Mediaset, the group controlled by Silvio Berlusconi and his family, will reduce its stake in Endemol to less than 10%, as the production house attempts to restructure its €2.8 billion debt through a debt-for-equity swap.
The Netherlands-based company, which produces TV shows such as Big Brother and Deal or No Deal, said it reached an agreement in principle with more than two-thirds of its lenders that will see them reducing Endemol's debt in exchange for a stake in the business.
As a consequence, the group’s three shareholders – Mediaset, Capital Partners and Cyrte, the investment company of Endemol founder John de Mol – will reduce their combined stake to less than 50%.
Currently, each owns about a third of the media group.
Along with the other shareholders, Mediaset bought Endemol in 2007 in a deal worth €2.6 billion. A number of institutions, including Apollo Management, Providence Equity Partners, Barclays Capital and RBS, supported the buyout by providing €2.2 billion in loans.
However, after earnings fell at Endemol, the company was unable to fulfil the terms of the loan agreements.
Mediaset, which is Italy’s largest commercial broadcaster, was founded in 1978 by Silvio Berlusconi.
Today, Berlusconi’s eldest son, Piersilvio, serves as the company’s vice-chairman, while his daughter Marina sits on the board. The media business, which in 2010 had revenues of €4.3 billion, is controlled by the Berlusconi family through their holding company Fininvest, chaired by Marina.