Ten Network investors have been handed more rope with which to hang their embattled board at today's shareholders' meeting, after the broadcaster announced its second highly dilutive capital-raising in six months.
The company requested a trading halt on yesterday ''pending an announcement by Ten in relation to a proposed capital-raising''. Ten is reported to be seeking $225 million at 20¢ a share, a deep discount to its last trading price of 32.5¢.
IG Markets analyst Cameron Peacock said the market thought the recently completed sale of Ten's Eye Corp business for an advance payment of $100 million would be enough to stabilise the balance and avert loan covenant issues ''but clearly this is not the case''.
''Unfortunately, Ten is a company bleeding cash, both from its operations and its shareholders,'' he said. ''Due to poor programming, Ten has lost significant TV market share and, as a result, has seen TV ad revenues slump more than 14 per cent this year.''
The raising is expected to place pressure on Ten chief executive James Warburton, who said as recently as October there would be no need for a further raising.
The only solace for investors is the billionaire board members will be sharing their pain.
From a peak above $1.50 in November 2010 - soon after James Packer, Lachlan Murdoch, Gina Rinehart and Bruce Gordon finished their buying spree - to an expected low of 20¢ for the latest capital-raising, the billionaires are looking at losses of about $600 million. Mr Packer is the only one of these investors not on Ten's board.
The losses are not expected to help the board avoid a fiery meeting today. Shareholder advocates and proxy advisers have already armed Ten shareholders with some scathing assessments of the company and recommendations to vote against the remuneration report. The Australian Shareholders' Association report detailed the loss of Ten's entire senior management over the past two years and the more recent cull of 100 staff from Ten's newsroom.
''So, is it working? Costs may be down but so are the ratings,'' the ASA report said.
''Obviously an overriding concern to the market and shareholders are the four billionaires sitting on more than 40 per cent of the stock. How much influence do they have? What is their plan? Are they getting on? What are their motivations?''
The ASA has recommended a cull of what it regards as an oversized board, starting with a vote against the reappointment of Siobhan McKenna.
Its report said she was a managing partner of Lachlan Murdoch's Illyria Nominees and was directly involved in the management of Ten Network in 2011.
It also recommended a vote against the remuneration report.
Proxy adviser CGI Glass Lewis supported the election of directors Ms McKenna and Brian Long but had plenty to say about the billionaire board members who were not up for re-election.
CGI said the $800,000 payment by Ten to Mr Murdoch's private company Illyria - for professional services provided for Ten's strategic review - potentially created conflicts for directors, ''as they may be forced to weigh their own interests in relation to shareholder interests when making board decisions''.
CGI recommended a vote against the remuneration report, saying: ''The company has not adequately linked executive remuneration to company performance over the past two years.''
The proxy adviser took Ms Rinehart to task for attending barely more than half the board meetings.
She relied on alternate directors to attend the other meetings in her place.
Another proxy adviser, ISS, recommended shareholders vote in favour of all resolutions, including the remuneration report.