(Winnipeg - February 19, 2010) Canwest Global Communications Corp (“Canwest” or the “Company”) announced today that the Ontario Superior Court of Justice (Commercial List) (the “Court”) has granted an order (“Approval Order”) approving and authorizing the Company to enter into a Subscription Agreement with Shaw Communications Inc (“Shaw”) and the other transaction agreements relating to Shaw’s commitment to make an equity investment in a restructured Canwest (“Restructured Canwest”) upon completion of the Company’s proposed recapitalization transaction.
As previously disclosed, the Subscription Agreement, the related amendment to the support agreement (the “Support Agreement Amendment”) between the Company and the members of the ad hoc committee of 8% senior subordinated noteholders (the “Ad Hoc Committee”) of Canwest Media Inc. (“CMI”) and the related support agreement between Canwest, Shaw and the members of the Ad Hoc Committee (the “Shaw Support Agreement”) required the Approval Order to become effective and binding.
Under the Subscription Agreement, Shaw has agreed to purchase $95 million in Class A Voting Shares of Restructured Canwest, representing a 20% equity interest and an 80% voting interest upon its emergence from the creditor protection proceedings under the Companies’ Creditors Arrangement Act (Canada) (“CCAA”). Based on this investment, Restructured Canwest has an implied equity value of $475 million.
Shaw has also agreed to fund cash payments to certain affected creditors of the Company, CMI and certain of Canwest’s other subsidiaries that are involved in this CCAA proceeding and also to fund cash payments to Canwest’s existing shareholders, in exchange for additional Class A Voting Shares of Restructured Canwest. This would result in Shaw’s equity interest in Restructured Canwest increasing above the initial 20%. Members of the Ad Hoc Committee have the right to participate pro rata with Shaw in the funding of the additional commitment.
Under the amended terms of the recapitalization transaction, affected creditors (including the members of the Ad Hoc Committee) who would otherwise be entitled to receive at least 5% of the outstanding equity shares of Restructured Canwest may elect to receive shares in full satisfaction of their claims. All other affected creditors, including those eligible to receive shares of Restructured Canwest but which have elected not to receive shares, will receive cash payments to extinguish their claims, in amounts equal to the value of the equity that they would have otherwise received under the amended transaction involving Shaw.
As noted above, holders of Canwest’s existing 177.6 million shares will receive cash payments in exchange for their shares equivalent in the aggregate to 2.3% of the implied equity value of Restructured Canwest, or approximately $11 million in aggregate.
The Subscription Agreement, the Support Agreement Amendment and the Shaw Support Agreement contain a number of representations, warranties and covenants of the parties, including an exclusivity covenant in favour of Shaw and provisions relating to the capital structure, governance and shareholders liquidity rights of Restructured Canwest upon its emergence from creditor protection under the CCAA. More information can be found at www.canwest.com and on the Monitor’s website at http://cfcanada.fticonsulting.com/cmi.
Completion of the equity investment by Shaw is subject to the satisfaction of various closing conditions, including the receipt of regulatory approval from the Canadian Radio-television and Telecommunications Commission, creditor and Court approvals of the Company’s restructuring plan.
The Subscription Agreement may be terminated by Shaw or Canwest in certain circumstances. In certain limited circumstances, Canwest would be required to pay Shaw a termination fee in the amount of $5 million and reimburse Shaw for its out-of-pocket fees and expenses up to a maximum amount of $2.5 million (the “Expense Reimbursement”). The Expense Reimbursement is also payable to Shaw on the closing of the equity subscription transaction.
As previously disclosed, under the terms of the various agreements, creditor approval of the recapitalization transaction is required to be obtained no later than April 15, 2010, and the closing of the recapitalization transaction must occur no later than August 11, 2010. The amended recapitalization transaction contemplates that Restructured Canwest will be a private company following its emergence from CCAA proceedings.
The Company continues to work with its various stakeholders in order to resolve outstanding matters in connection with its planned emergence from creditor protection under the CCAA.
The Subscription Agreement pertains only to Canwest, CMI and certain of Canwest’s other subsidiaries. It does not relate to Canwest Limited Partnership, Canwest (Canada) Inc. and their subsidiaries, which operate Canwest’s newspaper publishing and online operations and which are the subject of a separate Court-supervised financial restructuring process.
Forward Looking Statements:
This news release contains certain forward-looking statements about the objectives, strategies, financial conditions, results of operations and businesses of Canwest. Statements that are not historical facts are forward-looking and are subject to important risks, uncertainties and assumptions. These statements are based on the Company’s current expectations about its business and the markets in which it operates, and upon various estimates and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events if known or unknown risks, trends or uncertainties affect the Company’s business, or if its estimates or assumptions turn out to be inaccurate. As a result, there is no assurance that the circumstances described in any forward-looking statement will materialize. Significant and reasonably foreseeable factors that could cause the Company’s results to differ materially from its current expectations are discussed in the section entitled "Risk Factors" contained in the Company’s Annual Information Form for the year ended August 31, 2009 dated November 26, 2009 filed by Canwest Global Communications Corp. with the Canadian securities commissions (available on SEDAR at www.sedar.com ), as updated in its most recent Management's Discussion and Analysis for the three months ended November 30, 2009. The Company disclaims any intention or obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason.
About Canwest Global Communications Corp.
Canwest Global Communications Corp. (www.canwest.com), (TSX-V: CGS and CGS.A) is Canada’s largest media company. In addition to owning the Global Television Network, operating 18 industry-leading specialty channels and having ownership in 5 specialty channels, Canwest is Canada’s largest publisher of English language paid daily newspapers and owns and operates more than 80 online properties.
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For further information:
Media Contact:
John Douglas, Senior Vice President, Public Affairs
Tel: (204) 953-7737
jdouglas@canwest.com
Investor Contact:
Hugh Harley, Director, Investor Relations
Tel: (204) 953-7731
hharley@canwest.com
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