Network Ten in two-day trading halt as board mulls debt options

Faith Castro
June 13, 2017

Ten Network's future has been thrown into doubt after its billionaire shareholders decided not to support a new funding deal for the loss-making commercial free-to-air broadcaster.

Ten also said it had asked to have its shares suspended for two days while it considers its position in light of the stance taken by its backers.

The trading halt will remain in place for 48 hours or until an announcement is made by the company.

Advisers for Murdoch and Gordon told Ten they don't "intend to extend or increase their support" for the company's loans beyond their current term, which ends December 23, the network said in a stock exchange filing today.

Ten has been seeking a new $250 million loan to replace its existing $200 million facility, which is guaranteed by Lachlan Murdoch, Bruce Gordon and James Packer.

Ten shares were priced at 12 cents a share when trading was stopped, giving the broadcaster a market capitalization of just $45 million (AUS$59 million).

Mr Gordon is Ten's largest shareholder with 15 per cent. UBS is understood to be working for Mr Packer, who had shopped around his 7.7 per cent stake in Ten, with few interested buyers.

"That correspondence confirms that the those guarantors do not intend to extend or increase their support for the company's credit facilities beyond the term of the current facility, which expires on December 23, 2017".

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In a letter to the Australia Stock Exchange requesting the halt this morning, Ten Network's company secretary Stuart Thomas said the company had received written correspondence from Illyria, an investment vehicle run by Murdoch, and Birketu, run by Gordon.

The beleaguered network recently posted a $232 million loss and its CEO, Paul Anderson, has constantly warned of its doubtful future as a going concern in the increasingly tough TV advertising market.

Despite the financial troubles, Ten is running a suite of popular shows at the moment and its television revenue increased 2.1 per cent to $341 million in the first half of the current financial year.

It now needs to secure alternative funding before then, or face administration.

A lengthy administration process would also give Parliament time to pass proposed media reform laws that would lift ownership restrictions and scrap broadcast licence fees (costing Ten about $23 million annually).

Murdoch and Gordon backing away could be interpreted as a sign they do not believe Ten's debt problems can be overcome, weighed down heavily by USA content deal costs.

Spotlight will now turn to 13.9% shareholder Foxtel, which is part owned by Rupert Murdoch's News Corp.

Network Ten has often struggled since it was launched in the 1960s, according to Mark Westfield, author of a history of Australia's media industry called The Gatekeepers.

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