The bankruptcy of Canwest Global Communications Corp. left Goldman Sachs (NYSE:GS) with little control over its ownership agreement with the company concerning 13 Canadian cable channels after Shaw Communications (NYSE: SJR) was given approval by a Canadian coutrt to take over the Canwest.
Although Shaw was awarded control, it won’t become a operational reality until Canwest Global has its recapitalization plan approved by the court in Ontario.
The $95 million offered by Shaw Communications for CanWest was the winning bid, which represents 20 percent equity of the struggling media company. What gives Shaw the power in the deal is it will gain voting control of CanWest.
In a bid to regain control of the agreement concerning the 13 cable channels, Goldman Sachs got behind an offer by private equity firm Catalyst Capital Group, which while a much higher bid, was still rejected by the court, possibly because of its late entry into the bidding process.
Part of the winning bid form Shaw includes the empowerment to drop the former shareholders agreement between Goldman Sachs and Canwest concerning how the 13 cable channels will be run. Canwest Global ran the companies for Goldman Sachs, the reason they have such a strong interest in the outcome of the takeover of the company.
Major concerns for Goldman now is they’re clueless as to what Shaw will do concerning the 13 cable channels, and have criticized Shaw for not being transparent about their plans.
Either way, Goldman will have to renegotiate the terms of the shareholder agreement now with Shaw, and they will probably get far less than they originally had or currently hope for in the new agreement.
Shaw Communications – through its lawyers – said once the application process is completed with Canwest Global and they are in control of the company, at that time Goldman will be allowed to negotiate a new agreement with them.
