Canada's CanWest Global Communications Corp has sold its 29.9 per cent stake in Northern Ireland's Ulster Television (UTV) in a deal worth £59 million (€88 million).
The shares, which are understood to have been placed with 12 institutional investors through the London market on Wednesday, were sold at a price of £3.75 sterling each, a discount of more than 10 per cent on their trading level.
The company said the sale was consistent with its stated intention of divesting non-core, non-strategic assets and the proceeds would be used to pay down bank debt.
CanWest bought into the Northern Irish broadcaster in late 1997 and will record a gain of about 50 million Canadian dollars on the transaction. It has also received C$33 million in dividends from the company in the intervening seven years.
Davy Stockbrokers said the sale was positive for UTV as CanWest's stake had been seen as a significant liquidity deterrent for potential investors. "It removes a significant overhang on the stock," said Davy analyst Mr Mark Hannon, noting that, at the placing price, UTV was valued at just 16.5 times this year's earnings compared to a sector multiple of 25 times.
The move to exit UTV has prompted speculation that the company might also decide to sell its 45 per cent stake in TV3.
However, a TV3 spokeswoman said yesterday that the sale of the UTV stake did not impact on TV3 in "any way, shape or form" and that CanWest remained committed to the company.
CanWest, which also partially floated its New Zealand radio and television operations in a move that will raise up to 135 million New Zealand dollars, also said it was in no rush to sell other assets.
"Will we be exposing other assets for sale? Probably not. We like the assets that we have," CanWest's chief operating officer, Mr Tom Strike, said.
"The fact is that we don't need the money, contrary to popular media belief. Our debt levels in Canada are quite comfortable and quite manageable."
Aside from its stake in TV3, CanWest owns 57 per cent of Australian broadcaster, Ten Network Holdings. - (Additional reporting by Reuters)
