Fairfax Media have given besieged aged care provider Aveo front-page treatment again today because there were some share purchases by insiders the day before the company announced a $143 million share buyback on Tuesday morning.

It certainly does raise eyebrows, particularly since some earlier modest share purchases by the largest shareholder in Aveo had not been properly disclosed to the ASX.

However, the principle of directors and major shareholders demonstrating support for a company during a crisis through purchasing shares should be encouraged to ensure there is alignment. You don’t want the opposite of insiders sprinting to the exit by selling their shares.

The Fairfax allegation on page 1 today is essentially that the insiders might profit from the Aveo buyback. It’s a bit marginal because that would only be the case if they sold into the buyback, when it fact they have been buying the stock themselves.

And the three insiders who collectively purchased about 460,000 AVEO shares before the share buyback announcement have not made any material gain, with the stock down 10c to $2.75 in morning trading, presumably influenced by more ugly headlines emanating from Fairfax.

Truth be known, there was actually a bigger issue of uninformed share trading on the ASX yesterday, and it involved a raft of media companies.

Fairfax itself, through its majority-controlled listed subsidiary Macquarie Radio, failed to inform investors about the windfall gains it will receive from the federal government’s unexpected licence fee cut.

Communications Minister Mitch Fifeld made the announcement at 8.30am yesterday, declaring he was delivering a one-off $127 million benefit to Australia’s licensed radio and television companies.

Nine and Southern Cross did the right thing and came out with ASX announcements before trading commenced at 10am, knowing there would be a material share price impact.

Nine revealed a $33 million one-off benefit in 2016-17, and this sent the stock up 4.5% to $1.395.

Southern Cross Media’s benefit was $11.8 million, and its shares soared 7% to $1.28.

Prime Media belatedly revealed a $4 million windfall this morning, however there has still been nothing out of Seven West Media, Macquarie Radio and HT&E (the old APN), despite the fact their share prices all rose by between 3-5% yesterday. So much for informed trading!

I’ve contacted these companies today requesting they get with the disclosure program and reveal their individual windfall gains to the ASX. The ASX and ASIC were also informed and requested to act.

You then have the question of what all this means for Ten Network Holdings, which is currently being run by administrators KordaMentha, with PPB Advisory set to be appointed receiver by the three billionaire loan guarantors: James Packer, Lachlan Murdoch and Bruce Gordon.

Despite requests for more information from the Australian Shareholders’ Association, KordaMentha has declined to make any announcements to the ASX about Ten’s financial position and prospects.

If Nine has received an unexpected $33 million windfall, you would think a gain of at least $20 million is coming Ten’s way. From a cash flow point of view, this would have been payable on December 31, 2017, but it was accrued as a liability in the accounts, so will boost the forthcoming  result for the six months to August 31.

Given that Ten had only drawn down $97 million of the $200 million Commonwealth Bank loan facility as at the beginning of this week, there’s an argument that Malcolm Turnbull’s gift is big enough such that KordaMentha could hand back control to the Ten directors and allow trading to recommence.

But no — the three guarantors are reportedly only going to approve a further drawdown of the CBA facility if this coincides with the appointment of a receiver whom they control.

KordaMentha has certainly pulled the plug on the directors. Ten’s independent chairman David Gordon does not have access to his old email address and has left the country for a holiday.

Terry McCrann summed up the Murdoch family strategy today when he declared in today’s News Corp tabloids:

“Whoever ends up owning/controlling Ten, the process will be to turn debt into shares (plus more new shares). Existing shares will be worth four-fifths of five-eighths of very little.”

Hang on a minute, isn’t the game here to sell the business to the highest bidder?

For that to happen, KordaMentha needs to start providing accurate, timely financial information to the ASX, so that all bidders get a fair run at the asset, not just the billionaire insiders attempting to secure control of Ten on the cheap.

If Fairfax wants to slam Aveo for not making timely ASX announcements, they need to lift their own game in terms of disclosing the windfall Macquarie Radio has received from the licence fee cut and then push for much better disclosure out of TEN.

We certainly won’t get that out of News Corp, which is obviously conflicted in how it covers the Ten story.

When the Australian Shareholders’ Association met with KordaMentha on Monday afternoon, we requested they observe the continuous disclosure rules by making announcements through the ASX platform.

They’ve declined to do this so far, including with the licence fee issue but also with the slides at the creditors’ committee meeting, the appointments to the creditors committee and the press conference when a series of market sensitive comments were made, including that Mark Korda doesn’t believe there’s any value left for Ten’s shareholders.

The question here is whether the continuous disclosure regime continues during an administration.

Given the conflicts of interest, related-party transactions and potential breaches of Australia’s media ownership laws at play here, the federal government, ASX and ASIC need to closely follow the Ten situation and they should start be demanding much better public disclosure by whoever is currently controlling announcements made about the company.

*Stephen Mayne is director of the Australian Shareholders’ Association

Peter Fray

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