Fate of new Ten bid in the balance

The fate of a revised bid for Ten Network from Bruce Gordon and Lachlan Murdoch will become clear this week.

WIN owner Bruce Gordon. Picture: John Feder

The fate of a revised bid for Ten Network from Bruce Gordon and Lachlan Murdoch will become clear this week when administrator KordaMentha decides whether to put the joint offer to a vote.

It is understood KordaMentha is waiting for the Supreme Court of NSW to hand down a judgment at 9.30am today before making a call ahead of a meeting of the broadcaster’s creditors.

A spokesman for the administrator said: “KordaMentha is not commenting on the new bid for Ten or matters before the court.”

Through his NSW Supreme Court action against KordaMentha, Mr Gordon has already succeeded in delaying the second creditors’ meeting, originally scheduled for September 12, until tomorrow, when a bid by US media giant CBS is set to be voted on.

Mr Gordon sought a court ­declaration that KordaMentha’s creditors’ report was deficient, and failed to give adequate information about his initial bid with Mr Murdoch. The pair are also seeking orders for the weighting of CBS’s vote to be reduced to $1, a move that would significantly hamper the company’s ability to vote on its own offer.

Several scenarios could play out, depending on the judgment. If judge Ashley Black orders corrective disclosure, there’s likely to be a delay to the meeting to enable creditors to digest the corrective disclosure.

If the court decides there is a structural issue with the CBS deed of company arrangement, CBS and KordaMentha may go back to the drawing board.

If Justice Black says CBS can’t vote, such a judgment could change the voting dynamic. If he dismisses proceedings, the creditors meeting proceeds tomorrow as planned.

Late last week the battle for Ten took a new twist when Mr Gordon and Mr Murdoch upped the ante by tabling a revised bid that offers a better return to creditors than the transaction proposed by CBS. Under the revised terms, the maximum payment to unsecured creditors has increased by 57 per cent from $35 million to $55m, compared with $32m from CBS. The revised bid is 72 per cent higher than the proposed payment under the CBS bid.

In aggregate, Ten’s unsecured creditors, excluding CBS, will receive 13.4c in the dollar compared with 12.43c under the CBS deal.

The investment companies of Mr Murdoch and Mr Gordon, ­Illyria and Birketu, employees, and continuing trade creditors would receive 100c in the dollar and all other creditors would get 5.75c in the dollar.

Under the new structure, Mr Gordon and Mr Murdoch would allow shareholders to keep 25 per cent of their equity, with Ten to be relisted on the ASX.

This would enable Ten’s 17,000 shareholders to share in any recovery under Mr Murdoch and Mr Gordon.

Under the CBS bid, the US company will own 100 per cent of the company.

Also under the CBS deal, retail shareholders would get nothing for their stock, which prompted concerns from the Australian Shareholders Association and talk of a class action by disgruntled shareholders.

The Gordon and Murdoch deed of company arrangement provides sufficient funds that would see Ten continue operating and meet the obligations to staff, the offer letter states.

With media reforms to become law in about one month after completing their passage through both houses of parliament and other conditions removed, the new bid from Mr Gordon and Mr Murdoch had no execution risk, the letter said.

Last week, KordaMentha was forced to defend its actions during Ten’s receivership.

Among other accusations, it was alleged that Ten’s creditors were “left wholly in the dark” about the value of Mr Gordon and Mr Murdoch’s previous bid.

Lawyers for Mr Gordon argued that neither the original report by KordaMentha nor a supplementary report to address deficiencies in the first one supplied any ­material as to the effective value of the transaction.

The court action was brought last week by Ten affiliate WIN Corporation, owned by Mr Gordon. 21st Century Fox joined WIN as a plaintiff in the court action as a program supplier to Ten.