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Endemol Creditors Reject Time Warner Takeover Bid

Silvio Berlusconi
Giorgio Cosulich/Getty Images

Debtors of the European reality TV powerhouse seem willing to finalize a debt-for-equity swap that could boost the stake held by Silvio Berlusconi's Mediaset.

Creditors of European reality TV powerhouse Endemol have decided to reject a 1 billion euros ($1.4 billion) bid from Time Warner, according to a person familiar with the situation.

Endemol officials declined to comment. A Time Warner spokesman also declined comment, but a source said the entertainment conglomerate has not been informed of any final decision about its bid.

According to sources, Endemol, the company behind such international TV hits as Big Brother and Deal or No Deal, had told Time Warner that the firm would present creditors with a debt restructuring deal before considering any bid. Endemol and some of its lenders  thought Time Warner's offer was opportunistic and too low.

Endemol and its creditors, which include private equity players Apollo Management, Centerbridge and Providence Equity Partners, as well as such banks as Barclays and Goldman Sachs, seem ready to instead focus on finalizing a so-called debt-for-equity swap instead of doing a deal. The swap would convert debt into equity holdings in the company. Such a deal, likely to be completed by mid-December, could cut the company's debt and give it another chance to go it alone.

According to Italian media reports, Silvio Berlusconi's Mediaset and Italian equity fund Clessidra want to inject more money into Endemol and in the process raise their current 33 percent holding to 51 percent.

When TW's $1.4 billion bid became public earlier this month, sources said that TW saw debt-ridden Endemol as an opportunity to add a popular international TV content creator to its existing studio operations. Company executives saw Endemol similar to MGM a few years ago when the studio also explored its options amid challenges, meaning TW was prepared for a potentially drawn-out affair.