MERCURY. NEWS. Pic of Bruce Gordon owner of WIN TV . Picture: Sylvia Liber . 7 February, 2017The Murdoch family-controlled 21st Century Fox has intervened in a Supreme Court battle for control of Network Ten as America’s CBS seeks to buy the failed free-to-air network.
Billionaire Network Ten backer Bruce Gordon is seeking a court declaration that Ten’s administrators failed to give creditors adequate information about a joint bid by his company Birketu and Lachlan Murdoch’s Illyria to buy Ten.
Administrator KordaMentha backs a rival proposal by CBS.
Fox, which is owed $195 million by Ten, was given leave to be heard in the dispute on Tuesday on the first day of an urgent two-day hearing.
Andrew Bell, SC, for Mr Gordon’s Birketu and Ten’s regional affiliate, WIN Corporation – which is majority owned by Mr Gordon – rejected claims Birketu was a “disappointed underbidder”.
Birketu was a “disappointed overbidder” and the administrators should put its proposal to creditors for a vote, Dr Bell told the court on Tuesday.
He said KordaMentha’s statements backing CBS’s proposal had had the effect of “poisoning” Ten employees against the bid by Birketu and Illyria because they suggested the court case was “putting at risk the certainty provided to 750 employees … under the CBS transaction”.
“The administrators have turned [the law] on its head, having themselves chosen the winner, and entrenched that choice by, for example, excluding the Birketu-Illyria bid from the [creditors] report,” Dr Bell said.
An unusual secondary creditors’ report, released on Monday, revealed the Birketu-Illyria bid was $3 million higher than the bid by CBS but was too complex and would have seen secondary creditors getting just 2?? in the dollar.
Richard McHugh, SC, for the administrator, said Dr Bell’s opening address to the court “misrepresents the relative merits of the two proposals”.
He said the Birketu-Illyria bid expired on August 25 and “there continues to be no … proposal that could be put before the creditors”.
“On the 25th of August, a better offer having been received from CBS, the administrators moved forward … with that better offer,” Mr McHugh said.
WIN and Birketu are also seeking court orders that would remove or reduce the voting rights of CBS on the takeover proposal.
Jason Potts, SC, for CBS, said it was a “fairly extraordinary proposition that a major creditor of an insolvent company in voluntary administration should by court order be prevented from voting at all” or have its voting rights diluted.
CBS’s bid sees more money going to all creditors, except the ANZ Bank, Westpac and Fox, because it has agreed not to pay itself anything from the creditors’ pool of money.
Illyria and Birketu offered to pay CBS $7.4 million of the $348 million it is owed and 21st Century Fox $4.1 million of the $195 million it is owed. Employees and generic trade creditors receive 100 per cent of their claims in both bids.
The hearing continues.