Amends terms of recapitalization transaction

Source: Canwest Global Communications

 WINNIPEG – Canwest Global Communications Corp. (“Canwest” or the “Company”) announced today that it has secured an equity investment commitment from Shaw Communications Inc. (“Shaw”) to invest in a restructured Canwest (“Restructured Canwest”) upon completion of the Company’s recapitalization transaction.
 
As previously disclosed, the terms of the Company’s Support Agreement with the members of the ad hoc committee of 8% senior subordinated noteholders (the “Ad Hoc Committee”) of Canwest Media Inc. (“CMI”) require that a new equity investment in Restructured Canwest be completed on or prior to the implementation of the Company’s recapitalization transaction.  In connection with this requirement, RBC Capital Markets, the Company’s financial advisor, conducted an extensive equity investment solicitation process over the past several months, which has resulted in Shaw being selected as the preferred equity investor.
 
“We are very pleased with the firm investment commitment from Shaw”, said Derek Burney, Chairman of Canwest’s Board of Directors.  “While there is much work still to be done, Shaw’s commitment represents an important step towards a successful financial restructuring of Canwest and is supported by the Company and the members of the Ad Hoc Committee.”
 
He added, “We look forward to benefitting from Shaw’s participation in a reinvigorated Canwest, as it is a strong business partner with a proven commitment to the Canadian television broadcasting industry. This significant investment in conventional television should be seen as a big vote of confidence in the industry and its future.”
 
The Company and Shaw have entered into a Subscription Agreement, pursuant to which Shaw will acquire a minimum 20% equity interest and an 80% voting interest in Restructured Canwest upon its emergence from the creditor protection proceedings commenced on October 6, 2009 under theCompanies’ Creditors Arrangement Act (Canada) (“CCAA”). Further, Shaw is prepared to fund cash payments to the affected creditors of the Company, CMI and certain of Canwest’s other subsidiaries which are involved in this CCAA proceeding and to also fund cash payments to Canwest’s existing shareholders in exchange for additional equity securities of Restructured Canwest.
 
In connection with the Subscription Agreement, the Company has entered into an amended Support Agreement with the members of the Ad Hoc Committee in order to amend and modify the terms of the recapitalization transaction.  In addition, the Company, Shaw and the members of the Ad Hoc Committee have entered into a related support agreement pursuant to which, among other things, the members of the Ad Hoc Committee have agreed to support the amended terms of the recapitalization transaction, including the equity subscription by Shaw.
 
The transaction contemplated by the Subscription Agreement and other transaction agreements contemplate that Restructured Canwest will be a private company, the shareholders of which will be comprised of Shaw and a limited number of existing major creditors.  Restructured Canwest would be managed and operated as a stand-alone business with its own Board of Directors.
 
Under the amended terms of the recapitalization transaction, affected creditors (including the members of the Ad Hoc Committee) that on completion of the recapitalization transaction would otherwise be entitled to receive at least 5% of the outstanding equity shares of Restructured Canwest will be entitled to elect to receive shares in full satisfaction of their claims.  All other affected creditors, including those affected creditors eligible to receive shares of Restructured Canwest but which have elected not to receive shares will receive cash 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.  Existing shareholders of Canwest will receive cash in exchange for their shares of Canwest.
 
Creditor approval of the recapitalization transaction is required by no later than April 15, 2010 and the recapitalization transaction must be completed by no later than August 11, 2010. Following successful completion of the recapitalization transaction, Restructured Canwest will be de-listed from the TSX Venture Exchange and will apply to cease to be a reporting issuer under Canadian securities laws.
 
The Subscription Agreement and other transaction agreements contain a number of representations, warranties and covenants of the parties.  Completion of the equity investment by Shaw is subject to the satisfaction of various closing conditions, including the receipt of requisite regulatory approvals including from the Canadian Radio-television and Telecommunications Commission, as well as court approvals.  The Subscription Agreement also contains an exclusivity covenant in favour of Shaw, as well as provisions relating to the capital structure and governance of Restructured Canwest upon its emergence from creditor protection under the CCAA.
 
The Subscription Agreement may be terminated by Shaw or Canwest in certain circumstances, including by Canwest in the event that the related support agreement between the Company, Shaw and the members of the Ad Hoc Committee is terminated.
 
The Subscription Agreement and other transaction agreements are the result of extensive arm’s length negotiations between the parties.  They will become effective and binding upon the receipt of approval of the Ontario Superior Court of Justice (Commercial List), for which Canwest intends to apply shortly.
 
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.

© Canwest Global Communications