific

Magazines publishes more than one in five magazines sold in Australia,

including three of the biggest selling magazines. Seven's Yahoo!7 joint

venture with Yahoo Inc combines the strengths of Yahoo's search and

communications capabilities and its global internet network with Seven's

media and entertainment content and marketing capabilities. The joint

venture is driving the online, mobile and IPTV businesses of both companies

in Australia.

About KKR

KKR is one of the world's oldest and most experienced private equity

firms specialising in management buyouts, with offices in New York, Menlo

Park, California, London, Paris, Hong Kong and Tokyo. Throughout its

history, KKR has brought a long-term investment approach to its portfolio

companies, focusing on working in partnership with management teams and

investing for future competitiveness and growth. Over the past thirty years,

KKR has completed 146 transactions with a total value of approximately US$263

billion. KKR has significant experience in investing in media businesses and

has invested in transactions in the sector with a total value in excess of

US$35 billion. For more information, please visit http://www.kkr.com .

Advisers

Seven: Morgan Stanley which also acted as co-senior debt arrangers,

Freehills, Ernst & Young

KKR: O'Sullivan Pullini (exclusive financial adviser), Baker & McKenzie,

Simpson Thacher & Bartlett LLP and Deloitte

Source: KKR
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