Ironbridge Capital, the majority shareholder in TV3's parent MediaWorks, does plan to invest fresh equity in the business but it's 'significantly more' than the NZ$20 million suggested by a report in The Australian Financial Review, according to an Ironbridge spokesman.

The Ironbridge spokesman also told interest.co.nz that the Australian private equity fund, which bought MediaWorks through a leveraged buyout in 2007, doesn't believe any capital restructure at the media firm would require the unanimous approval of its senior lenders as reported by the AFR.

Earlier, the AFR reported lenders to MediaWorks are worried the company may face a serious cash crunch as soon as next month, which is shortly after the introduction of a new banking covenant, as Ironbridge offers about NZ$20 million of fresh equity in a new plan to try and secure the ongoing support of senior lenders holding debt with a face value of about NZ$388 million.

The AFR said that although MediaWorks isn't currently in breach of any of its borrowing terms and conditions, lenders led by the BNZ and including Westpac, Lloyds Banking Group, the Royal Bank of Scotland, Rabobank, JP Morgan and private equity group TPG, are concerned about the possibility of "serious liquidity issues" in March. The newspaper said MediaWorks is "skirting dangerously close" to loan covenants and "risks running out of money to pay its bills" even though the loans don't mature until 2014.

MediaWorks had a new banking covenant introduced on November 30, being a leverage ratio, or borrowings relative to earnings before interest, tax, depreciation and amortisation (ebitda). MediaWorks will also have a debt service cover ratio, or cashflow relative to interest and debt repayments, covenant added from February 28. These come on top of three other covenants - an interest cover ratio, or ebitda relative to interest, a minimum ebitda ratio, and a net capital expenditure limit.

Ironbridge's latest plan to persuade lenders to amend and extend its loan terms requires unanimous approval from lenders, the AFR reported. It would be unlikely to secure this given TPG, which bought senior debt with a face value of about NZ$70 million - about 17% of the senior debt - from ASB's parent Commonwealth Bank of Australia for about 60 cents in the dollar just before Christmas, is pushing for a debt-for-equity swap.

 Ironbridge bought MediaWorks in a deal valued at about NZ$790 million in 2007 from Canada's CanWest Global and minority shareholders including Brook Asset Management. It then delisted the firm from the stock exchange.  Aside from TV3, MediaWorks also owns TV4 C4 and a stable of radio stations including Radio Live, The Rock and More FM. MediaWorks is dependent  on advertising for its revenue with the AFR suggesting it's currently generating about NZ$30 million in annual earnings.

For the year to August 31, 2010  - its latest publicly available financial results - MediaWorks reported proforma ebitda of NZ$50.1 million. It delivered a loss after tax of NZ$50.9 million with expenses of NZ$176.5 million, excluding NZ$49.9 million of finance costs, outstripping NZ$171.5 million of revenue.

A capital restructure at MediaWorks would be the second since Ironbridge took charge of the company. The first capital restructure, in late 2009, saw NZ$70 million of equity tipped into MediaWorks that was used to repay debt, reset fixed interest rate swaps and provide ongoing liquidity.

See more on MediaWorks' debt here and more on TPG's move here.

(Update adds comments from Ironbridge, corrects TV4 to C4).