The proposed C$2.3 billion ($2.1 billion) purchase of Alliance Atlantis by Goldman Sachs and CanWest Global Communications is one step closer to reality as Canada’s broadcast regulator greenlit Friday the splitting up of the company and approved the appointment of a trustee for the specialty channel assets while the deal is examined by regulators.
Announced in January, the takeover of Alliance Atlantis would see CanWest Global taking effective control of the company’s 13 specialty webs while its 50% stake in the “CSI” franchise would go to Goldman Sachs.
The fate of the Alliance Atlantis-controlled Movie Distribution Income Fund remains unclear, and the trustee repping minority shareholders of the income fund has gone to court to try to force AAC to disclose more information about the structure of the deal, arguing that their OK is needed for it to proceed. AAC denies that such approval is required. A court date to hear the case has been set for June 15.
The Canadian Radio-Television & Telecommunications Commission has yet to examine the proposed takeover of the 13 Canadian specialty channels — the portion of the transaction over which it has jurisdiction. CanWest has a tough row to hoe, because while Goldman Sachs is kicking in the majority of the equity for the takeover, CanWest must convince the CRTC and its no-nonsense chairman, Konrad von Finckenstein, that CanWest will nonetheless have “effective control” of the specialty webs. Canadian regulatory law prohibits Canadian broadcasters from being controlled by foreign entities.
In addition, CanWest announced Friday it has entered into a deal to take its income trust assets private. Subsid CanWest MediaWorks has offered to purchase the 26% of the outstanding shares in CanWest MediaWorks Income Fund that it does not already own for C$9 ($8.34) per share, a 17% premium over the closing price on Feb. 6, when it announced its intention to go private.
Move follows the federal government’s removal of income trust tax breaks in November. The fund’s unitholders are scheduled to meet and vote on the proposal in early July. If they approve the move, it will close in mid-July.