The Ten Network has gone into voluntary administration.
The decision follows the refusal by two billionaire shareholders to increase or extend a $200 million credit facility past December.
The company told the ASX on Monday that Illyria Pty Limited and Birketu Pty Limited, two shareholders which guarantee the company’s current credit facility, say they don’t plan to extend or increase support.
Illryia is the investment vehicle of media executive Lachlan Murdoch and Birketu is associated with TV pioneer Bruce Gordon. Murdoch owns 7.7% of the network and Gordon 15%.
Billionaire James Packer also has 7.7% of Ten and mining magnate Gina Rinehart 8.2%
The current credit facility of $200 million with the Commonwealth Bank expires on December 23 and company wanted to replace this with a new $250 million loan.
The company in April posted a loss of $232.19 million for the half year in a tough advertising market. At that time, the company said the current debt facility was drawn down by about $66.2 million.
The board of directors said today the company was left with “no choice but to appoint administrators”.
The free-to-air TV network announced that Mark Korda, Jennifer Nettleton and Jarrod Villani of Korda Mentha have been appointed as voluntary administrators.
“The administrators have advised the company that they will work closely with management, employees, suppliers and content partners while they undertake a financial and operational assessment of the business,” the company said.
“During this period, the Administrators intend to continue operations as much as possible on a business as usual basis.”
The company says it has identified initiatives expected to have a positive impact on earnings in the order of at least $50 million in 2018 and potentially more than $80 million in 2019.
The network is also renegotiating programming contracts, a key expense.
“The company has agreed in principle the vast majority of the commercial terms of replacement volume content supply agreements with its US studio partners, Fox and CBS, although final terms have not yet been formally agreed,” the company said.
Replacement content agreements, if finalised and implemented, would reduce the company’s future liabilities by 50% for US content.
And Ten anticipates the changes to federal regulations will cut television licence costs for Ten by $22 million in 2017 and $12 million in 2018.
Foreshadowed changes to cross media ownership laws would also benefit Ten, making it more attractive to other media groups, including News Corp where Lachlan Murdoch serves as co-chair of the global group and executive chair of 21st Century Fox.
“The directors of Ten regret very much that these circumstances have come to pass,” the statement said.
“They wish to take this opportunity to thank all Ten employees and contractors for their commitment and enthusiasm for Ten’s programs and business.”
Analysts have been questioning the future of the TV network.
In April, Macquarie wealth management, in a note to clients, said: “Given the difficult operating backdrop and further operating losses it is difficult to make an investment case for TEN, even at these price levels.”
And Credit Suisse said: “We see Ten as un-investible for most investors due to operating losses and funding concerns.”
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