Endemol lenders reject TW bid

ROME -- Rejecting Time Warner's latest bid, Endemol lenders have given the Dutch content giant a waiver extension until February. Hedge funds and banks now appear poised to take control of Endemol, as the process of restructuring the "Big Brother" maker's $3.7 billion debt continues. Sources close to the negotiations have confirmed an Endemol debt waiver, the third extension since September, on the part of Royal Bank of Scotland and Lehman Brothers, two of the main lenders, as well as by shareholders Cyrte and Goldman Sachs. Time Warner on Monday had renewed its interest in Endemol with a $1.3 billion cash offer, which lenders have rejected. Endemol did not comment on reports that a debt-for-equity swap is now underway, which would slash some $2.6 billion in loans and hand management control over to the lenders. Most significant outcome of that scenario is that Mediaset, the Italo broadcasting giant controlled by Silvio Berlusconi, which owns one-third of Endemol and has made an offer for a majority stake, would see its 33% stake greatly diluted to the point of no longer even being an Endemol board member. Mediaset and Italian equity fund Clessidra have reportedly offered to inject more than $500 million in Endemol to raise their 33% stake to 51%, with lenders owning the minority interest. Within the upcoming two-month period it is possible that Mediaset may up its offer and renegotiate with lenders. Or instead opt to reconfigure its role in Endemol as a mere industrial partner. There was no comment from Mediaset. In 2007, a consortium comprising Mediaset, Goldman Sachs Capital Partners and Cyrte, the investment company in which Endemol co-founder John de Mol is a minority shareholder, paid $3.5 billion for Telefonica's controlling stake in Endemol in a three-way split. But they largely used leveraged loans that now weigh heavily on the unscripted TV giant, whose formats also include "Deal or No Deal" and "Extreme Makeover: Home Edition." Contact Nick Vivarelli at nvivarelli@gmail.com