CALGARY – Shaw Communications announced this morning that it intends to purchase control of CanWest Global Communications.
The Calgary-based cable company has entered into agreements with Canwest and certain 8% senior subordinated noteholders to acquire a minimum 20% equity interest and 80% voting interest in the broadcaster, which includes effective control of a restructured Canwest. Shaw’s initial equity interest will exceed 20% depending on the number of Canwest creditors that elect cash rather than shares in restructured Canwest, says the press release.
Full financial terms were not disclosed.
"We are excited about the Investment and gaining effective control of one of the premier broadcasters and owners of content in the Canadian broadcasting industry at a reasonable valuation. We believe that Shaw’s investment results in a number of benefits to the broadcasting system, including an ability to strengthen local programming, ensure the ongoing viability of the second largest private conventional television network in Canada, and sustain a dynamic and competitive television market" said Jim Shaw, CEO, in the statement.
The recent restructuring initiatives undertaken by Canwest have positioned the Company as a pure play Canadian broadcaster. The Company will operate as a separate private company with a dedicated management team and Board of Directors. The Investment was structured whereby Shaw has the flexibility to increase its ownership in a Restructured Canwest in the future.
It is not stated specifically in the release, but it appears from that quote from Mr. Shaw the selloff of Canwest’s Canadian newspapers will go ahead and see that portion owned by others.
These new agreements will become effective upon approval of the Court in Ontario overseeing Canwest’s CCAA restructuring process. The financial terms of the agreements will be filed with the Court on a confidential basis and will remain confidential until Court approval is obtained. Following receipt of such approval, Shaw will provide further information concerning the financial terms of the Investment.
The Investment also remains subject to various conditions, including Canwest creditor approval, further approval from the Court and regulatory approval from the CRTC, “as well as certain other matters satisfactory to Shaw,” concludes the company’s press release.
“We are very pleased with the firm investment commitment from Shaw”, said Derek Burney, chairman of Canwest’s board of directors. “While there is much work still to be done, Shaw’s commitment represents an important step towards a successful financial restructuring of Canwest and is supported by the company and the members of the Ad Hoc Committee.
“We look forward to benefitting from Shaw’s participation in a reinvigorated Canwest, as it is a strong business partner with a proven commitment to the Canadian television broadcasting industry. This significant investment in conventional television should be seen as a big vote of confidence in the industry and its future.”
The transaction will see Canwest become a private company, the shareholders of which will be comprised of Shaw and a limited number of existing major creditors. Restructured Canwest would be managed and operated as a stand-alone business with its own board.
The fact it will be Canadian-controlled will make Ottawa happy.
Creditor approval of the recapitalization transaction is required by no later than April 15, 2010 and the recapitalization transaction must be completed by no later than August 11, 2010. Following successful completion of the recapitalization transaction, Restructured Canwest will be de-listed from the TSX Venture Exchange and will apply to cease to be a reporting issuer under Canadian securities laws.
More to come.
