control gives canwest more seats

http://www.theaustralian.news.com.au/story/0,24897,22278648-7582,00.html




Control gives CanWest more seats

Nick Tabakoff | August 21, 2007

BIG board changes are expected at the Ten Network after federal Treasurer Peter Costello yesterday raised no objection to Canadian media conglomerate CanWest Global Communications taking full control of the network.

The move -- likely to be completed in the next 10 days -- will leave Kerry Stokes's Seven Network as effectively the only Australian-controlled free-to-air operator.

Speaking on behalf of the Foreign Investment Review Board, Mr Costello said: "I have decided to raise no objections to the proposal for CanWest Global Communications ... to acquire shares representing up to 56.7 per cent of Ten Network Holdings Limited."

However, Mr Costello said his decision was subject to a series of conditions "put in place to protect the national interest", including that: Ten remains a locally listed company; it holds a majority of its meetings in Australia; it remains headquartered in Australia; that the majority of its board members are Australian; and that its CEO and chief financial officer are to live in Australia. Among other things, these conditions will mean that a Canadian-based CanWest heavyweight will not be drafted into the CEO's role at Ten.

"These conditions will have effect for so long as members of the CanWest Group of companies own a controlling interest in Ten Holdings," Mr Costello said.

Despite the Treasurer's conditions, the approval will allow the complicated ownership structure, which allowed CanWest to avoid former foreign ownership restrictions, to be removed.

While CanWest has previously had an economic interest in the listed Ten Network of more than 56 per cent -- held through non-voting convertible debentures -- it was only allowed to hold a direct interest of 14.4 per cent in the network's operating company, Ten Group.

New media laws introduced four months ago have allowed that situation to change. Now, CanWest has decided not to proceed with its sale process for Ten in the short term.

CanWest president and CEO Leonard Asper said in a statement: "We welcome FIRB's decision and expect to complete the exchange by the end of this month."

Ten's chief executive, Nick Falloon, had previously said CanWest's conversion might now allow Ten Group to be abolished altogether. He yesterday welcomed Mr Costello's approval: "We can now move forward with confidence amid a simplified corporate structure."

That simplified structure will see Ten's board numbers change, with CanWest representation rising. CanWest currently supplies only one of the listed company's 11 directors, while on the Ten Group board, it contributes just three of 13.

Informed sources have told The Australian that the unusually large boards were a legacy of rules requiring the company to satisfy foreign ownership regulatory requirements. The listed company's board size is now likely to shrink, with CanWest providing several more directors to a smaller structure.