Canwest, Goldman Sachs battle heats up

Dispute over 13 Canadian cable channels escalates

TORONTO -- Embattled Canadian broadcaster Canwest Global Communications Corp. has told an Ontario court it was forced to put 13 local cable channels under creditor protection to stop Wall Street partner Goldman Sachs & Co. from selling its "crown jewels."

In an Ontario Superior Court of Justice filing, Canwest Global corporate development president Thomas Strike confirmed the insolvent broadcaster closed down a holding unit for the cable channels, 4414616 Canada Inc., that Goldman Sachs set up in 2007 as part of a joint venture.

Strike stated that the shareholders agreement between Canwest Global and Goldman Sachs did not bar the dissolving of the holding unit, and that any sale of the 13 cable channels would be "disastrous" as the Canadian broadcasters restructures.

Canwest Global confirmed that it moved shares from its joint venture with Goldman Sachs to its own holding company, Canwest Media, as it negotiates an overall recapitalization with U.S. bondholders and other senior lenders (HR, Oct. 6).

As part of its 2007 shareholders agreement with Canwest Global, Goldman Sachs was to either see its stake in the 13 cable channels either bought out starting in 2011, or be put up for sale on the open market.

But Canwest Global told the Ontario court it felt compelled to ring-fence the cable channels to prevent a premature sale.

Rival broadcasters Astral Media and Corus Entertainment in recent months have publicly stated they covet some or all of the Canwest Global cable channels, which are among the most profitable in the Canadian market.

They include Food Network Canada, Showcase and BBC Canada.

Goldman Sachs, in its own recent court filings, has urged the Ontario court to restore the holding unit for the 13 cable channels to prevent U.S. bondholders from exerting undue control over the assets.

Ontario Superior Court Judge Sarah Pepall is expected to hold a hearing to resolve the tussle between Canwest Global and its Wall Street partner over the 13 cable channels.