From Financial Review
The Murdoch letter that triggered the Ten Network insolvency
Jun 14 2017 at 11:00 PM Updated Jun 15 2017 at 10:29 AM
It just so happens that one of the coincidences involving the Murdoch-controlled film company occurred around the same time that Lachlan Murdoch and fellow billionaire Bruce Gordon had threatened to sue all the directors of Ten if they went ahead with a recovery plan.
That threat was contained in a letter sent to the Ten directors on Monday night at 9pm. The same letter was sent to the directors of Ten's subsidiary companies, which included Ten chief executive Paul Anderson and chief financial officer Dave Boorman.
To put it another way, Murdoch was threatening to sue Ten director and Foxtel chief executive Peter Tonagh, and Gordon was threatening to sue Ten director and WIN Corporation chief executive Andrew Lancaster.
Tonagh's company is half-owned by News Corp, which is co-chaired by Lachlan Murdoch
The threat was not taken lightly by the directors of Ten. The directors told the ASX on Wednesday that the letter from Murdoch and Gordon left them "with no choice but to appoint administrators".
The company was trying to develop a viable plan for from the Commonwealth Bank. The CBA facility was guaranteed by Murdoch, Gordon and James Packer. It was due to expire in December.
Ten's recovery plan was proceeding well until last week .
Anderson and his team had done an extraordinary job putting together a plan that would have delivered a $50 million positive impact on earnings in fiscal 2018 and $80 million in fiscal 2019.
Add in the expected licence fee cuts of $22 million in 2017 and $12 million in 2018 and you had the makings of a $90 million boost to the bottom line. The management and the board were convinced this would be sufficient to allow the balance sheet to handle a $250 million loan.
But there was one final piece of the puzzle missing – an agreement with 21st Century Fox to agree to a replacement content supply agreement. During the negotiations over the past two weeks, Ten made it clear to 21st Century Fox's president of international distribution, Mark Kaner, that there was a certain urgency to getting a deal done.
Last week, Kaner became difficult to contact. Last Friday, after , the board was still confident it could get a refinancing facility in place.
had already agreed to a replacement content deal. The moment that Kaner agreed to a new deal Ten would have prepared a term sheet for its corporate adviser Moelis.
Moelis had advised the board that there were several options for refinancing by distressed credit funds in the United States.
On Saturday and Sunday, Kaner was uncontactable. Ten was trying to get him several times an hour, without success.
The board, chaired by David Gordon (no relation to Bruce Gordon), knew it was facing the need to use its CBA facility this week to pay wages and meet other financial commitments.
But all of its plans collapsed in a heap when the letter from Murdoch and Gordon arrived on Monday night. It was sent by Fort Street Advisers on behalf of the two billionaires.
The letter, a copy of which has been obtained by Chanticleer, said the billionaires understood the company would need $45 million "in the coming few days".
It said that the company would need to draw down $147 million by the end of this week and $173 million by the end of July.
The letter said that unless the company had in place alternative finance, Murdoch and Gordon would consider that Ten directors could not avoid an administrator.
"Fort Street Advisers has been requested by our clients to put you each on notice that, to the extent they are damaged by you failing to prevent drawdowns under the existing facility in breach of the statutory requirements mentioned above, they will reserve their rights to pursue the statutory compensation rights they may have against you personally," the letter said.
The ultimate irony and perhaps the ultimate coincidence is that one hour after the company was put into administration, there was an email from Kaner at 21st Century Fox saying he had agreed to a replacement content deal for Ten.
Correction: An earlier version of this story said Andrew Gordon was a director of Ten.
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