CanWest joins flood of floats

By PAUL PANCKHURST

Canadian media giant CanWest yesterday unveiled a long-awaited share float of New Zealand radio and television assets, including TV3, that will raise up to $143 million.

The initial public offering brings the amount sought from sharemarket investors in five current and three imminent IPOs to more than $800 million.

"I can't remember the last time so many floats hit the market at once," said Tim Preston, the managing director of ASB Securities.

The Business Herald predicted the CanWest offer nine weeks ago.

It will return TV3 to the stock exchange after a 14-year absence and help to plug the sharemarket's gap in listed media companies.

The public will be offered 68 million shares in a float company called CanWest MediaWorks (NZ), raising up to $119 million.

CanWest will also have the option of selling up to 13.6 million more shares for up to $23.8 million.

That means the Canadian company will retain between 64 per cent and 70 per cent of the company.

The figures suggest a top-end market capitalisation of nearly $400 million.

CanWest always intended to retain majority control, but the size of the stake is at the high end of market expectations.

The share price for the offer will be set by institutional investors bidding in a "book build" to be run by the lead manager, Goldman Sachs JBWere.

CanWest's figures suggest $1.75 a share will be the price at the top of the range.

Expected to open about June 9 and close about June 29, the offer is seen as likely to include only a small public pool of shares.

CanWest president and chief executive Leonard Asper said the cash would be used to reduce debt at home.

One possibility is that the sell-down will set the scene for a full exit by CanWest.

The float comes with the company's television channels, radio networks, and regional radio stations riding high in an advertising market that has been strong since late 2002.

"The advertising market is extremely buoyant, and it looks as if that is going to continue," said Martin Gillman, the head of Total Media, a company that buys advertising time and space.

But ABN Amro media analyst Peter Shorthouse believed the timing of the float was driven by "their desire to get cash back to Canada", not the stage of the advertising cycle.

"I don't think they're trying to sell at the top."

In the six months to February 29, the New Zealand businesses reported operating earnings of $34 million - a 47 per cent increase on a year earlier - on revenue of $116 million.

The radio operations were especially strong, producing a bottom line profit of $18 million on revenue of $53 million.

Television's bottom line profit was $15.5 million on revenue of $63 million.

The business is expect to float with about $200 million of debt, so bank financing arrangements are part of the preparations.

An upside for sharemarket investors is the progress towards a broad offering of media stocks.

The owner of the New Zealand Herald and half of the Radio Network, Australian company APN News & Media, is planning a New Zealand listing.

Pay-television operator Sky Network Television is already listed.

Add CanWest, and investors will have access to stocks that represent newspapers, free-to-air television, pay television, and radio.

For TV3, the float is the latest development in a long story.

It listed in the late 1980s and went into receivership in May 1990, after which CanWest bought in.

Going public

Company - Timing - Max

Feltex Carpets, Now, $271m

Pumpkin Patch, Now, $113m

Colville Equities, Now, $75m

Salvus Strategic, Now, $50m

Just Water, Now, $8.25m

StoreFund, This month,$30m

CanWest, June, $143m

Noel Leeming*, June, $150m

* (unofficial estimate)