only had time for a quick skim but several weaknesses in the report... does not fill me with confidence in this process... plenty of grounds to challenge in my view:
- kpmg deduct all the US content liabilities on day one ($348m for CBS and $195m for fox) against the PV of business cash flows without noting any discounting to reflect they are actually contingent liabilities forecast to occur in future years, consistent with the going concern basis
- they don't actually present a table of the annual cash flows used for the valuation, poor form in my view for a paid valuation with full access to company info, not transparent enough in these circumstances. eg impossible to tell impact of above
- only 20% US content cost reduction in base case... should be slashed much further in the circumstances, coming out of a VA
- no additional value for tax losses !
- KPMG are being paid to value it yet 'to give an indication of the expected future financial performance of Ten, KPMG have considered brokers forecasts' !! These forecasts are old, pre the licence fee relief and mgmt's savings initiatives, and published during the period of maximum uncertainty around ten in the market.
- so they're happy to look at 5-6 months old outside brokers forecasts, yet can't see any mention of KPMG considering the fact there is a live rival bidder. this is fundamental to the s444GA judgement as i've said before ie precedent suggests court will ask the question what would happen if this DOCA wasn't there ... that is, not a case of going to liquidation (or CBS's asset sale alternative)...rather a quarter of the shares would stay in the hands of holders (and creditors in basically the same place from what i can tell)
No doubt some will try to call me on bias / sour grapes, that's fine though i think it would be more useful in a discussion forum if folks would actually read the report. happy to be corrected on each of above
TEN Price at posting:
16.0¢ Sentiment: None Disclosure: Held
