News: Australia's Ten Network says receivers appointed, still a going concern, page-5

Interesting developments, wonder if it's the start of a potential bidding 'war' (I use that term loosely)

Source: http://www.theaustralian.com.au/bus...e/news-story/c5e25398c991cfd37541961fa4dd57c3

Tuning in: Leon Zwier joins Ten Network battle

Formidable Melbourne corporate lawyer Leon Zwier sure gets around. And sure enough, he’s popped up — again — in the battle to take control of failed free-to-air broadcaster Ten Network, now in the hands of receiver PPB.

It is believed that Arnold Bloch Leibler partner Zwier is working for a bidder to rival media billionaires Lachlan Murdoch and Bruce Gordon.

Zwier has assisted distressed debt funds before in similar circumstances, working for senior lender Apollo Global Management and Oaktree in the $3.4 billion restructure of Nine Entertainment.

Oaktree is believed to have expressed interest in a role in a debt-for-equity recapitalisation of Ten ahead of the broadcaster being tipped into voluntary administration. New York hedge fund Anchorage Capital did the same, although Zwier is not believed to be helping them.

Zwier is close to Opposition Leader Bill Shorten, who was at the lawyer’s 60th birthday celebrations in Melbourne on the weekend.

Leon Zwier of Arnold Bloch Leibler. Picture: Aaron Francis.

In 2015, Zwier worked pro bono for Shorten at the royal commission into trade union governance.
The two could have a common purpose once again. The Labor leader has trenchantly argued against the repeal of the “two out of three” media ownership laws, which have complicated the business arrangements of Murdoch and Gordon.

Shorten’s opposition could provide just the opportunity Zwier’s new mystery buyer needs.

A long program
The still unnamed Bruce Gordon and Lachlan Murdoch Birketu-Illyria bidding syndicate for Ten has been gearing up for some time.

Preparations were well under way before mid-June, when Ten was pushed into the hands of KordaMentha and when the media giants, via their lawyers Atanaskovic Hartnell, revealed they were working towards their own plan for a restructure of the failed broadcaster.

Way back in March, Gordon — with the help of Atanaskovic Hartnell’s Lawson Jepps — set up a new corporate vehicle called Network Investments Pty Limited. Shortly after, Gordon and his only son Andrew Gordon became directors of the new entity.

Network Investments was created about a week after Murdoch’s director at Ten, Siobhan McKenna, left the board for a new role providing strategic oversight of News’s broadcast assets — Foxtel, Fox Sports and Sky News.

McKenna had already been appointed to the boards of Foxtel and Fox Sports in September last year and the board of Australia News Channel (which controls Sky News) in December.

When McKenna left the board, restructure specialist KordaMentha had been at Ten for almost three weeks. They were brought in by the network’s lawyers, Gilbert + Tobin, in late February and on March 7, KordaMentha’s Scott Kershaw held the firm’s first meeting with Ten’s board.

Then on March 14, another meeting was held with Ten directors in which they were briefed by Kershaw and his colleagues Mark Korda, Ryan Rabbitt and Joan Uyabout what became known as the Ten “Contingency Plan” — that is, voluntary administration, which ended up happening in mid-June.

Administration has since transformed into receivership managed by PPB.

Meanwhile, the Gordon-Murdoch syndicate is now being advised by Fort Street’s Ben Keeble, previously of private equity shop CVC, who has just asked Rod Sims’ ACCC to conduct an informal inquiry into the proposed bid.

The competition regulator has asked for submissions by July 24 and will report its findings on August 24.

In the box seat
Turns out billionaire James Packer isn’t quite done with the Ten Network.

Packer has been trying to sell his 7.5 per cent Ten stake and some time ago declined to continue as a long-term guarantor of the network’s debt alongside his friend Lachlan Murdoch and Bermudian magician Bruce Gordon for the failed broadcaster. But — presumably giving the OK while floating on his icebreaker Arctic P in the South Pacific — Packer has signed on for another two months and another $10 million. Perhaps friendship encouraged the Crown billionaire’s move, although improving his future creditor status may also have played a part.

The three billionaires now have equal responsibility for the $30m in fresh funding to August 30, which allows Ten to trade on, film Sophie Monk and buy a crucial two-week overlap for Murdoch and Gordon as they wait for media legislation to be debated in federal parliament in mid-August.

If the media ownership law changes fail, the pair are cooking up a clever structure that they hope will receive regulatory approval anyway.

One version is Gordon and Murdoch each buying an economic half share of Ten, but with Gordon holding 85 per cent of voting rights and Murdoch 15 per cent.

Former Ten Network owner Izzy Asper in 1996.
There is some precedent for this sort of structure.

Canadian media baron Israel “Izzy” Asper got around the foreign ownership rules in 1992 when his CanWest bought Ten from Westpac, along with the help of backers that included fast food billionaire Jack Cowin (now a Fairfax director), media investor John Singleton (still pining for the Fairfax’s radio assets), JetSet owner Isi Leibler, the late Kerry Packer’s mate and millionaire Robert Whyte, lawyer Steven Skala, and investors Laurence Freedman and Brian Sherman.

Lawyer David Gonski and now Prime Minister Malcolm Turnbull, as well as law firm Freehills, advised on the structure, which saw CanWest put in most of the money in return for non-voting debentures that kept Asper’s control at less than the 15 per cent threshold.

We are sure the PM could give a refresher to anyone too young to remember the early nineties — once he returns from his trip overseas.

Bean there, done that
Meanwhile, the Bruce Gordon-Lachlan Murdoch syndicate has asked competition boss Rod Sims to have a squizz at their potential joint bid for Ten.

If Pauline Hanson and her senators won’t allow the removal of the “two out of three” ownership law, that would bring another regulator to the deal table: the Australian Communications and Media Authority’s acting chairman, Richard Bean, whose term is scheduled to expire in October.

Yes, that’s right: Mr Bean would be the centre of attention. It would be 1997 all over again.

One of ACMA’s jobs is to rule on media ownership structure. Unless the parliament changes them, Bean might have to advise on whether the current laws allow the mooted structure that would give Murdoch and Gordon an equal ownership, but give the Bermuda billionaire the majority legal interest.
Bean was once a commercial and media lawyer at Blake Dawson Waldron. He knows about the varied, creative interpretations of Australia’s media laws better than most — and particularly how they have been used at Ten. After all, he worked at the network for six years during the previously mentioned CanWest epoch.

And taking a keen interest in Bean’s decision-making will be Communications Minister Mitch Fifield, who is also trying to broker the crossbench solution that would change the laws, so that no tricky decision ends up in Bean’s in tray.