Aspers won't go quickly or quietly

Friday's court decision in Toronto approving the Shaw Communications bid to acquire a controlling stake in Canwest sounded like the final straw for the Asper family's control of the media company.It also seems to be the beginning of the end of Winnipeg's boast as being a media "centre."

But if the 11th-hour, $125-million bid by Catalyst Capital Group, which includes the Asper family participation, was any indication, the Shaw bid is far from a slam dunk.

In disclosing its offer -- slipped under the doors of interested parties early Friday morning before the court was expected to rubber stamp the Shaw bid -- Catalyst effectively started the propaganda campaign of publicly pointing out the flaws in the Shaw bid.

Probably chief among them was the opposition to that deal from Goldman Sachs Capital Partners.

It's the Wall Street firm that cut an unwieldy deal with Canwest in 2007 that allowed the Winnipeg company, whose balance sheet was already challenged, to go big into the specialty-channel market that it had been coveting for years.

In addition to the fact it was a wickedly complicated arrangement that allowed Canwest to buy Alliance Atlantis's stable of lucrative specialty channels, it was generally seen as a good investment for Goldman Sachs. It would only turn out good for Canwest if those channels produced excellent returns.

As it turns out, that was the only part of the company that did generate strong returns as the recession slashed the previously reliable profits its conventional television channels and newspapers had been delivering.

It remains a deal that Goldman Sachs wants to preserve. One Bay Street analyst noted that returns of close to 20 per cent Goldman Sachs earns on the deal are far greater than it could hope to achieve in most other situations in a global market still trying to get back on its feet.

The point is, Goldman Sachs has made it clear to the court supervising Canwest's restructuring process that it is prepared to fight to preserve that deal.

Shaw, on the other hand, has made it clear that one of the conditions that will have to be met before it will close its $95-million purchase of 20 per cent of Canwest is a renegotiation of the Goldman Sachs deal.

In the second paragraph of its news release Friday, Catalyst pointed out its deal had the support of Goldman, as if to signal that one way or the other, a battle is about to be waged.

The fact the Aspers are part of that team also might suggest this matter is not going to be settled quickly or quietly.

After all, the Canwest empire was effectively built inside a courtroom. Izzy Asper originally won control of Global through a court-ordered auction pitting him against his previous partners.

The acquisition of Global's Alberta and B.C. stations happened only after lengthy court battles.This is the business terrain these guys are very comfortable with.

I was cautioned by a source on Friday before the judge's decision was rendered that there were plenty of twists and turns left in this story.

It is not clear what the next move will be. Canwest's statement on Friday was that all the stages of closing will have to be met by August. An awful lot can happen in six months.

Some are already pointing out the $5-million break fee -- negotiated by parties in these types of arrangements to put the vendors' feet to the fire to complete the deal -- is effectively a nominal amount.

It's as if Canwest's current board, that now only includes one Asper, is not even all that convinced it will work.

The fact the Aspers are now publicly participating in an effort to come up with a Plan B with a counter bid further corrodes the certainty.

The Shaw deal states that former shareholders will get six cents a share.

Canwest shares traded down on Friday, but still closed at 12 cents.

It looks like the punters also believe there might be something else coming down the pike.

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition February 23, 2010 B3