$138m MasterChef recipe for Ten Ratings success spurs share sale

Less than six months after failing to attract investors with an ill-fated raising attempt, the broadcaster yesterday sold 120 million new shares.

The shares were offered at $1.15 apiece more than 50 per cent above its bungled 75?-a-share offer in February and just 8.4 per cent below Ten's last closing price.

Unlike the first attempt, handled by Citigroup, this one was fully underwritten by Macquarie Capital Advisors.

It is believed that the offer closed oversubscribed, having found support from institutional investors.

Sentiment has improved markedly for Ten as its ratings recovered with programs such as Talkin' 'bout Your Generation and the cooking show hit MasterChef Australia.

The shares have gained 28 per cent over the past three months, closing at $1.255 on Monday, as investors begin positioning themselves for an advertising recovery next year.

However, analysts expressed surprise at the "cheeky" offer price, which was in contrast to other recent share sales at discounts of up to 20 per cent especially as the fate of Ten's majority shareholder, CanWest, remains in the balance. CanWest could be forced to offload its holding as it is seeking to avoid bankruptcy, with its next creditor deadline on August 14.

Its newspaper unit this week again failed to pay interest to its noteholders.

Analysts said the $1.15-per-share raising could either set a floor price for a future sale of CanWest's stake, or indicate that its creditors planned to hold on to Ten.

"If CanWest was going to sell down any time soon you would have thought they'd like to do it at the same time as a Ten raising. So, maybe that is a bit of a signal that CanWest bondholders intend to hold on to the Ten stake," said Fraser McLeish from Royal Bank of Scotland. "But there is no guarantee, so there is still a risk overhanging the stock."

Ten executive chairman Nick Falloon said CanWest had "participated in the discussions" about the raising, but wouldn't comment further on CanWest's intentions.

Mr Falloon said the raising put Ten "in complete control of our balance sheet" with all proceeds used to reduce its $600 million in debt.

Ten reaffirmed its guidance that it would remain within its banking covenants in August, even without the new cash being raised, implying operating earnings of at least $141 million for the year to August 31.

KEY POINTS

Ten sells 120 million shares at $1.15 apiece.

Majority-owner CanWest could now sell-down stake to avoid bankruptcy.