CanWest eyes sale of Network Ten stake

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TORONTO -- Canadian broadcaster CanWest Global Communications Corp. on Thursday sent its strongest signal yet that it may sell its majority 56.4% stake in Australian broadcaster Network Ten by rejigging a possible deal for minority shareholders.

Winnipeg, Manitoba-based CanWest Global and Network Ten said in a joint statement that the Australian network will help the Canadian company find a possible buyer in a sales process that will run through Aug. 31.

"Ten Network Holdings and Ten Group have today entered into an agreement with CanWest to provide assistance to CanWest," both companies announced.

In return, CanWest Global agreed that any poTential sale of Network Ten will require an all-or-nothing offer, protecting the interests of minority shareholders.

Tom Strike, president of CanWest MediaWorks International, was not available for comment while he held board meetings in Australia. But executives at parent CanWest Global privately said the all-for-one structuring of any Australian sale should be seen in the context of the Canadian company's October hiring of investment bank Citigroup to consider options for its majority stake in Network Ten, including a sale or converting its stake to a controlling interest.

That move came as the Australian government introduced legislation to repeal foreign media-ownership restrictions. CanWest Global executives insist that move opened up another option, namely converting its subordinated debentures into Network Ten equity shares so that it owns 56.4% of the Australian broadcaster rather than the current combination of 14.8% in equity shares and debt security in the form of debentures.

Such a move would give CanWest Global the controlling equity stake it has long coveted in Network Ten, according to company executives.

Canadian financial analysts in recent weeks have speculated on what CanWest Global might do with an estimated $1.5 billion in proceeds from a sale of its Australian and New Zealand assets.

Ben Mogil, an entertainment analyst with Toronto-based Westwind Partners, ventured in a Dec. 6 investment report that CanWest Global may well sell its South Pacific assets and either plough the proceeds into purchasing a Canadian specialty channel broadcaster, or purchasing the minority stake in an income trust that runs its Canadian newspaper assets.

CanWest Global executives privately discount any speculation on where they might spend money that would come from possibly leaving the South Pacific. They insist the Network Ten holding has been an impressive cash cow over the years, a factor that must be weighed against any reinvestment of capital in the Canadian market.
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