June 22, 2010 / 5:17 PM / 9 years ago

Judge tells Canwest, shareholders to settle dispute

* Lawyers huddle after judge sends them out of court

* Dispute is over sale of Canwest’s broadcast arm to Shaw

* Shareholders say left empty-handed after deal changed

TORONTO, June 22 (Reuters) - An Ontario judge ordered Shaw Communications Inc (SJRb.TO), Canwest Global Communications CGS.V and a group of disgruntled shareholders out of the court on Tuesday to settle a dispute over the shareholders’ claim that a deal to sell Canwest’s broadcast arm to Shaw leaves them empty-handed.

Ontario Superior Court Judge Sarah Peppal told lawyers for the parties she was surprised they weren’t able to resolve their differences over the C$2 billion ($1.96 billion) sale of Canwest’s television arm to Shaw.

“There is lots of legal talent in this room... Go back and you should be able find some middle ground,” Peppal said, according to Canwest spokesman John Douglas.

The lawyers adjourned to a nearby boardroom where they were locked in talks.

Shaw was in court to get approval for its purchase of Canwest’s bankrupt TV assets.

But a group of Canwest shareholders, led by the company’s founding Asper family, want the sale process re-opened arguing that the Shaw acquisition announced on May 3 leaves them out in the cold and is different from a deal approved by an Ontario court in February.

The original deal, approved by Peppal on Feb. 19, involved Shaw buying a 20 percent equity interest in Canwest. Common shareholders were due to receive 2.3 percent of the stock, worth about C$10 million, according to the Financial Post newspaper.

On May 3, Shaw, a Calgary-based cable and telecoms company, said it had reached agreement to buy 100 percent of Canwest’s TV assets for C$2 billion. The deal includes the C$700 million purchase of Goldman Sachs’ stake in some of the channels, including National Geographic Channel and Food Network Canada.

The shareholders own 49 percent of the equity and 88 percent of the voting rights of Canwest, which collapsed under a C$4 billion mountain of debt last year.

The sale of Canwest’s newspaper assets, which include the National Post and Ottawa Citizen papers, in a separate transaction was approved by an Ontario court last Friday .

$1=$1.02 Canadian Reporting by Cameron French; Writing by Nicole Mordant; editing by Peter Galloway

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