CanWest to spin off papers
To sell 28% of newspaper, online units Stake to be converted into income trust
CanWest Global Communications Corp., Canada’s largest media company, said yesterday that it would sell a 28 per cent stake in its newspaper unit in an income trust initial offering that values the business at $ 2.2 billion. CanWest said it would keep a 72 per cent interest in the income trust, which includes 12 daily newspapers such as the Vancouver Sun
and Ottawa Citizen, 21 non-daily community papers in B. C., and interests in two free commuter papers. The company’s flagship paper, the National Post, won’t be part of the income fund. CanWest is the latest of more than 200 Canadian companies that have converted to the income trust model in a bid to pare taxes and bolster the share price, prompting the federal finance department yesterday to say it’s considering ways to recoup the $300 million worth of tax revenue lost last year to such trusts and limited partnerships. “We have been considering this transaction for some time, as a way to unlock what we believe is significant shareholder value,” CanWest’s president and chief executive officer Leonard Asper said in a statement. “ We believe that this offering will be well received by the investing public.” The trust, which will be known as CanWest MediaWorks LP, will also include stakes in online newspaper operations, including classified advertising revenue and other income from CanWest websites such as Canada. com and online business research site fpinfomart. ca.
There were 209 income trusts in Canada with a total market value of $ 148 billion at the end of June, according to the TSX Group website. That accounts for about 9 per cent of the S& P/ TSX composite index. Winnipeg- based CanWest,
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