Canwest sells Australian TV stake

Shares of Canwest Global Communications Corp. soared Thursday after the media company  announced it has sold its stake in Australian broadcaster Ten Network Holdings Ltd.

The shares were up 7½ cents to 20 cents, or 60 per cent, late in the trading day on the Toronto Stock Exchange.

Australian investment bank Macquarie Capital Advisers agreed Wednesday to pay $634 million for all of Canwest's ownership interest.

"The sale of the shares of Ten Holdings is expected to facilitate continuing discussions with the ad hoc committee [of lenders] regarding a recapitalization transaction," the company said in a statement.

Canwest has tried repeatedly to sell its Australian media assets — which it bought 12 years ago — as it struggles to get its $4-billion debt under control. Creditors have granted 12 extensions of payment deadlines since it first defaulted this spring. The latest expire on Oct.  6.  

Canwest plans to use $102 million to repay debt owed by subsidiaries Canwest Media and Canwest Television Limited Partnership. Another $85 million will be used for cash and to pay down a line of credit to CIT Business Credit Canada Inc.

Canwest also agreed to deposit $426 million with a trustee for the holders of its eight per cent senior subordinated notes. The transaction also lowers Canwest's total debt because it removes the debt of Ten from the parent company's books.

Ten shares have doubled

The sale is expected to be completed by Oct. 1. The price is a 4.8 per cent discount to what Ten's shares were trading at before the announcement. Ten shares have more than doubled as Australia's economy rebounds from the depth of the global recession last year. 

Canwest, the Winnipeg-based media giant, owns daily newspapers in most major Canadian cities, including the National Post, the Calgary Herald, and the Vancouver Sun and the Global TV network. It also owns specialty channels such as Showcase and the History Channel with Goldman Sachs. 

Canwest has sold numerous other assets, including some of its local E! channel branded stations in Canada, indirect interests in four Turkish radio stations, and American political magazine the New Republic.