KEY POINTS:
CanWest New Zealand's new owner, Ironbridge Capital, is offering incentives to keep the broadcaster's management team together after buying a majority stake in the business yesterday.
Ironbridge is paying $386 million or $2.43 a share for the 70 per cent of CanWest owned by Canadian parent CanWest Global Communications and will offer the same price to the minority shareholders under a full takeover bid.
The Australian private equity firm - which last year raised A$1 billion for its latest buyout fund - runs waste disposal companies, backpacker hostels and retirement homes in New Zealand.
But it is new to media, and the management team led by chief executive Brent Impey will play a key role in making the investment work.
Private equity funds usually offer management strong incentives, including significant stakes in the business, to stay on board.
Impey might bring to the table a $3 million payout negotiated during the company's 2004 share float, but Ironbridge Capital New Zealand operational partner Kerry McIntosh says that others in the management team would also be given incentives to stay.
CanWest MediaWorks New Zealand owns TV3, C4 and half New Zealand's radio stations including More FM, Radio Live, The Rock and The Edge.
Ironbridge is confident New Zealand investors will accept the $2.43 a share offer accepted by CanWest Global Communications, ending its 15 years in New Zealand.
Some investors, such as Shane Solly of Mint Asset Management, are questioning its prospects of reaching the 90 per cent compulsory acquisition threshold, after which the last 10 per cent of shareholders are legally forced to sell. The offer was at the lower end of valuations of the company, he said.
Brook Asset Management, which has recently been buying the stock at $2.10 and $2.27 to boost its stake to 7.2 per cent, said it had "no intention to block or to not block" the bid.
"We will simply make a valuation based on our valuation of the stock and how it shapes up," said Brook's Simon Botherway.
McIntosh is playing down prospects of a revised offer to investors who hold out for more.
"We think the price on the offer is high enough. It is 49 per cent above the $1.63 price for the share in October before CanWest announced its intention to look at a sale."
And if it does not reach 90 per cent?
"We are happy that it remains a listed entity and we will manage it on that basis.
"It is a question on how attractive it would be to investors.
"We would put in different levels of leverage that investors are not always comfortable with. There is a bunch of stuff that would happen."
He said Ironbridge would have a similar approach to other private equity players, usually aiming to be out of a company within five years.
Asked why the company was buying the broadcast assets when it had no background in media, he said media had been a consistently attractive sector for private equity globally.
"We see these businesses as generating good cash flows, with a good market position and very good management and staff and run on a very low cost structure," McIntosh said.
Asked where he saw prospects to improve the performance of the company - CanWest has a reputation for tight controls - he said Ironbridge did not see a cost-cutting opportunity.
"It's about revenue growth and we have several ideas, but we have not had the opportunity to speak to management about those yet. We do not have any experience in media but our experience is in backing good management."
One source familiar with CanWest's approach described Ironbridge as a relatively new private equity player but one that might allow Impey the same level of independence as its previous owners.
The share price for CanWest MediaWorks closed yesterday at $2.39, up 5c.
From down to up
* Canadian owners CanWest Global Communications arrived in 1992 to run TV3 which had come close to bankruptcy.
* It yesterday sold its 70 per cent of CanWest New Zealand assets for $2.43 a share or $386 million to Ironbridge Capital.
* Ironbridge is also offering investors $2.43, giving CanWest NZ a $551m market worth.
