Canwest agrees to sell controlling stake to Shaw

TORONTO - Canwest Global Communications Corp. said Friday it has agreed to sell a controlling stake of its company to Shaw Communications Corp.

Under terms of the agreement, Shaw will pick up "a minimum" 20 per cent equity interest and 80 per cent voting interest in Canwest's restructured television business. Shaw is also prepared to make cash payments to Canwest creditors.

Financial terms of the deal were not disclosed, pending court approval next week. The deal must also be approved by the Canadian Radio-television and Telecommunications Commission.

John Douglas, senior vice-president of public affairs with Canwest Global, said when the company filed for creditor protection last October, the terms stipulated any deal needed "at least $65 million" in new Canadian equity.

He added that the 80 per cent voting interest for Shaw is in place at least in part to meet Canadian regulatory requirements.

"The structure is the passport that's needed," he said.

As well, Shaw could potentially add another 15 per cent to its initial 20 per cent stake, depending on how many of Canwest Global's creditors opt for cash instead of equity in the new company.

Canwest Global is Canada's largest media company, which owns Global Television Network and operates 18 specialty television channels.

The National Post and other Canwest newspapers fall under a separate holding company, Canwest LP, and are unaffected by this announcement.

The proposed investment from Shaw will not occur until Canwest Global emerges from creditor protection, which is expected to be about six months away.

There are four hurdles for Canwest Global to overcome before it does emerge from creditor protection: it must resolve all outstanding claims against Canwest Media Inc. entities; hold a creditors meeting to secure enough votes to pass; obtain regulatory approval from the CRTC; and obtain final court approval.

Once complete, Canwest Global will emerge as a private company with a new management team and board of directors, the release said.

A memo sent to Canwest Global broadcast employees Friday morning noted that competitor Corus Entertainment, which is owned by Shaw, is not involved.

"We are very pleased with the firm investment commitment from Shaw," Derek Burney, chairman of Canwest Global's board of directors, said in a release. "Shaw's commitment represents an important step towards a successful financial restructuring of Canwest."

Peter Viner, interim president of Canadian broadcasting with Canwest Global, said in the memo the proposed deal with Shaw does not impact any current operations.

"We will continue to operate as we have throughout the course of the filing and will continue to make business decisions where they make sense for the long-term health of the company," he said.

The company said the agreement with Shaw has the support of Canwest Global's board and its creditors.