CanWest price leaves a little on the table

By PAM GRAHAM

CanWest Global Communications has given away several cents a share to ensure a successful sharemarket debut for its New Zealand assets.

The Canadian media giant yesterday set a price of $1.53 a share for the sale of 68 million shares in CanWest MediaWorks, the float vehicle for media brands that include TV3, More FM and Radio Pacific.

The price, set after a "book build" of institutional investors, was at the lower end of the $1.50 to $1.65 range in the prospectus, and CanWest did not take up the option of selling an extra 13.6 million shares.

"The final price has not been the maximum price we could have cleared the book at," said Andrew Barclay of lead broker Goldman Sachs JBWere.

"In setting the price, CanWest and ourselves have balanced a number of objectives, including the desire to have a good after-market and the desire to have a good price."

CanWest, the parent, was ensuring the float went well because it would reduce its New Zealand holdings in future, according to analysts.

"This is another opportunity for CanWest to reduce its debt by monetising some of its well-performing international assets, while also still having a significant position in the New Zealand marketplace," said president and chief executive officer Leonard Asper.

The float, which debuts on the NZX on July 29, gives CanWest $104 million for 30 per cent of its New Zealand assets and puts a market price on its portfolio.

It also shifts internal debt to the new company, which has $200 million of bank financing.

CanWest still owns 70 per cent of the new listed company and has undertaken not to reduce that stake for a year. The prospectus says the parent intends to be a long term shareholder, but it can sell into a takeover offer.

Analysts said there would have been discussions with trade buyers in the past and future bids are possible, particularly from Australia.

In the meantime, the market gets a welcome media stock, having lost a newspaper play when Fairfax bought INL's papers last year.

"We're delighted that the offering has been so well received by investors," said Tom Strike, CanWest's chief operating officer and chairman of CanWest MediaWorks.

Fund managers said they got fewer shares than they had bid for in the book build, indicating that a higher price could have been set.

They said investors had to take a view on a volatile advertising market when valuing the stock.

However, the combination of a television business with a radio business offset some risk.