This is an important document and requires your immediate attention. You should read it carefully and in its entirety before deciding whether or not to vote in favour of the Resolutions. If you are in any doubt as to what you should do, you should consult your broker, financial adviser or legal adviser immediately. Notice of Meeting and Explanatory Memorandum Seven West Media Limited ACN 053 480 845 For personal use only For personal use only Seven West Media Limited (ACN 053 480 845) 1 Contents Explanatory Memorandum 2 Important information 4 1 Important Information on the Proposed Transaction 5 2 Key reasons to vote in favour of the Resolutions 9 3 Reasons why you may consider voting against the Resolutions 11 4 Shareholder approval 12 5 Additional information 14 6 General Meeting and how to vote 18 Annexure A – Notice of General Meeting 19 Annexure B – Glossary and interpretation 21 Annexure C – Independent Expert’s Report 23 Annexure D – Proxy form 105 For personal use only Notice of meeting and explanatory memorandum 2 Explanatory Memorandum Letter from Chairman of Independent Board Committee 29 April 2015 convert the CPS based on 95% of the average of the daily VWAP for a 5 business day period commencing on the date of service of the relevant Redemption Notice. The Company has Dear Shareholder, no discretionary right to redeem the CPS prior to its Redemption Date in April 2016 without the agreement of SGH. Seven West Media (the Company) is inviting you to attend a general meeting (Meeting) to be held on 2 June 2015 to consider The Company has reached an agreement with SGH to permit and vote on a proposal for the early resolution of the Convertible the early resolution of the CPS whereby all the CPS held by SGH Preference Shares (CPS) that the Company has on issue (the will be converted into Seven West Media Ordinary Shares almost Proposed Transaction). 12 months prior to the Redemption Date, based on 95% of the average of the daily VWAP over the period from 22-28 April 2015. The Proposed Transaction consists of two components: • the conversion of all of the CPS on issue, which are held by In addition to the CPS Conversion, the Company is making a Pro- Seven Group Holdings (SGH) into Ordinary Shares (the CPS rata Offer in order to provide eligible non-SGH Shareholders with Conversion) at an issue price of $1.28 per share; and an opportunity to subscribe for new Ordinary Shares at the same • a 2.27 for 3 conditional, accelerated, non-renounceable entitlement ratio and a lower price than Ordinary Shares being entitlement offer to all eligible Seven West Media issued to SGH under the CPS Conversion. The price under the Shareholders (in which SGH will not participate) to subscribe Pro-rata Offer is $1.25, based on 93% of the average of the daily for new Ordinary Shares at an issue price of $1.25 per share VWAP over the period from 22-28 April 2015. SGH has agreed (the Pro-rata Offer). The Company has entered into an not to exercise its rights in the Pro-rata Offer and therefore, the underwriting agreement with respect to $150 million of the Proposed Transaction effectively provides an opportunity for all Pro-rata Offer. eligible Shareholders to subscribe for new Ordinary Shares at lower pricing than the CPS Conversion. As SGH is a major Shareholder in Seven West Media, an Independent Board Committee (IBC) has been formed to assess SGH currently has a shareholding of approximately 35% in Seven the Proposed Transaction, comprising myself as the Chairman of West Media and following completion of the CPS Conversion and the IBC, Mr John Alexander and Dr Michelle Deaker. the Pro-rata Offer, if all Shareholders were eligible and elected to take up their full entitlement under the Pro-rata Offer, SGH The Proposed Transaction, if implemented, has the following will retain its current 35% interest. If non-SGH Shareholders do benefits: not participate fully, SGH could increase its shareholding to a • early resolution of the CPS approximately 12 months maximum of approximately 45% (depending on the final take-up ahead of its Redemption Date and removal of the current under the Pro-rata Offer). Given the possibility of SGH increasing uncertainty with respect to how the Company will resolve the its interest in the Company by more than its 3% “creep capacity”, CPS; shareholder approval is required under section 611 (item 7) of the • an opportunity for all eligible Shareholders to subscribe for Corporations Act to approve such an increase in SGH’s voting new Ordinary Shares at an equivalent ratio and at a lower power by virtue of the CPS Conversion. price than the CPS Conversion; We have considered a range of alternatives available to the • agreement from SGH not to participate in the Pro-rata Offer Company having regard to the interests of all Shareholders, and therefore, all eligible Shareholders who participate in the Company’s financial position, our rights under the CPS the Pro-rata Offer will retain at least their current