Goldman plans to file documents today that criticizes the sale of Canwest’s TV properties to Shaw and the Superior Court of Ontario’s role in the final approval of that deal. The transaction is part of a bankruptcy court-led restructuring of the Winnipeg media company under the federal Companies’ Creditors Arrangement Act, or CCAA.
Goldman called the TV sale process corrupt, and asked the Ontario Court of Appeal to reconsider other purchase proposals, including one backed by Goldman, that were “wrongly” rejected by the bankruptcy court.
The Goldman appeals aims to stop an agreement between Canwest and Shaw that was approved by the lower court last month, despite an eleventh-hour bid from private equity firm Catalyst Capital Group, which Goldman had supported.
Goldman claims that the restructuring “has involved a remarkable abuse of the CCAA’s process and a total failure of Canwest’s corporate governance for the purpose of extracting the most value possible for the noteholders, rather than an effort to produce the most viable restructuring consistent with applicable CCAA protocols and the interests of other constituencies.”
The documents allege that Canwest’s noteholders have “held a hammer over Canwest’s directors” and dictated “every move” during the restructuring process, essentially shutting Goldman out of the process, even though it is a partner on Canwest’s specialty channel assets, which include Showcase and History Television.
“These CCAA proceedings have simply continued the pattern and theme of the noteholders manipulation and the Canwest directors’ abdication of their fiduciary duties in favour of the noteholders’ dictates. Unfortunately, the CCAA court has not stopped these abuses…,” the court filings allege.
Goldman is asking the appeals court to reconsider the approval of Shaw’s offer, which is worth $95 million for about 20 per cent of Canwest Media, which holds the broadcast television and specialty channel assets. The deal would also give Shaw 80 per cent of the voting shares.
Catalyst and Goldman’s counter offer was valued at $120 million for 32 per cent of the equity interest in Canwest and voting control of the company, though it was shut down when the court approved the Shaw offer.
However, Shaw’s agreement also hinges on reaching a separate arrangement with Goldman which still has a stake in Canwest’s specialty channels.
“It is critical that the Court of Appeal intervene at this stage of the restructuring process to stop the abusive use of the CCAA to serve the noteholders’ interests, to re-empower Canwest’s board of directors to perform its fiduciary duty,” Goldman said in the filing.
“Without Court of Appeal intervention, this matter will continue down a path of acrimonious and time-consuming litigation in which (Goldman) will ultimately prevail against any attempted disclaimer of the CW Shareholders Agreement.”