TORONTO – An Ontario court made a number of mistakes when it approved a deal that allowed Shaw Communications to buy CanWest Global Communications’ TV assets, say documents filed in court this week by Goldman Sachs.
Amongst the numerous “fundamental errors” that Goldman has alleged was “failing to properly assess the integrity of the fundamentally unfair (bidding) process”. Goldman claims the process was designed to exclude any bidders who did not agree to sign a non-disclosure agreement which prevented them from speaking with the U.S. investment bank, as Cartt.ca has reported.
Goldman Sachs is the key creditor and the 65% equity holder of CW Media Holdings, the division which owns and operates CanWest’s specialty TV channels. It partnered with Canwest to finance the acquisition of Alliance Atlantis Communications and its 13 specialty TV channels in 2007.
Shaw’s offer, which still requires final consent from the court, could quash the shareholder agreement between Goldman and Canwest, which in turn would prevent Goldman from selling its stake in the channels.
Canwest’s board backed an offer from Shaw for a 20% stake in CanWest and 80% voting control last month. Goldman supported a rival offer spearheaded by Toronto private equity firm Catalyst Capital Group for a 32% economic stake in CanWest. That offer, which also has the backing of Canwest’s founding Asper family, would preserve Canwest’s agreement with Goldman.
A ruling on whether a formal appeal will be allowed to proceed is expected by next week.
In related news, CanWest was granted an extension of its bankruptcy protection from March 31 to June 15 to allow it more time to restructure.
– Lesley Hunter
