Network Ten has been placed in a trading halt ahead of an expected $225 million capital raising, while one expert has lambasted the network's move for its “inconsistency”.
A statement on the ASX has confirmed the trading halt and capital raising, while a report this morning in The Australian Financial Review gave a figure of $225 million. This will mark the company's second capital raising in six months.
The move comes after chief executive James Warburton assured the market a second capital raising would not be necessary.
Network Ten has declined to comment further on the initiative.
The new shares will most likely be sold at 20 cents. It has been reported the company's biggest shareholders, including chairman Lachlan Murdoch, mining magnate Gina Rinehart, gaming magnate James Packer, Hungry Jack's owner Jack Cowin and WIN Corporation founder Bruce Gordon, will support the move.
By supporting the raising, these players will be able to marginally increase their holding in the company, provided not all shareholders take up the offer.
Cox Media principal Peter Cox said the move indicates “poor cash flow planning” on the part of the company, however he went on to say it is not a surprise.
“It's a necessary move. The whole industry has been hit by the slow economy, then combine that with Ten's poor performance, so there is the double whammy. Plus, there is obviously a need for more short term cash flow when there are retrenchments.
“It's no surprise they need more capital.”
Meanwhile, Fusion Strategy boss Steve Allen took a more hard line view against the Ten board.
“I can't say this is a very smart move,” Allen said. “Ten's board has told Warburton to go out and say there was no need for a capital raising, then they come back and push for another capital raising.
“It makes them look so unbelievably inconsistent. There is clearly a problem at board level, because they have not made one right decision in the last couple of years. Tell me one decision which has been successful. I can;t tell you one.
“Warburton has yet to prove himself as a CEO, but the board seems to be doing its best to make him the patsy.”
Ten will resume trading on 7 December.
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.
Have something to say? Send us your comments using the form below or contact the writer at davidblight@yaffa.com.au
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.