SYDNEY — For the first time since bailing out Australia’s once financially crippled Network Ten, CanWest may soon find its preeminent position in the now hugely profitable web is vulnerable.
That’s because federal treasurer Peter Costello has made last-minute orders to vary the terms of Ten’s long-awaited partial IPO and Australian Stock Exchange listing, which is expected to fetch A$375 million ($255 million), that may dilute CanWest’s hold on the web.
Late Friday, Costello demanded two CanWest imposed conditions be removed before the IPO proceeded. Namely, a 40% voting limit imposed on shareholders, and CanWest having preemptive rights over the shares of Ten regional affiliate TNQ if they were to be sold. These conditions were viewed as CanWest either attempting to entrench its influence over Ten, or, at least, prevent anyone else from exercising control.
The April 4 listing is for the 24% of Ten stock that the government ordered CanWest to sell in order to reduce its 76% economic and 52% voting stake to the 57.5% economic and 15% voting stake it held before financing the acquisition of shares from departing stakeholders to prevent hostile parties gaining a foothold in the web.
But those late 1996 transactions prompted the Australian Broadcasting Authority and the Foreign Investment Review Board to find that CanWest controlled Ten in breach of media ownership laws that both bar foreigners from holding more than 15% voting stock in networks and ban aliens from controlling webs.
CanWest then decided it would sell the offending shares to affiliate TNQ, which in turn would use the shares for an IPO.