TMS television & media services limited

chairman's address 15 april

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    Based on the Chairman's address (to be delivered at this morning's XGM, scheduled for 11am), I am not convinced that acceptance of the recapitalisation proposal is yet in the bag. If so, then it will come down to just how many proxies the Chairman holds (ie: for exercise, at his discretion).

    This morning's Chairman's address reads as follows (and shows that even with an approved recapitalisation, TMS still faces a challenging financial future). Now, when will the Chairman step down?:

    2003-04-14 ASX-SIGNAL-G (8.02pm)

    HOMEX - Sydney

    Good morning ladies and gentleman and welcome to TMS's General
    Meeting to consider the Recapitalisation and related Transactions.

    I would like to begin by firstly introducing my fellow Directors, Mr
    Brett Daley and Mr Peter Myers and our Company Secretary, Mr Chris

    As you may recall it has already been announced that TMS has
    transferred the loss-making Val Morgan Group to the Exhibitors in
    December 2002. Under the agreement with the Exhibitors TMS was
    released from long-tem guarantees to the Exhibitors for the theatre

    At today's meeting we will consider the resolution to approve the
    Recapitalisation and related Transactions, which will allow TMS to:

    * Reduce the Bank Debt by at least $10 million; and

    * Continue to trade and preserve the value of the Global Television

    As I outlined at the AGM TMS is emerging from a period of critical
    financial difficulty. I do not intend to go through in detail the
    events that have lead to the need to recapitalise TMS as these have
    been covered in the Notice of Meeting and Explanatory Statement and
    at the last AGM. However, I would like to highlight the main elements
    of the Recapitalisation.

    * The minimum proceeds to be raised under the Recapitalisation will
    be $13.9 million. Essentially these funds will be raised from a
    placement to PBL, TEN and the ANZ. These funds will be used to pay
    $2.5 million to the Exhibitors for the releases from the liabilities
    from the theatre rents and the balance will be used to cover the
    costs of the recapitalisation and reduce debt.

    * A new facility agreement will replace the existing ANZ facilities.
    As part of the agreement with the ANZ the interest rates payable by
    TMS will be reduced. PBL and TEN will also guarantee approximately
    $16 million in debt ($13 million in Junior Debt and $3 million in
    working capital), which will allow TMS to realise its non-core assets
    in an orderly manner to fund further debt reduction.

    * In recognition of the increased credit risk for the ANZ, PBL and
    TEN each of these parties has been granted 50 million Options.

    * Additional options have also been issued to PBL and TEN (for up to
    520 million New Shares) and may only be exercised in the event that
    there is still an outstanding Junior Debt at the end of 3 years.

    Subject to the approval of the Recapitalisation today, TMS will be
    inviting shareholders to participate in a renounceable rights issue
    of 5 new shares for every 2 existing shares. The issue price is 2.5
    cents and the proceeds will be used to fund further debt reduction.
    The Rights Issue is renounceable but given the current TMS share
    price, trading in the rights for shareholders with small parcels of
    shares may not be viable.

    I believe the Rights Issue also answers the request by some
    Shareholders at the last AGM, that they have the ability to
    participate in the Recapitalisation. The prospectus for the rights
    issue will be issued shortly.

    The Recapitalisation, including the proposed Rights Issue, is one
    step towards the goal of returning TMS to a more stable financial
    position. In conjunction with the Recapitalisation, the Directors
    believe the following strategies are also critical steps toward this

    * Improving the utilisation of Global Television's resources by
    increasing its market share, seeking new business opportunities,
    increasing the range of services provided to existing customers and
    upgrading its equipment, where appropriate.

    * Pursuing a sustainable cost reduction program.

    * Maximising cashflow from both the sale of non-core assets and
    trading in order to fund further reduction of the Bank Debt.

    These steps are being implemented as Board strategy.

    There are a number of costs associated with the Recapitalisation, the
    most obvious being the dilutionary effect of the Placements. I
    believe that, although undesirable, they are a necessary cost of
    receiving the benefits of the recapitalisation and the continued
    trading of TMS.

    It has also been a condition of the Recapitalisation that the
    shareholders approve an agreement between PBL and TEN to communicate
    regarding their intentions for TMS and grant each other pre-emptive
    rights over their shares. Whilst I would not normally recommend that
    shareholders support such an arrangement I believe that shareholders
    in the current circumstances have no better alternatives and I
    therefore recommend that shareholders support the resolutions.

    In concluding that whilst the Board regrets the impact on the
    shareholders of the financial difficulty facing TMS, which came from
    the unexpected reverses in the prospects of the Val Morgan business,
    I believe that we have taken the necessary steps to restore TMS to a
    more stable financial position. There are obviously a number of
    challenges facing TMS in working towards putting the company in a
    better financial position.

    Your support for the Recapitalisation represents the first important

    A G Hartnell

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