* Shaw reaches agreement with the debtholders of Canwest
* Deal worth about C$1.2 bln, plus C$815 mln debt
* Sale of TV assets separate from newspaper sale process (Adds analyst comments)
By Pav Jordan
TORONTO, May 3 (Reuters) - Shaw Communications Inc (SJRb.TO) said on Monday it agreed to buy the television operations of Canwest Global Communications CGS.V for C$1.2 billion ($1.18 billion), adding cable channels such as Food Network Canada to its stable of media holdings.
The agreement also includes the assumption of C$815 million of debt, and ends months of uncertainty over television assets that Canwest spent billions to acquire in 2007 in a bid for growth. Canwest had filed for creditor protection for the television properties last October.
Calgary, Alberta-based Shaw will pay C$700 million to affiliates of Goldman Sachs (GS.N) for an equity interest in the Canwest unit that owns the channels, which also include History Television and HGTV Canada.
It will also pay nearly C$500 million to unsecured creditors of Canwest.
The agreement will give Shaw 100 percent of Canwest’s television unit, including the over-the-air and specialty services, giving it access to key content and removing other financial claims on the assets.
“Our view is that this gives us an opportunity to crystallize the value today, which we think is an optimal time to do that,” said Chief Executive Jim Shaw, adding that Canwest would likely cost more to buy a year from now.
“This has given us the ability to remove the financial players. Goldman Sachs certainly was a key to be able to solve the entire problem here and we’re pleased that we were able to come to an agreement with them that was satisfactory for both of us,” Shaw said on a conference call.
Three years ago, Goldman helped Winnipeg, Manitoba-based Canwest buy the specialty channels in a C$2.3 billion deal with Alliance Atlantis.
Shaw Communications said the acquisition represents its bet on the increasing importance of owning content as more traditional programming is viewed in a video-on-demand format.
The company also expects more and more customers to view content on their mobile devices, and said the acquisition would help it capitalize on those changes in viewing habits.
“Shaw is expected to benefit from operating both content and distribution (including television, Internet and, in the future, wireless) in a world where media continues to seek new forms of distribution,” analysts from bond rating service DBRS said in a report.
Shaw will fund the deal with cash on hand, currently at more than C$700 million, and through its untapped credit facility, worth C$1 billion.
It also said it will look at restructuring the debt assumed in the transaction.
The Canwest media empire began a struggle for survival soon after its rapid expansion trapped it under a C$4 billion debt load. It was eventually forced to file for creditor protection for its television operations and, separately, for its newspaper arm.
The deal, subject to regulatory approvals, followed negotiations among Shaw, Canwest and Goldman Sachs and other senior subordinated noteholders.
TD Securities acted as financial adviser on the deal and Davies Ward Phillips & Vineberg LLP provided legal advice.
The sale of Canwest’s TV assets is separate from a process to sell its newspapers. The papers on the block include the National Post and Vancouver Sun.
Torstar Corp (TSb.TO), publisher of Canada’s biggest daily, the Toronto Star, said on Monday it has submitted an offer to acquire the newspaper and digital businesses of Canwest Ltd Partnership and its related entities.
Shaw shares dropped 2.04 percent to C$18.70 on the Toronto Stock Exchange on Monday afternoon.
$1=$1.01 Canadian Reporting by Euan Rocha and Pav Jordan; Editing by Frank McGurty and Rob Wilson