CanWest Offers Details on Alliance Atlantis Break-Up

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Diversified Canadian media company CanWest Global Communications detailed this morning its participation with Goldman Sachs Capital Partners (GSCP) in the plan to acquire and split-up Alliance Atlantis (AA).

Under the agreement, Alliance Atlantis, a Toronto-based media company, will be reorganized into three separate groups operated on a stand-alone basis: broadcasting, entertainment and motion picture. The broadcasting business will be held by an entity controlled by CanWest and in which GSCP will have a stake; the entertainment business will be 100% owned by GSCP; and the motion picture business will be owned by EdgeStone Capital Partners with equity contribution from GSCP.

The broadcasting assets will be held by CW Investments Co., in which CanWest Global will hold two-thirds of the voting shares and an approximate 36% equity interest, and GSCP will hold one-third of voting shares and approximately 64% equity interest.

The purchase price of the broadcasting business will be C$1.5 billion and will be financed with debt and equity. CanWest will make a C$262 million equity investment in CW Investments, and GSCP will contribute C$472 million. CW Investments subsidiary CW Media Holdings will issue debt to fund the balance. The debt consists of a C$475 million term loan, a C$50 million revolving credit facility (which is not expected to be immediately drawn) and approximately C$313 million of bridge loans.

The financing package was originally expected to include a high yield bond component, which was scrapped in favor of bridge financing and a higher equity contribution from CanWest.

CanWest expects to combine its existing Canadian television assets with the CW Investment assets in 2011.

The motion picture business of AA will be owned by private equity house EdgeStone following the acquisition of 51% of Motion Picture Distribution LP (MPD) from AA and the remaining 49% from Canadian income trust Movie Distribution Income Fund for C$475 million.

The C$2.3 billion deal to acquire Alliance Atlantis at C$53 per share was announced in January by CanWest Global and GSCP.

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