The media group, staggering under about $700 million debt accumulated since the global financial crisis, is expected to have that debt slashed to less then $100 million under its new owner, Newco.
The MediaWorks NZ portfolio of broadcasters includes TV3, Four and radio stations Radio Live, the Rock and MoreFM.
The banks, reported to be owed about $400 million, placed MediaWorks in receivership.
If the sale goes through, their purchase will be used to pay creditors, with the banks first in line for payment, but at the expense of other second-tier lenders, such as IronBridge, IronBridge Capital and Goldman Sachs.
With the banks swapping debt for an equity shareholding, it raises the question of the new holding company, Newco, operating at more manageable debt levels, floating and rejoining the stock exchange. The media group delisted in 2007.
Receivers KordaMentha partner Brendon Gibson said the syndicate of senior lenders, its present bankers, was buying MediaWorks, which would be transferred to Newco, chaired by Australian businessman Rod McGeoch and former Eyeworks Touchdown head and reality television producer Julie Christie.
''This is a story about a debt structure that has killed a business,'' Mr Gibson said during a tele conference yesterday.
KordaMentha, which specialises in receiverships and company restructuring, said 1400 jobs would be carried over to Newco, under present pay and conditions, obligations to trade suppliers would be met, and there would be no change to television or radio programming.
Mr Gibson stressed during a conference call ''it's business as usual'' for the stable of broadcasters, which would be sold as a ''going concern''.
''The senior debt lenders [banks] have got significant amounts involved in this company. They can pay a price they think reasonable,'' Mr Gibson said.
The lenders include Westpac Banking Group, Rabobank, RBS Group, TPG Capital, Oaktree Capital and JP Morgan, BusinessDesk reported.
''As a shareholder, there will be a [financial] hit for them,'' Mr Gibson said of the banking syndicate.
He declined to name a figure.
Auckland-based MediaWorks has been looking at ways to reduce its debt burden after Australian private equity firm Ironbridge Capital bought CanWest's 70% stake in 2007 for about $741 million.
The company's $387.7 million senior borrowing facility was fully drawn down as at August 31, 2011, as was its $15 million working capital facility, according to its latest financial statements lodged with the Companies Office.
It also had subordinated debt of $96.8 million, and $24.3 million payment in kind shareholder loans.
In a letter to staff, MediaWork's chairman, Brent Harman, said the receivership and sale was the culmination of an 18-month process, in which directors had worked alongside the senior banks ''to ensure an orderly transition of the business'', noting the role of the current directors was now complete.
The New Zealand Herald reported MediaWork's lenders did not pursue about $266.7 million owed by the previous holding company, HT Media Holdings, after agreeing to a restructuring which gave them equity in the broadcaster, according to the company's first liquidator's report.
