WINNIPEG – As has been long rumored, CanWest Global Communications announced today it will offer an interest in its Canadian newspaper and interactive media businesses (with the exception of the National Post) via an initial public offering ("IPO") in Canada structured as an income fund.
CanWest MediaWorks Income Fund (the "Fund") has filed a preliminary prospectus with all securities regulatory authorities in Canada. Total proceeds from the sale to CanWest MediaWorks Inc. are expected to be approximately $1.45 billion.
The newly-created Fund will, on completion of the offering, indirectly hold through CanWest Mediaworks Limited Partnership (the "Partnership") an approximate 28% interest in CanWest’s Canadian newspaper and interactive media businesses such as canada.com.
Scotia Capital Inc. and RBC Capital Markets will co-lead a syndicate of underwriters for the IPO and will act as joint book runners for the transaction.
The newspaper operations – the former Southam/Hollinger chain – include some of Canada’s oldest and most respected metropolitan daily newspapers — including the Times Colonist (Victoria), The Vancouver Sun, The Province (Vancouver), Edmonton Journal, Calgary Herald, The Star Phoenix (Saskatoon), Leader- Post (Regina), The Windsor Star, Ottawa Citizen and The Gazette (Montreal).
These titles, including their online editions and classified web sites (such as working.com and driving.com), together with Nanaimo Daily News, Alberni Valley Times, the new free-distribution, youth-oriented Dose, 21 non-daily newspapers distributed in various communities in B.C., and CanWest’s investment in Metro will form the main group of assets being taken to market in this transaction.
These operations will be joined by CanWest’s Internet and electronic publishing arm, which includes the internet portal canada.com, FP infomart.ca and FP DataGroup.
The net proceeds of the equity offering, together with $830 million in cash from new term and revolving credit facilities will be used by the new partnership to acquire these media businesses from one of CanWest’s subsidiaries, CanWest MediaWorks Inc.
The term and revolving credit facilities are part of a total $1 billion, five-year senior unsecured credit facility which will be available to the partnership and which has been underwritten by The Bank of Nova Scotia as lead arranger and bookrunner and Royal Bank of Canada as syndication agent. CanWest MediaWorks Inc. will use the proceeds from the sale to retire certain existing debt.
"We have been considering this transaction for some time, as a way to unlock, what we believe is significant shareholder value," said Leonard Asper, CanWest’s president and CEO in this morning’s press release. "We believe that this offering will be well received by the investing public."
Concurrently with this announcement, CanWest MediaWorks Inc. announced that it had initiated tender offers and consent solicitations for any and all, of its 10 5/8% senior subordinated notes due 2011 and 7 5/8% senior unsecured notes due 2013. In the aggregate, these notes have an outstanding principal amount of approximately $744 million (US$625 million).
As part of this tender offer process, CanWest MediaWorks Inc. is seeking noteholders’ consents to amend certain provisions of these notes and related note indentures. Completion of the IPO and spin out of its newspaper and online media businesses is conditional upon successful completion of the tender offer and consent solicitation process for these notes. CitiGroup Global Markets Inc. has been retained as the dealer manager in respect of the tender offers.
The 1.45 billion in proceeds, together with proceeds from a new $500 million five-year senior secured revolving credit facility which has been underwritten by The Bank of Nova Scotia and Royal Bank of Canada will be used to retire debt under existing senior credit facilities and fund the tender offers and consent solicitations.
CanWest will retain 100% ownership of the National Post, and its Canadian broadcasting and related operations. On completion of the contemplated transactions, it will retain an approximate 72% interest in the partnership. It will also continue to hold all of CanWest’s international media businesses.
