* Lawyers to work into the evening, hearing resumes Wed
* Dispute is over sale of Canwest’s broadcast arm to Shaw
* Shareholders say left empty-handed after deal changed
(Adds adjournment, hearing on Wednesday)
TORONTO, June 22 (Reuters) - A legal dispute over Shaw Communications Inc’s (SJRb.TO) takeover of Canwest Global Communications’ CGS.V broadcast assets that shareholders say leaves them empty-handed will continue into the evening on Tuesday.
The two sides hope to hammer out a deal that can be finalized in a hearing on Wednesday, David Byers, a lawyer for the court-appointed monitor for the CanWest bankruptcy and sale, told Toronto Superior Court on Tuesday.
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, wants the sale process reopened, 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.
Earlier on Tuesday, 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.
“There is lots of legal talent in this room ... Go back and you should be able find some middle ground,” Peppal said.
The lawyers adjourned to a nearby boardroom where they were locked in talks for most of the day.
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. 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 $1=$1.03 Canadian Reporting by Cameron French and Nicole Mordant; Editing by Mario Di Simine