Shares fall close to record low as Network Ten urges approval of $200m loan

Shares in Network Ten today fell to the lowest point in the company’s history as details emerged of the broadcaster’s plans to raise a $200m loan.

Ten's ASX price fall | Source: Google Finance

Ten’s ASX price fall | Source: Google Finance

The shares briefly dropped to 24.5 cents – their lowest on the ASX in 2013. The 24.5c point has only been hit once before, on December 10 last year (Ten disputes this: see below) . The company’s price on the ASX eventually closed just above that level on 25.5c, giving it a market capitalisation of $659m.

The price plunged as soon as the market opened today. It followed the release of the company’s annual report and notice of its AGM on December 18. It also included further details of why it needed a new $200m loan guaranteed by its three biggest shareholders.

Ten argues that the numbers provided by Google Finance, Yahoo Finance  and ninemsn finance are incorrect because they do not take into account the dilutory effect of last year’s two share raisings, and that in fact last year’s real number was the equivalent of 22c. This would mean that although yesterday’s fall was not the company’s lowest point of all time, it was still the lowest point of the year and close to an all time low. Ten’s preferred historical source is Bloomberg.

In a letter to shareholders published on the ASX, chairman Lachlan Murdoch calls on shareholders to approve the loan and avoid a third round of capital raising.

Ten announced plans for the Commonwealth Bank of Australia loan while declaring a loss of $285m in the 12 months to August 31 when it published the end of financial year results last month.

The new loan will need to be guaranteed by three of its largest shareholders – Bruce Gordon, James Packer and Murdoch. If it is not approved by shareholders, the network will risk breaching existing debt covenants and could be forced into another round of capital raising.

It has been a disastrous two years for Ten, as ratings and revenues have collapsed, and CEO Grant Blackley was ousted in 2011, soon to be followed by his predecessor James Warburton earlier this year.

Current CEO Hamish McLennan, who joined the network in February, has laid out a strategy to boost revenue and earnings over the next year by delivering premium sport content and a new morning television line-up. However the morning line up has since launched to disappointing ratings below that of its previous attempt at morning television with Breakfast, which was axed in 2012 after less than a year.

It also emerged that rival Seven Network is now Ten’s tenth largest shareholder with a stake of 2.4 per cent of the company. The acquisition was first reported in March at which point it was estimated to actually amount to around five per cent of the company.

Ten's biggest shareholders

Ten’s biggest shareholders | Source: Ten ASX filing

The detail is included in Ten’s notice of meeting.

The largest shareholder is Nine-affiliated WIN owner Bruce Gordon’s investment vehicle Birketu, followed by Gina Rinehart’s Hanrine. Lachlan Murdoch holds just under nine per cent through Ilyria while James Packer holds the same amount through Consolidated press Holdings.

Megan Reynolds


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