Catalyst proposal would halt dilution and create value for all shareholders
TORONTO, Feb. 26, 2016 /CNW/ - The Catalyst Capital Group Inc. ("Catalyst"), Canada's second-largest independent private equity firm, announces alternatives to Corus Entertainment Inc.'s ("Corus") (TSX:CJR.B) proposed overpayment for Shaw Media Inc. ("Shaw Media"). These solutions would maximize value for minority shareholders.
"While the currently proposed Corus deal was created by the Shaw family for the Shaw family, Catalyst's proposal is fair to all shareholders, and creates value for all," said Gabriel de Alba, Managing Director and Partner of Catalyst. "Minority shareholders should not be diluted for the benefit of the Shaw family."
In an effort to maximize shareholder value and rectify the proposed transaction's problems (as outlined at www.stopcorusshaw.ca), Catalyst is advocating the following:
- Reduce the acquisition price: Corus should be focused on making the Shaw Media deal terms more equitable and then should re-distribute any savings realized to existing Corus shareholders by either issuing fewer shares or paying a special dividend to existing shareholders.
- Issue fewer shares: By reducing the purchase price Corus can reduce the share consideration to Shaw Communications Inc. ("Shaw") (TSX:SJR.B) and thereby issue fewer shares to reduce the dilution to current shareholders.
- Issue a special dividend: Alternatively, Corus could use the excess consideration created by a reduced purchase price to pay a special dividend to existing shareholders. This dividend could be paid in either cash (reducing the cash consideration to Shaw) or in-kind in the form of Corus shares (reducing the share consideration to Shaw).
- Every $200 million saved on the acquisition of Shaw Media would result in $2.31 per share of cash available for a special dividend to existing Corus shareholders. The special dividend would be equivalent to 23% of the closing share price of $9.87 on February 25th, 2016.
- Reducing the purchase price by $580 million to reflect a multiple in line with Corus's Pay TV sale would enable a $6.70 per share special dividend. The special dividend would be equivalent to 68% of the closing share price.
- Reducing the purchase price by $858 million to reflect a multiple in line with Corus's public offering of Subscription Receipts at $9.00 per share would enable a $9.92 per share special dividend. The special dividend would be equivalent to 101% of the closing share price.
- Allocating share issuances to existing shareholders instead of Shaw would create incremental value attributable to existing shareholders of $1.01 - $8.11 per share. This would be equivalent to 10% - 82% of the closing share price.
- Change the public offering to a rights offering: Minority shareholders were not offered the opportunity to purchase subscription receipts pro-rata to their holdings as of the transaction announcement, which is especially damaging to the small investor. Minority shareholders should not be diluted for the benefit of the Shaw family. Converting the public offering to a rights offering would represent a value improvement to existing shareholders estimated at $29 million or 9% of the closing share price.
- Evaluate the sale of Corus: Rather than proceeding with the Shaw Media transaction, Corus should consider selling itself. Using the multiple that Corus is paying for Shaw Media as a reference to a sale of Corus results in a $15.11 - $17.66 per share value. This is an increase of $5.25 - $7.80 or 53% - 79% to the closing share price.
About The Catalyst Capital Group Inc. (www.catcapital.com)
The Catalyst Capital Group Inc., a private equity investment firm founded in June 2002, is a leader in distressed-for-control investing. The firm's mandate is to manufacture risk adjusted returns, in keeping with its philosophy of "we buy what we can build." Catalyst's Guiding Principles of investment excellence through superior analytics, attention to detail, intellectual curiosity, team and reputation are key to the firm's success. The Catalyst team collectively possesses more than 110 years of experience in restructuring, credit markets and merchant and investment banking in both Canada and the United States.
SOURCE Catalyst Capital Group Inc.
For further information: MEDIA ENQUIRIES: Daniel Tisch, Argyle Public Relationships, Direct: (416) 968-7311, ext 223, firstname.lastname@example.org; INVESTOR ENQUIRIES: Ian Robertson, Kingsdale Shareholder Services, Direct: 416.867.2333, Cell: 647.621.2646, email@example.com