CALGARY – Shaw Communications will take full ownership of Canwest Global on Wednesday, the company announced this afternoon, just after the CRTC said it approved of the transaction.
"We are pleased with the comprehensive and expeditious review of the transaction conducted by the CRTC. We felt that we had a constructive and positive dialogue with the CRTC, and other interested parties, with respect to the transaction’s impact on the Canadian broadcasting industry,” said CEO and vice-chair Jim Shaw, in a release.
“We look forward to strengthening the Industry going forward through innovation, technology enhancements, additional investment, and a commitment to strong and economically viable Canadian programming.”
As part of the decision, the CRTC requires that Shaw contribute approximately $180 million in new benefits to the broadcasting system over the next seven years. “Most of this contribution will be used to create attractive new programming on Canwest services, construct digital transmission towers and provide a satellite solution for over-the-air viewers whose local television stations do not convert to digital. No new targeted safeguards were imposed on Shaw by the CRTC in connection with the transaction. Any issues of increased concentration and integration arising from overall industry consolidation will be the focus of an industry-wide hearing in May 2011,” notes the Shaw release.
On May 3, 2010, Shaw completed the purchase of approximately 29.9% of the voting shares and 49.9% of the equity shares of CW Investments from certain entities affiliated with Goldman Sachs Capital Partners. As part of the Initial purchase, Shaw also acquired an option to acquire the remaining voting and equity shares of CW Investments held by the GS Entities, which option Shaw will exercise immediately before closing of the transaction.
Closing of the transaction is scheduled for October 27. The aggregate purchase price to be paid by Shaw for the Canwest broadcasting assets, including the amounts paid prior to closing to acquire the shares of CW Investments from the GS Entities and the net debt of C$815 million to be assumed at the CW Media Group level, will be approximately C$2 billion.
The acquisition price of approximately $2 billion represents a transaction multiple of approximately 8.5 times 2010 proportionate EBITDA and compares favourably to recently announced media transactions and comparative trading multiples. The acquisition is immediately accretive to Shaw from a free cash flow perspective
To complete the transaction, Shaw is required at closing to fund total payments of approximately C$500 million, which will be made to pay Canwest bondholders, other affected creditors of Canwest and Canwest shareholders, as well as to pay other transaction costs. The acquisition price includes approximately C$815 million of debt outstanding at the CW Media Group level, comprised of a term loan of approximately US$400 million, liabilities under related currency swap agreements and US$335 million in respect of 13.5% senior unsecured notes.
In conjunction with the closing, Shaw intends to refinance the CW Media Group term loan. The refinancing, including the breakage of the currency swaps, will generate substantial interest savings.
In aggregate, Shaw will require approximately C$1 billion to complete the transaction and refinance the outstanding CW Media Group term loan. Shaw has secured an additional C$500 million credit facility from a syndicate of Canadian banks to provide additional liquidity and, together with its existing credit facility, the company now has C$1.5 billion of available credit to fund these payments.
"CRTC approval was the last remaining step of the process to close the transaction. We are pleased to be moving forward and are excited about our ability to offer a variety of programming and other compelling content across multiple platforms to better meet the needs of our customers in an on-demand environment. The marriage of content and distribution will enable us to take advantage of new opportunities that will be beneficial for all of our stakeholders, including our customers, employees and shareholders", said Peter Bissonnette, president.