percentage and optimising the Company’s cost of capital. Based on shareholding in the Company following completion of the this assessment, we believe that the Proposed Transaction Proposed Transaction; and is the most suitable option available and provides all eligible • Seven West Media will have a strengthened balance sheet Shareholders with an opportunity to subscribe for new Ordinary with reduced gearing and a simplified capital structure, Shares at an equivalent ratio and at a lower price than SGH, providing flexibility for the business to pursue growth as well as delivering enhanced balance sheet strength to the initiatives. Company. The CPS were issued as consideration to SGH in 2011 when Deloitte Corporate Finance has been appointed as an the Company acquired Seven Media Group Pty Limited, which Independent Expert and has expressed its opinion that the owned the assets which now comprise the Company’s television, For personal use only Proposed Transaction: magazine and digital businesses. That transaction was approved • is not fair but reasonable and in the best interests of Non- by non-SGH Shareholders at the time. Associated Shareholders; and Under its terms, if the CPS remain on issue beyond the stated • despite the Proposed Transaction being assessed not fair, Redemption Date (April 2016) (i) the Adjusted Issue Price of the considered the reasonableness factors to be sufficiently CPS will accrue at an increased rate of approximately 9.1% per compelling for the Proposed Transaction to be reasonable. annum compared to its current rate of approximately 7.1%, and Furthermore, the Independent Expert considered the (ii) the Company will face certain restrictions on its ability to pay reasonableness factors when compared to the fairness ordinary dividends to Shareholders. In or at 6 monthly intervals assessment to also be sufficient in nature for the Proposed after April 2016, the Company may repay the CPS in cash or Transaction to be in the best interests of Non-Associated Shareholders. Seven West Media Limited (ACN 053 480 845) 3 The Independent Expert’s Report, which you should read in full, is contained in Appendix C. The IBC considers that the Proposed Transaction is the best way to resolve the CPS, taking into account the interests of non-SGH Shareholders and the interests of the Company. The IBC unanimously recommends that you vote in favour of the Resolutions at the Meeting. Further information, including the time and location of the Meeting is contained in this Explanatory Memorandum and Shareholders are encouraged to read and consider all of the information provided before making a decision on whether to vote in favour of the Proposed Transaction. Your vote is important. The IBC strongly encourages you to vote either by attending the Meeting in person, by voting online or by appointing a proxy, attorney or corporate representative to attend the Meeting and vote on your behalf. The Company will keep Shareholders informed of any material developments in relation to the proposal through releases to ASX (which will also be published on SWM’s website). If you have any questions in relation to the proposal, please contact the Shareholder Information Line on 1800 000 639 (for callers within Australia) or +61 3 9415 4000 (for callers outside Australia) or visit www.sevenwestmedia.com.au. Yours faithfully Mr David Evans Chairman, Independent Board Committee Seven West Media Limited For personal use only Notice of meeting and explanatory memorandum 4 Important information Explanatory Memorandum This Explanatory Memorandum has been prepared for the Shareholders in connection with the general meeting to be held on 2 June 2015. The purpose of this Explanatory Memorandum is to provide the Shareholders of SWM with important explanatory information that SWM believes to be material to deciding whether or not to approve the Resolutions detailed in the Notice of Meeting. This Explanatory Memorandum forms part of the accompanying Notice of Meeting and should be read in conjunction with it. Independent Board Committee In considering whether to vote in favour of the Resolution, the Independent Board Committee of SWM encourages you to: • carefully read the whole of this Explanatory Memorandum (including the Independent Expert’s Report); • have regard to your individual risk profile, portfolio strategy, taxation position and financial circumstances; and • obtain financial advice from your broker or financial adviser on the Proposed Transaction and obtain taxation advice on the effect of the Proposed Transaction being implemented. They also encourage you to attend the Meeting and vote in person or by proxy. Not an offer This Explanatory Memorandum is not an offer of securities. The Seven West Media shares to be offered and sold in the Pro-rata Offer have not been and will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration except in transactions exempt from or not subject to the registration requirements of the Securities Act.