The co-owners of 13 Canwest Global Communications specialty channels on Tuesday traded punches in a Toronto courtroom, with the insolvent broadcaster arguing that financing partner Goldman Sachs & Co. has threatened its restructuring.
Canwest Global lawyer Lyndon Barnes told the Ontario Superior Court of Justice that the Wall Street bank has upended its court-directed creditor protection proceedings by attempting to renegotiate the terms of their joint specialty channel division, which includes HGTV Canada, History Television and Showcase.
‘It will affect not only people involved, but it’s having a detrimental effect on the restructuring,’ Barnes told Justice Sarah Peppal during an update hearing on Canwest Global’s court-directed restructuring.
Goldman Sachs lawyer Kevin McElcheran told the court it did not seek an unfair advantage over the Canadian broadcaster, or a sale of the profitable specialty channels.
Instead, the Wall Street bank aimed to ‘undo the manipulation’ that occurred when Canwest Global closed down a holding unit for the 13 former Alliance Atlantis specialty channels that Goldman Sachs established in 2007 to protect its ownership stake in the joint venture.
Goldman Sachs, in pre-hearing filings, argued that Canwest Global tipping the 13 specialty channels into creditor protection unfairly placed them under the control of U.S. bondholders, who now control the debt-laden broadcaster’s destiny.
Goldman Sachs’ filings added it may agree not to force an early sale of the 13 specialty channels if Canwest Global restored its numbered holding company to keep the US bondholders at bay.
The 2007 shareholders agreement between Canwest Global and Goldman Sachs includes drag-along rights, which would allow the Wall Street bank, as a majority shareholder, to force Canwest Global as a minority shareholder to join in the sale of the specialty channels.
Canwest Broadcasting president Peter Viner on Friday offered no comment when asked during an analyst call whether Goldman Sachs has indicated whether it will exercise those drag-along rights.
Canwest Global also told Justice Pepall that the shareholders agreement did not preclude it from dissolving Goldman Sachs’ numbered company to stop a forced sale of the 13 specialty channels after it filed for creditor protection on Oct. 6.
From Playback Daily
