CanWest pitches IPO for strong debut

By PAUL PANCKHURST

The float of media company CanWest's New Zealand assets is being pitched as likely to offer the first-day rally missing from some of this year's share offers.

The final details of the initial public offering are locked down and investment bank Goldman Sachs JBWere is on the road, marketing to sharebrokers and institutional investors.

The float company - CanWest MediaWorks (NZ) - owns TV3, C4 and the RadioWorks group of radio stations.

The Canadian-owned CanWest - controlled by the Asper family - is selling down to cut debt at home.

The indicative price range for the offer will be $1.50 to $1.65 per share. That compares with the $1.50 to $1.75 of earlier market soundings.

Goldman Sachs' marketing is highlighting CanWest as a vendor that - unlike some private equity investors - is not solely driven by securing the maximum price for its shares.

The listed Canadian company will retain 64 per cent to 70 per cent of the New Zealand business.

A minimum of 68 million shares will be sold in the offer, with another 13.6 million available on over-allotment.

The Business Herald was told that Goldman Sachs and CanWest wanted the offer priced to give "an appropriate IPO premium" on day one.

IPO pricing is topical after the year's biggest local offer saw Feltex Carpets' shares list at a discount to the issue price.

The second-biggest IPO saw childrenswear retailer Pumpkin Patch list at a premium.

The tiny Just Water International this week rocketed away with a first-day gain of 32 per cent.

Raising up to $135 million, MediaWorks will be the third-largest local float of the year.

Initial market responses are that the price range looks reasonable.

"It looks OK," said one analyst.

"I certainly don't think it's a steal," said another.

Brokers and analysts are reserving judgment until looking at the prospectus more closely.

The offer will open on June 30, with the final share price to be announced on July 12 after a "book build" where institutional investors bid for stock. The company is to list on July 29.

Goldman Sachs' marketing says MediaWorks is priced at a multiple of 8.8 to 9.4 times forecast operating earnings for 2005. It says media companies such as Sky Network Television and Australia's Ten Network are trading on higher multiples.

MediaWorks forecasts operating earnings for the year to August 2005 of $61.1 million on revenue of $235 million. This year's forecast is operating earnings of $60 million and revenue of $227 million.

The offer

Between 30 and 36 per cent of CanWest MediaWorks is for sale.

Canadian parent CanWest Global Communications will retain the rest.

The stake is priced at $122m to $135m, or $1.50 to $1.65 a share.

The forecast dividend yield is 6.1 to 6.7 per cent.

The offer opens on June 30 and closes on July 21.

The NZX listing is on July 29.