The Stock Exchange requires Seven to tell the world about the extraordinary general meeting whch will bring in the equity partners and create a new company. Here is the announcement.
Seven Network – Extraordinary General Meeting
22 December 2006. Address by Peter Ritchie, Deputy Chairman, Seven Network Limited.
1
Last month, your company announced execution of definitive agreements for the formation of a joint
venture with Kohlberg Kravis Roberts & Company. The joint venture, the Seven Media Group, will
acquire Seven’s television, magazines and online businesses for approximately $4.0 billion.
Seven Media Group will be Seven and KKR’s vehicle to pursue media opportunities in Australia and
New Zealand – in television, magazines and online. Seven and KKR will contribute capital to the
venture and the balance of the acquisition price will be funded by way of a line of credit of
approximately $2.6 billion. This is a line of credit extended to subsidiaries of Seven Media Group
rather than Seven Network Limited. This funding is not an obligation of Seven Network Limited.
The agreement recognises Seven’s strengths in television, magazines and online and delivers to
Seven, our people and our shareholders a venture with the strategic and financial flexibility to take
advantage of the dynamics of the Australian and New Zealand media landscape.
Under the terms of the agreement, due to be completed by the end of this month, KKR will invest
approximately $735 million for a 50 per cent economic stake in the venture. The venture will own
Seven’s television and magazines businesses and its 50 per cent interest in the Yahoo!7 joint
venture.
The Seven Media Group has obtained underwritten financing from Morgan Stanley, Mizuho, Goldman
Sachs and Citigroup of which approximately $2.5 billion will be drawn on closing. Seven will receive
cash proceeds of approximately $3.2 billion and will retain a 50 per cent economic stake in the joint
venture. To explain: of the $4 billion received for the transfer of assets, effectively $735 million is reinvested
for Seven Network Limited’s 50 per cent stake in the venture. This means cash received is
in the order of $3.2 billion.
KKR’s investment will initially be in the form of convertible notes which may not be converted until
after recent amendments to the Broadcasting Services Act are proclaimed to take effect.
The deal has been approved by the Directors of your company – and is set down for completion next
week, on 29 December. Given this, today we are seeking shareholder approval for financing-related
commitments which are to be given by Seven Media Group subsidiaries, including the granting of
securities to secure the funding.
Seven Network – Extraordinary General Meeting
22 December 2006. Address by Peter Ritchie, Deputy Chairman, Seven Network Limited.
2
Under the Corporations Act, this amounts to a company giving financial assistance in connection with
the acquisition of its own shares or shares in its holding company. To comply with the Act, Seven
Network Limited, as the listed holding company of the group, is required to obtain shareholder
approval on certain elements of the financing, under the financial assistance provisions (Section
260B) of the Corporations Act.
We should point out that this funding is not something Seven Network Limited is guaranteeing or is
liable for. It is a requirement under the Act that shareholder approval is obtained in the form of a
special resolution relating to certain elements of the financing which involve our subsidiaries in the
Seven Media Group joint venture.
