Ten Network Holdings Limited (ASX: TEN) announced today that it has entered into an agreement with Foxtel, which will see Foxtel become a 15% stakeholder in TEN. The transaction is part of an effort by TEN to raise capital of $154 million, reduce debt and to provide additional financial flexibility. According to the company Ten has recently enjoyed strong ratings momentum and believes that the deal with further benefit shareholders.
The agreement includes the issue of new shares to Foxtel to raise up to $77 million at $0.15 per share which is at a 44% discount to TEN’s share price at the close of trading on Friday. Existing TEN shareholders will also have the ability to buy shares at the same price up to a total of $77 million. The deal also includes a two year option for TEN to become a 10% shareholder in Foxtel owned online streaming service Presto.
As part of the deal, Multi Channel Network (MCN), the advertising sales joint venture between Foxtel and Fox Sports, will be appointed as sales representative of TEN’s television and digital advertising inventory and TEN will take a 24.99% stake in MCN. With the appointment, TEN hopes to gain scale, create efficiencies, improve data capabilities and provide broader integration opportunities for clients. As a result TEN will have a seat on the MCN Board and a Foxtel representative will join the Board of TEN, which will thereafter be reduced to six directors.
“The Board believes the agreements with Foxtel and MCN will materially enhance TEN’s business and better equip it to respond to the challenges of the ever-changing media and advertising landscape” in a statement by TEN Executive Chairman and CEO, Hamish McLennan.
The proposed transaction is subject to a number of conditions. TEN and Foxtel are already working through the conditions with a particular focus on the regulatory conditions precedent which are expected to take at least three months to satisfy.
As of 12pm (AEST) TEN shares trade at 26c which is 1.9% lower than Friday's closing price.
Author: Matthew Dibb
Jun 15, 2015
Matthew has an extensive track record in equity markets and derivative advisory. Spanning a career in several investment banks and prviate wealth groups including Macquarie Bank, his specialist knowledge relates to capital market advisory and equity market analytics. Matthew has a diploma in Financial Advisory, Applied Finance and is ADA 1 & 2 accredited.