By: E&P Staff Canada's biggest media company, CanWest Global Communications, on Tuesday confirmed a Globe and Mail report that it was shrinking by half the size of the initial public offering (IPO) for its newspaper and interactive-media holdings.
CanWest, which includes the Montreal Gazette, Ottawa Citizen, and Vancouver Sun among the 60-plus dailies and weeklies it publishes, said the value of the IPO has been cut to $470 million U.S. When CanWest announced plans for the so-called "income trust" IPO, it said it intended to issue 70 million "trust units" at C$10, which would have a value of approximately $597 in U.S. dollars.
CanWest's initial IPO plan would have been one of Canada's biggest income trust offerings ever. Income trusts have been an increasingly popular structure because they allow Canadian corporations to avoid some taxes by paying regular distributions to investors from cash flow.
Last month, though, the Canadian federal government dampened much of that enthusiasm with an announcement that it was reviewing income trusts, and would temporarily stop issuing advanced tax rulings on IPO proposals.
CanWest's initial plan was that the CanWest MediaWorks Income Fund would hold about 28% of its newspaper and interactive media holdings. The flagship National Post, which has not been profitable, will not be included in the fund.
The Asper family will continue to control the company through super-voting shares.
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