James Packer has distanced himself from Channel Nine's owner, PBL Media, quitting its board and declaring his Consolidated Media Holdings won't pour more funding into the debt-laden company.
Mr Packer's resignation, and those of CMH chairman John Alexander and alternate CMH directors Chris Anderson and Martin Dalgleish, came as PBL Media moved to allay concerns about its ability to service its $4.2 billion of debt.
"The group has been in compliance with all of its financial covenant requirements to September," PBL Media said.
It revealed it was in talks with senior debt and mezzanine note lenders about a possible recapitalisation of the company.
However, refinancing of its $4.5 billion loan facility - drawn down to $4.2 billion - was not due until February 2013 and April 2014.
"Amortisation of the senior debt over the next 12 months requires a payment of approximately $22 million in December 2008 and approximately $22 million in June 2009."
PBL Media was formed in 2006 after Mr Packer's former media and gaming empire Publishing & Broadcasting sold its media assets for $4.5 billion into a joint venture with private equity firm CVC Asia Pacific.
The billionaire's exposure to the vehicle - which houses the Nine Network, ACP Magazines and some website holdings - then reduced to CMH's 25 per cent stake.
Mr Packer's resignation from the board sees him effectively relinquish all control of his late father's TV network and PBL Media's other assets.
Australia's leading media buyer Harold Mitchell said Mr Packer's move did not come as a surprise.
"James Packer is clearly making his business life in his own mould rather than that of his father," Mr Mitchell told BusinessDaily.
"The media properties - while still very good - are not as close to him as they were to Kerry."
CMH, which holds its annual meeting today, will stop equity accounting its 25 per cent PBL Media stake.
It said the holding could be diluted by extra capital contributions from major shareholder Red Earth Holdings, which is owned by funds advised by CVC.
BBY analyst Mark McDonnell said CMH's decision not to equity account its PBL stake suggested it could be diluted below 20 per cent.
"It's difficult to see this in any other light than a distancing of CMH directors at a time when there's a great deal of speculation that PBL Media's debt levels are unsustainable," Mr McDonnell said.
"By the end of the year there's a risk that CVC will have been in breach of its debt covenants."
CVC did not return calls yesterday.
Shaw Stockbroking analyst Greg Fraser said that if attention moved from CMH'S PBL Media stake to its other assets - such as stakes in Foxtel and jobs site Seek - investors would realise the stock was cheap.
CMH shares, down 50 per cent since the start of the year, closed 6c higher yesterday at $2.08.
(Credit: News.com.au)
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