Eyes turn to Canwest as Globalive blocked
The newest player in Canada's mobile market fails CRTC's foreign ownership test, a result that could impact Canwest's overhaul.
The CRTC has ruled Globalive Communications Corp. failed Canada’s foreign ownership test to operate as a new cell phone provider, a ruling that could affect the overhaul at Canwest.
The regulator ruled on Thursday that Globalive is controlled by Egyptian phone giant Orascom Telecom, and so falls short of Canadian ownership requirements set out in the Telecommunications Act.
During recent CRTC hearings, Globalive proposed that Orascom would hold a 65.1% equity stake in the mobile phone provider and 33% of its voting power.
Rogers Communications, Bell Canada and other incumbent mobile players said Globalive should be denied a domestic carrier license as Orascom will fully underwrite its Canadian launch, erasing any notion that Canadian hands control its destiny.
The CRTC sided with the incumbent carriers against Globalive.
‘When these levers are considered in concert with Orascom’s provision of the vast majority of Globalive’s debt financing, the commission finds…that Orascom has the ongoing ability to determine Globalive’s strategic decision-making activities,’ the CRTC said.
As existing Canadian mobile phone players savor their win, Canwest Global Communications Corp. will sort through the ruling for possible impact on its own upcoming bid to enable US bondholders to swap debt for equity in a restructured broadcaster.
U.S. bondholders including GoldenTree Asset Management and Beach Point Capital Management currently hold 70% of debt in Canwest Media Inc., a holding company for Canwest Global.
Canwest Global in 2007 managed to secure CRTC approval to allow Goldman Sachs & Co. to largely finance its takeover of former Alliance Atlantis specialty channels.
During upcoming CRTC hearings on its court-directed restructuring, Canwest Global faces a similar foreign ownership test as it attempts to convince the regulator it will remain in Canadian control as its destiny falls into the hands of U.S. bondholders post-recapitalization.
From Playback Daily