Canwest exits Australia
The sale of Network Ten stake to raise some $634 million, ending almost 20 years Down Under - and months of rumours.
Canwest Global Communications is to sell off its 50.6% stake in Australia’s Network Ten by Oct. 1 to raise around $634 million to pay down debt.
A spokesman for Canwest confirmed the sale of its controlling stake in the Australian broadcaster via a block trade executed by Sydney-based Macquarie Capital Advisers.
The network’s parent, Ten Network Holdings, had its shares halted in Australian financial markets Thursday ‘to enable the sell down to be conducted in an orderly manner.’
Shares in Canwest Global shot up on the Toronto Stock Exchange following the news, going for $0.20, up from $0.09, in late-afternoon trading.
The sale ends months of speculation that Canwest Global would be forced by its US bondholders and senior lenders to sell its controlling stake to pay down a $3.8 billion debt load and avoid bankruptcy protection.
Canwest Global said in a statement a prior agreement with its debt holders will see the broadcaster repay $102 million in senior notes owed by divisions Canwest Media Inc. and Canwest Television Ltd. Partnership. Another $85 million will pay down a revolver loan with lender CIT Business Credit Canada, with the facility remaining available to the broadcaster after repayment. Canwest Global will also deposit $426 million with a trustee for US bondholders owed US$761 million, and with whom the broadcaster is negotiating a recapitalization plan along with senior lenders.
Besides raising much-needed cash, Canwest Global will further strengthen its balance sheet by eliminating around $582 million worth of Network Ten debt.
The next deadline for those debt talks has been extended from Sept. 25 to Oct. 6.
The sale follows a doubling of Network Ten’s share price since last March to the $1.27 (AUS$1.36) sale price secured by Canwest Global as part of its fully underwritten block trade.
‘While the advertising market remains difficult, there is evidence of the market fundamentals strengthening, such as an increase in the level of general inquiries for advertising for the medium to long term,’ said Network Ten chairman Nick Falloon in a statement, explaining his network’s recent ratings and share price rise.
To test the waters, Canwest Global raised around $123.7 million in August by reducing its stake in Network Ten from 57%.
With its final exit, Canwest Global ends an ownership interest in the net that began in 1992 when the late Izzy Asper sent lieutenant Peter Viner to Sydney to restore the troubled Australian broadcaster to health. Two years ago the company sold its TV and radio holdings in nearby New Zealand.
In better times, the Australian network spun off healthy profits for use by Canwest Global to build out its Canadian and international operations.
But that expansion is in the past as the Canadian broadcaster continues to wrestle with outstanding debt and a TV ad slump.
From Playback Daily