Ten Network takeover: Bruce Gordon to appeal court ruling

Media mogul Bruce Gordon will appeal a court ruling against him and Lachlan Murdoch in the Ten takeover case.

Media mogul Bruce Gordon.

Bruce Gordon, the media mogul agitating for the takeover of Ten Network, will appeal a NSW Supreme Court ruling against him and Lachlan Murdoch in the Ten administration case, just as a key creditors’ vote takes place this morning.

The appeal is likely to be lodged before the scheduled meeting of creditors in Sydney.

Mark Korda, a partner at Ten’s administrators KordaMentha, will present the bids, the new bid from Mr Gordon and Mr Murdoch, and the rival CBS offer, to the meeting, leaving it for creditors to decide on the outcome of the free-to-air network. The vote will take place in a closed-door meeting, after which Mr Korda will hold a media briefing.

Under a new offer, Mr Gordon and Mr Murdoch have proposed a payout of $55 million for unsecured creditors, compared with $35m in their first bid. The CBS bid of $32m, which had earlier been backed by KordaMentha, offered no payout to creditors.

It marks another twist in a saga that has pitted Mr Gordon and Mr Murdoch against US media giant CBS in the battle for Ten, home of MasterChef, The Bachelor and the Big Bash cricket league.

If the appeal by Mr Gordon is successful, today’s vote on the proposed CBS buyout will be rescinded.

The appeal comes after Justice Ashley Black yesterday dismissed legal action brought by Mr Gordon and Mr Murdoch against KordaMentha. The would be buyers had argued their bid wasn’t properly considered by KordaMentha when the administrators decided in favour of CBS.

Justice Black also ordered that today’s meeting should be able to go ahead as planned. “In summary, I am not satisfied that the plaintiffs have established that any deficiencies in the (Ten creditor’s report), as supplemented by the supplemental report, are such as to warrant orders requiring further information be provided to creditors or that the second creditors’ meeting be restrained,” he said.

“It will be a matter for creditors at that meeting to determine whether that meeting should be adjourned by reason of, inter alia, any recent commercial developments, or for any other reason.”

Justice Black also stopped Mr Gordon’s attempts to stop CBS from voting at the meeting, where it will be the largest creditor by value with $348m in debt.

“I am not satisfied that CBS should be prevented, in advance, from voting at the meeting, or its vote restricted to a nominal amount,” said Justice Black.

“Any challenge to the outcome of that meeting is properly brought after the event. I am also not satisfied that shareholders in holdings are entitled to be provided information concerning or to vote at the second creditors’ meeting.”

Decisions by CBS and the group representing Ten employees could be pivotal in deciding whether to adjourn the meeting or accept a deal. Combined, they have the numbers to carry the vote. Any deal needs the support of the largest value in terms of creditors (CBS) and the most number of votes, which is Ten’s 750 Ten staff.

Mr Gordon and Mr Murdoch have proposed allowing shareholders in Ten 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’s proposal.

Mr Murdoch is co-chairman of News Corp, which is publisher of The Australian.

Under the CBS bid, the US company will own 100 per cent of the company, which means retail shareholders would get nothing for their stock, a prospect that prompted concerns from the Australian Shareholders Association and talk of a class action by disgruntled shareholders.

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

Lawyers for Mr Gordon’s private investment firm Birketu and regional television network WIN Corporation argued in the Supreme Court last week that the CBS offer treated different creditors unfairly and was therefore a “transaction risk” and a magnet for litigation.

Justice Black said the plaintiffs should pay the defendants’ costs of the proceedings, but there should be no order as to 20th Century Fox’s costs. Fox, a program supplier to Ten, joined the action as a party.

Mr Gordon had already succeeded in delaying a second creditors’ meeting, originally scheduled for September 12, until today.

Mr Korda said Ten’s fate was now in the hands of the creditors.

“The creditors can do two things. They can either adjourn the meeting or vote on the CBS proposal,” Mr Korda said. “It’s up to the creditors, not me.”