Goldman Sachs moves to block Shaw deal

Canwest's jilted partner claims 'remarkable abuse' of creditor protection by Shaw and bondholders. The debt-laden broadcaster has also reportedly sold its corporate jet.

Goldman Sachs & Co. has asked the Ontario Court of Appeal to block Shaw Communications and US bondholders from taking control of a restructured Canwest Global Communications.

‘This CCAA restructuring proceedings has involved a remarkable abuse of the CCAA’s process and a total failure of Canwest corporate governance for the purpose of extracting the most value possible for the [US] noteholders,’ the Wall Street bank said a legal brief filed Wednesday.

Goldman Sachs, as it appeals a lower court ruling to give Shaw control of a recapitalized Canwest Global, said the US bondholders see value not in ‘Canwest’s insolvent conventional TV business,’ but in the 13 profitable cable channels the broadcaster has operated as CW Media on behalf of the US investment bank in 2007.

Following the blessing of the Ontario Superior Court of Justice, Shaw stands to acquire at least 20% of Canwest Global’s equity and 80% of its voting stock after the debt-laden broadcaster completes its restructuring.

Shaw’s equity stake will likely exceed 20% after US bondholders and other senior lenders decide whether to take cash rather than shares in a restructured Canwest Global.

Goldman Sachs claims the proceedings under the Companies’ Creditors Arrangements Act aim not to get Global Television back on its feet, but to force the bank to ‘surrender value or else to force a CCAA disclaimer’ of the 2007 CW shareholders agreement.

Goldman Sachs pointed to an earlier failed Catalyst/Leonard Asper bid for a controlling stake in Canwest Global, which did not call for changes to the CW shareholders agreement, as evidence that the renegotiation called for by Shaw was ‘not necessary’ for a restructuring of Canwest and served only to transfer value to the U.S. bondholders.

Without the Court of Appeal setting aside the lower court decision, Goldman Sachs said its showdown with Shaw and the U.S. bondholders will ‘continue down a path of acrimonious and time-consuming litigation,’ in which Goldman Sachs will, it added, ‘ultimately prevail against any attempted disclaimer of the CW shareholders agreement.’

A separate March 2 court monitor report on the Canwest Global restructuring reveals the debt-laden broadcaster reached an agreement on March 1 to sell its corporate aircraft, a 1988 BAE 125 series craft, with the deal to close before March 15.

The court report added that the US bondholders approved the latest asset sale at Canwest Global and Shaw did not oppose.