Providence says deal financing thawing

DUBAI (Reuters) - Media and entertainment-focused private equity firm Providence Equity Partners' chief executive said on Tuesday the previously shut market to finance deals is beginning to thaw.

"We're coming out of the ice age, it's starting to thaw," said Jonathan Nelson. "I think that will improve."

He said it was possible to raise money for deals under $1 billion, and up to $2 billion with time, although he said that the leveraged loan market is not yet back.

Nelson, speaking at the Super Return private equity conference in Dubai, said that he's bullish on the prospects for the private equity industry but was bearish on the economy.

"Private equity will have to do a much better job henceforth in creating value at the portfolio level," he said.

Private equity firms have struggled since the credit crisis to keep their portfolio companies healthy, finding the financing for new deals and finding ways to exit investments they've made through sales or initial public offerings.

Rhode Island-based Providence has investments in companies including Spanish-language broadcaster Univision Communications and New York Yankees sports network the YES Network.

It was also one of the companies that bought into Hollywood studio Metro-Goldwyn-Mayer in a $2.85 billion buyout in 2005.

MGM has been grappling with looming debt payments which stem from the buyout. Earlier this month, it secured a forbearance agreement with its lenders which expires December 15, winning some breathing room and liquidity.

Providence in September hired Richard Parsons, the chairman of Citigroup Inc (C.N) and former chairman and chief executive of Time Warner (TWX.N), as a senior adviser.

Providence has $22 billion of equity capital under management. It raised its sixth fund, totaling $12 billion, in 2007.

The firm has taken advantage of improving equity markets to take one of its investments public. Providence took Education Management Corp (EDMC.O), a company it bought with other investors in 2006, public earlier this month at $18 a share. The company is currently trading at $22.68.

Providence has also been pursuing deals. It was among the private equity firms that put in a second round bid for Northrop Grumman Corp's TASC unit, and bid for Cox Enterprises' Travel Channel, sources told Reuters in September.

(Reporting by Megan Davies, editing by Dave Zimmerman)