WINNIPEG - Canwest Global Communications Corp. (TSX:CGS) will have a smaller ownership stake in its Australian media division as a result of a equity offering by Ten Network Holdings Ltd.
The Winnipeg-based media conglomerate said the fully underwritten equity offering by Ten will raise C$123.7 million (A$138 million) in gross proceeds before expenses.
The offering represents about 13 per cent of existing Ten Holdings shares and will reduce Canwest's proportionate ownership to about 50 per cent from 57 per cent.
Canwest, which has been struggling to cope with a nearly $4 billion debt load, isn't selling any of its approximately 750 million Ten shares and won't receive any proceeds from the Australian company's equity offering.
Canwest said 120 million shares of Ten will be offered at A$1.15 each, and that Ten Holdings would use the proceeds of the equity offering to pay down debt.
It also said Ten Holdings is expected to be within its financial covenants when its fiscal year wraps up at the end of the month.
Like many media companies, Ten Holdings has been hit hard by weakness in advertising markets, reporting a 36.6 per cent drop in earnings so far this year.
Canwest has at times considered selling its entire stake in the Ten network to cope with its own crippling debt. The company first put the commercial television channel up for sale in October 2006, with a valuation of about C$1.2 billion, when Australian foreign ownership rules were relaxed.
Rupert Murdoch's News Corp. considered buying the assets, but decided the asking price was too high.
After a failed search for an offer that it deemed attractive, Canwest yanked Ten off the market and completed a share exchange plan that gave it majority ownership of the network.