GPO Box 964 Brisbane QLD 4001 Level 14 12 Creek Street +61 7 3338 0222 Brisbane QLD 4000 [email protected] 4 September 2017 Ten Network Holdings Ltd (Administrators Appointed) (Receivers and Managers Appointed) ACN 081 327 068 (‘the Company’) and Associated Entities (Collectively ‘the Ten Group’ - refer to Appendix 1) Report to Creditors ASX Code: TEN I refer to the appointment of Mark Korda, Jarrod Villani and Jenny Nettleton of KordaMentha Restructuring (‘the Administrators’) as Administrators of the Ten Group on 14 June 2017 pursuant to Section 436A of the Corporations Act (‘the Act’). Pursuant to Section 439A of the Act, the Administrators today issued their Report to Creditors ahead of the Second Meetings of Creditors to decide the future of the Ten Group. In the Report, the Administrators express that in their opinion it is in the creditors interests for the Ten Group to execute the Deed of Company Arrangement proposed by CBS. The Report be found at Appendix 2 or alternatively at http://www.kordamentha.com/creditors/ten- group. The release of the Report follows the announcement on 28 August 2017 by the Receivers and Managers (Christopher Hill, Phil Carter and David McEvoy of PPB Advisory) and the Administrators that wholly owned entities of the New York Stock Exchange listed CBS Corporation had entered into a binding Transaction document to acquire the business and assets of the Ten Group, and their announcement today concerning the completion of the refinance. Details of the Second Meetings of Creditors are as follows: Date: Tuesday 12 September 2017 Time: Registration from 10.00 am with the meeting commencing at 11.00 am Location: Sydney Harbour Marriott, 30 Pitt Street, Sydney NSW 2000 At these meetings, creditors will vote on the future of the Ten Group. Meetings for each entity of the Ten Group will be held concurrently. Ends For personal use only KordaMentha Pty Ltd ACN 100 169 391 kordamentha.com Liability limited by a scheme approved under Professional Standards Legislation Page 2 Appendix 1 1. Ten Network Holdings Limited (Administrators Appointed) (Receivers and Managers Appointed) ACN 081 327 068 2. The Ten Group Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) ACN 057 564 708 3. Network Ten Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) ACN 052 515 250 4. Network Ten (Sydney) Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) ACN 008 664 962 5. Network Ten (Brisbane) Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) ACN 050 148 537 6. Network Ten (Melbourne) Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) ACN 008 664 953 7. Network Ten (Perth) Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) ACN 009 108 614 8. Network Ten (Adelaide) Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) ACN 007 577 666 9. Caprice Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) ACN 008 655 847 10. Chartreuse Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) ACN 008 655 874 11. Television & Telecasters (Properties) Pty Limited (Administrators Appointed) ACN 050 690 161 12. Ten Online Pty Limited (Administrators Appointed) ACN 089 829 667 13. Ten Ventures Pty Limited (Administrators Appointed) ACN 089 830 759 14. Ten Employee Share Plans Pty Limited (Administrators Appointed) ACN 082 736 150 For personal use only Page 3 Appendix 2 – Report to Creditors For personal use only Ten Group For personal use only Report to Creditors pursuant to Section 439A of the Corporations Act 2001 4 September 2017 Liability limited by a scheme approved under Professional Standards Legislation Contents Glossary ............................................................................................................................ 1 Executive Summary .......................................................................................................... 3 1.1 Appointment of Administrators and Receivers ............................................. 3 1.2 Sale/Recapitalisation process outcome ....................................................... 3 1.3 Estimated return to creditors ........................................................................ 3 1.4 Opinion ........................................................................................................... 4 1.5 Second Meetings of Creditors ....................................................................... 4 2 Appointment of Administrators ............................................................................... 5 2.1 Appointment of Administrators ..................................................................... 5 2.2 Object of Administration ................................................................................ 5 2.3 Purpose of this Report ................................................................................... 5 2.4 Appointment of Receivers and Managers .................................................... 5 2.5 Declaration of Independence Relevant Relationships and Indemnities ..... 6 2.6 First meetings of creditors ............................................................................. 6 2.7 Committee of Creditors .................................................................................. 6 2.8 Second meetings of creditors ....................................................................... 7 2.9 Conduct of Administrations – summary ....................................................... 8 2.10 Receipts and payments of Administration .................................................... 9 3 Ten Group background ........................................................................................ 10 3.1 Corporate structure ..................................................................................... 10 3.2 Shareholders ............................................................................................... 11 3.3 Operations of the Ten Group ...................................................................... 11 3.4 Ten Group investments .............................................................................. 14 3.5 Directors and officers ................................................................................. 14 3.6 Ten Group finance facilities ........................................................................ 15 3.7 Registered PPSA interests .......................................................................... 16 3.8 Historical performance ............................................................................... 16 3.9 Reports as to affairs ................................................................................... 20 3.10 Liabilities ..................................................................................................... 21 4 Progress of the Administrations .......................................................................... 23 4.1 Operations ................................................................................................... 23 4.2 Employees ................................................................................................... 24 4.3 Stakeholder engagement ........................................................................... 24 For personal use only 4.4 Statutory matters and Court applications.................................................. 25 4.5 Sale/recapitalisation process .................................................................... 26 5 Investigations ....................................................................................................... 27 5.1 Administrators’ investigations .................................................................... 27 5.2 Overview of investigations .......................................................................... 27 5.3 Approach to investigations ......................................................................... 27 Page i 5.4 Date of insolvency ....................................................................................... 27 5.5 Offences under the Act by the directors .................................................... 31 5.6 Potential recovery actions available to a Liquidator ................................. 31 5.7 Offences ...................................................................................................... 33 5.8 Limited report by Peter Gothard ................................................................. 33 6 Sale/recapitalisation process .............................................................................. 34 6.1 Outcome of process .................................................................................... 34 6.2 Summary of process ................................................................................... 35 7 Proposed Deed of Company Arrangement .......................................................... 37 7.1 Key features of proposed Deed of Company Arrangement ...................... 37 7.2 Creditor entitlements .................................................................................. 39 8 Proposed Creditors’ Trust .................................................................................... 42 8.1 Purpose of a creditors’ trust ....................................................................... 42 8.2 Overview of the proposed Creditors’ Trust ................................................ 42 8.3 ASIC guidelines for creditors’