Canwest will see holding reduced in Ten Network

Canwest Global Communications Corp. has announced that it will have a smaller ownership in Australia's Ten Network Holdings Ltd. as a result of a share sale expected to raise about $123 million.

Ten Network Holdings plans to sell 120 million new shares at $1.15 (Australian) per share, which is an 8.4 per cent discount to the closing share price on Aug. 3.

The equity offering will dilute Canwest’s ownership stake of Ten Holdings from approximately 57 per cent to slightly more than 50 per cent.

Canwest said it won't receive any proceeeds from the fully underwritten equity offering and is not selling any of its approximately 750 million Ten Holdings shares.

Ten Holdings intends to use the proceeds from the sale to pay down debt.

The move followed an earlier statement from Canwest that the limited partnership that runs most of its daily newspapers will not make an $18.5 million US interest payment on some of its senior subordinated debt. The interest payment was due on Aug. 1.

Canwest said that under the terms of the notes, the noteholders will not be in a position to demand payment of the roughly $400 million US principal amount of outstanding notes before Sept. 1.

The company said the decision not to pay the interest will allow the partnership to continue operating normally while working on a restructuring transaction.

Canwest has been struggling under about $4 billion in debt at a time when the economic downturn has hit the advertising market hard.

The partnership operates 12 major daily newspapers across Canada, 26 community newspapers and more than 80 online operations. The National Post is held outside of the partnership.