For years, it appeared as if Shaw Communications Inc. wouldn’t become a wireless carrier. In 2011, it ceased construction of their cellular network, wrote down $111 million of assets and sold the option to its spectrum licences in 2013. But privately it was itching to get into mobile, assessing the possible ways it could do so.
The doors swung wide open in July, when the regulator approved a change in airwaves from the Calgary cable company to Rogers Communications Inc. To appease Ottawa, Rogers gave most of the spectrum to discount carrier Wind Mobile Corp. In mid-December, Shaw agreed to acquire Wind for $1.6 billion, which will be funded by the $2.6 billion January sale of Shaw Media Inc. to related company Corus Entertainment Inc.
Both transactions await approval. If the Corus deal is derailed, Shaw can draw the total amount from the bridge loan supplied by its financial advisers, CIBC Capital Markets and TD Securities. But Shaw does not foresee facing opposition from the regulators or Corus’ minority shareholders.
“They fully expected, and we fully expected, that they were going to sell Shaw Media to Corus” during the time of the Shaw-Wind deal, said Ryan Voegeli, a md with CIBC Capital Markets. “If that did not happen, we provided a bridge to them. But it wasn’t our expectation, or our hope, that that will get drawn.”
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Securing a shorter-term loan that would fully finance the Dec. 16 acquisition of Wind gave Vito Culmone, chief financial officer at Shaw, the confidence to explain the deal to Bay Street and enough time to decide and execute his next move. He told the market it could be a good thing sale, equity offering or perhaps a combination.
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Shaw said on Jan. 13 that it sold its media assets to Corus for $2.6 billion, of which $1.8 billion was in cash.
“When (Shaw) announced the Wind transaction, there was no cope with Corus in those days,” said Jeremy Walker, a professional managing director with TD Securities. “Obviously conversations had to have place. You can’t put a deal together such as this and size in a few weeks. It may not have happened. That was the purpose of the bridge.”
TD Securities has watched the evolution of Shaw up close, acting as its financial adviser in connection to these two deals alongside CIBC, Shaw’s acquisition of Canwest Global Communications Corp., the sale of Shaw’s airwaves, among others. The investment bank may be the joint bookrunner for Corus’ public offering of subscription receipts, which will partially finance the purchase of Shaw Media. TD and CIBC were a part of the syndicate that extended up to $425 million in senior secured credit to Wind before Shaw bought it.
Financial Post
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