Canwest selling down Network Ten stake

Canadian broadcaster set to secure $680 mil

Updated: Sept 24, 2009, 12:55 PM ET

Embattled Canadian broadcaster Canwest Global Communications is selling its 50.1% stake in Australian broadcaster Network Ten, the net confirmed Thursday.

Trading in Ten Group Holdings' shares on the Australian Stock Exchange were halted while the sell-down took place. It is expected to net the Canadian broadcaster AUS$680 million ($590 million).

Stock in Ten Network Holdings Ltd. last traded at AUS$1.36 per share, valuing the broadcaster and outdoor media group at $1.14 billion.

A spokesman for Canwest Global in Winnipeg, Manitoba, confirmed that the broadcaster has begun to sell down its stake in Australia's Network Ten to pay immediate debt obligations and strengthen its balance sheet.

Macquarie Capital Advisers Ltd. is to sell the ownership interest in Ten Network Holdings Ltd. via a block trade to raise around CDN$634 million ($590 million). The sale is expected to be completed by Oct. 1.

Canwest Global in August began to dilute its stake in the Australian broadcaster with an equity offering to raise about CAN$123.7 million ($116 million).

The Canadian broadcaster first took control of Network Ten in 1990 with a 57% stake, as Ten was losing $2 million per week. Before long, the Australian broadcaster was back to profitability, and became a cash cow for Canwest Global.

The Canadian broadcaster first explored its options with Network Ten and its then-57% stake in 2006 when Australia relaxed its media ownership rules.

After failing to find a buyer, Canwest Global in 2007 took Network Ten off the market and completed a share exchange plan to give it majority control.

Selling off its Network Ten stake will end two decades of international expansion for the Canadian broadcaster, as it looks to pay down debt after a series of expensive acquisitions back home.

Besides the $590 million Canwest Global will gain by selling off its controlling stake, it will also see around $600 million in debt from Network Ten removed from its balance sheet.

That would go some ways to easing Canwest Global's crippling debt load, which currently stands at about $4 billion.

The sell-down of the stake also comes as Canwest Global continues debt renegotiation talks with U.S. bond-holders and senior lenders to stave off bankruptcy proceedings. The next deadline for those talks is Sept. 30.

Canwest Global has received a series of reprieves from its lenders as it cuts costs and sells off assets in a bid to remain in business.

Ten said in a market update its unconsolidated full year results to Aug. 30 showed television earnings of AUS$142 million and group earnings of AUS$151 million. That's down on the 2008 TV earnings of AUS$209 million. Ten is also carrying about AUS$450 million in debt.

Ten chairman Nick Falloon said "While the advertising market remains difficult, there is evidence of the market fundamentals strengthening, such as an increase in the level of general inquiries for advertising for the medium to long term."

The company is due to release its full year results on Oct. 22.

Ten has enjoyed a ratings resurgence this year and is leading the ratings year to date in its target 16-39 and18-49 demographics. That's largely because of the success of new hit shows such as "Masterchef Australia" and "Talkin Bout Your Generation."

Pip Bulbeck reported from Sydney; Etan Vlessing reported from Toronto.