Canwest's Ten Network stake diluted

Aussie broadcaster paying down debt with equity offer

TORONTO -- Struggling Canwest Global Communications Corp. is to dilute its stake in Australian broadcaster Ten Network Holdings Ltd. with an equity offering to raise around CAN$123.7 million ($116 million).

Canwest Global will see its stake in Ten Network fall from around 56.5% to 50.1% after the Australian network unveiled a fully underwritten equity offering of around AUS$138 million ($116 million).

The offering, led by Macquarie Capital, will place 120 million new shares in the Australian broadcaster at AUS$1.15 per share ($0.97), which represents an 8.4% discount to Ten Holding's closing price on August 3.

Ten Network looked to sell some stock last February, but pulled the offering due to adverse market conditions.

Canwest Global added that Ten Network will use the proceeds of the equity offering to pay down debt and strengthen its balance sheet. The Australian broadcaster also expects to remain within the requirements of its banking covenants at the end of its current fiscal year on August 31.

Canwest Global has struggled with its own CAN$3.8 billion ($3.52 billion) debt load amid a TV ad slump in Canada.

Canadian analysts predict Canwest Global will eventually sell its controlling stake in Australian network under better market conditions to raise much-needed cash and keep lenders at bay as it restructures its own balance sheet.