Ten Network placed in voluntary administration

Ten Network may be sold after losing the backing of key shareholders, but administrators plan “business as usual”.

Hopes had been fading at Ten for restructuring and refinancing initiatives. Pic: AAP

Ten Network — the home of MasterChef and the Big Bash League — will be put up for sale or recapitalisation as it enters voluntary administration, after failing to secure the financial backing of its two main billionaire shareholders.

Mark Korda, Jennifer Nettleton and Jarrod Villani of KordaMentha will take on the role of voluntary administrators, effective immediately. The appointment of administrators means Ten shares will also be suspended from the ASX immediately.

Ten (TEN) went into a trading halt yesterday, warning that two key shareholders — Lachlan Murdoch’s Illyria and Bruce Gordon’s Birketu — were not prepared to support a new $250m refinancing package beyond December 23.

Ten staff learned of the move into administration this morning and were told it will be “business as usual” for the debt-ravaged TV network while it is in administration.

Speculation has been rife that a private equity firm is circling Ten and could join forces with the shareholders in a privatisation of the network.
Meanwhile, it emerged this afternoon that Mr Murdoch and Mr Gordon will work together as associates to renegotiate Ten’s loan.

A disclosure to the ASX has combined their shareholdings at 22.47 per cent to meet Australian Securities and Investments Commission disclosure obligations.

But the arrangement does not involve any financial transactions or trading of shares between the two parties.

A letter sent by Mr Gordon’s representative to Mr Murdoch’s adviser proposes the new structure, saying it would be in both parties’ interests.

The board — which is led by independent chairman David Gordon and includes former trade minister Andrew Robb and Foxtel chief Peter Tonagh — held emergency board meetings yesterday and this morning and concluded they had no choice but to appoint administrators.

“The directors of Ten regret very much that these circumstances have come to pass,” Ten’s directors said in a statement.

“They wish to take this opportunity to thank all Ten employees and contractors for their commitment and enthusiasm for Ten’s programs and business.

“In particular, they would like to express their sincere gratitude, respect and admiration for Ten’s leadership team, who have achieved everything the board has asked them to do over the past few years in very challenging circumstances. They wish Ten and its management all success in the future as the administrators look to the potential sale or recapitalisation of the business.”

KordaMentha has told Ten it will work closely with management, employees, suppliers and content partners as it assesses the financial and operational health of the company.

The decision to place Ten in administration comes despite last-ditch efforts to rein in the broadcaster’s costs and to extract itself from onerous programming deals with Hollywood studios CBS and 21st Century Fox, which cost the broadcaster more than $150 million a year.

Ten was also close to finalising renegotiated agreements that would have reduced its costs by approximately 50 per cent. That deal, however, has not been finalised.

An 18-month transformation program — codenamed Blue Horizon — had also commenced to recast the under-pressure broadcaster’s revenue opportunities and cut tens of millions of dollars from its cost base. The company had identified savings of at least $50 million in FY18 and potentially more than $80 million per annum by FY19.

But the future of those cost-saving plans are now under a cloud as KordaMentha works out a recapitalisation plan or potential sale of the business.

Ten first unveiled its uncertain operating future in April when the broadcaster’s board warned there was “material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern”.

Ten’s future was always hinging on the support of News Corp (publisher of The Australian) co-chair Lachlan Murdoch, WIN owner Bruce Gordon and casino mogul James Packer as guarantors of its $200m revolving cash advance facility with the Commonwealth Bank, which is due to expire on December 23.

Lachlan Murdoch

The company drew $45.5m from its $200m facility in the six months to February 28 but since then Ten has been burning through another $10m a month.

The company had hoped to refinance that $200m loan with an increase to $250m, which would have been used to tackle its mounting debt, but Mr Murdoch and Mr Gordon withdrew their financial support for the company late on Friday. Mr Packer has been actively trying to sell his stake in the company since late last year.

Ten ­reported a $232.2m loss for the six months to February 28 including a $214.5m writedown on the value of its television licence.

Shares in Ten have been hammered this year, plummeting more than 80 per cent. They are now suspended at 16c a share, which gives the company a market share of just $58 million.