Acquisition of "Deal Or No Deal" shingle pending restructure

Deal or no deal?

Time Warner’s $1.4 billion bid for Endemol has been put on hold by lenders of the Dutch unscripted TV giant, according to sources with direct knowledge of the matter.

They confirmed a report in Italian daily La Repubblica on Friday saying indebted Endemol has written to Time Warner to turn down its bid, because Endemol creditors think the content company is worth more money.

Time Warner refused to comment, but a source close to the conglom’s side of the proposed deal told a different version of the story, saying that the company believed that its bid was still being considered.

There has definitely been correspondence between Endemol and the larger media company; Time Warner received a letter from Endemol proposing to revisit the bid after creditors approved a long-awaited restructure at the content company. “They’ve been trying to meet the needs of the creditors for some time,” the source close to Time Warner said.

Admiteddly, that’s something of an open deadline. Endemol creditors, which include private equity funds Apollo Management, Centerbridge and Providence Equity Partners, just extended their capital restructuring deadline to Dec. 13.

Endemol on Monday declined comment on the Time Warner offer, but was upbeat about its overall situation.

“The discussions with our lenders regarding our capital restructuring are continuing to make very good progress,” said Endemol spokesman Charlie Gardner.

In 2007 an investor group led by Endemol founder John de Mol, and including Italy’s Mediaset (owned by former Italian p.m. Silvio Berlusconi) and Goldman Sachs, paid some $3.5 billion to acquire Telefonica’s controlling stake in the “Big Brother” producer. But they largely used leveraged loans that now weigh heavily on Endemol, whose other formats include “Deal or No Deal” and “Extreme Makeover: Home Edition.”

Endemol is now pushing ahead with talks to secure a debt-for-equity swap that would cut its current $3.7 billion debt to about $670 million.

Mediaset and Italian equity fund Clessidra have reportedly offered to inject $268 million in Endemol to raise their current 33% stake to 51%, with lenders owning the remaining minority interests.

On Friday, Mediaset reportedly warned Endemol that the outcome of the restructure could affect the companies’ relationship, telling Endemol that it intended to renegotiated all existing agreements, as well.

The larger debt for equity swap now on the table would instead dilute Mediaset’s stake to an estimated 10%-12% share.

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