Judge says TV deal did not purposefully exclude other parties

Source: Ottawa Citizen

The Ontario Court justice who ruled in favour of Shaw Communications Inc.'s contentious takeover of Canwest Global Communications Corp.'s television operations says the deal was made in "good faith" and did not purposefully exclude other interested parties now objecting to it.

However, in an 18-page decision released Monday, Justice Sarah Pepall did say one of those objectors -- U.S. investment giant Goldman Sachs Group Inc. -- remains a "major question" in Canwest's restructuring efforts.

"There was nothing unfair or unbalanced about the process," Pepall said about a weeks-long search for an investor to take a stake in Canwest Media Inc. (CMI), run by RBC Capital Markets.

Goldman, which jointly owns 13 highly profitable specialty channels with the Winnipeg-based media company through subsidiary CW Investments Co., has complained loudly that the sale was designed to exclude it. It says Canwest, now controlled by its bondholders, has left it out in order to eventually "disclaim" or rip up their multibillion-dollar deal.

But in her ruling released Monday, Pepall said Goldman was "in no worse position" now than before Shaw's approval to take on a 20-per-cent-equity stake and 80-per-cent voting control for about $95 million.

"(Goldman) are not creditors and none of their rights will be affected or confiscated if the Shaw (deal) is approved," she wrote.

Moreover, she said that Canwest has expressed that it must still cut a deal with the U.S. bank before it can emerge as a going concern.

"The parties will jointly pursue any consensual amendment to the shareholders agreement" of CW Investments, she wrote.

Goldman had backed a last-minute bid from Catalyst Capital Group and the Asper family for the troubled TV assets on Feb. 19. Pepall rebuffed that bid on the grounds that it was not made within the rules set out by the court-appointed monitor for the sale.

"There was nothing stopping either (Catalyst or Goldman) from challenging the process at an earlier stage, or alternatively participating in it," she said.

Shaw's offer, which was endorsed by the monitor, Canwest and the committee representing the bulk of the company's debtholders, was in danger of being dropped if it did not receive approval at the Feb. 19 motion hearing.

The judge said the bid, which still must receive regulatory approval, also put a higher equity value on the assets than the Catalyst-led offer.

"For these reasons, I granted the relief requested" by Canwest and Shaw, she said. However, "a major question continues to revolve around the CW Investments shareholder agreement and the relationship between (Canwest) and (Goldman)."

She urged Canwest and Goldman to reach a "commercial resolution" on the agreement struck in 2007, and to "move forward and have a reasonable dialogue."

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