More questions for the Shaw family: Minority Corus shareholders still waiting for answers

Lack of disclosure on sale process another reason to vote NO to Shaw Media acquisition

TORONTO, March 7, 2016 /CNW/ - The Catalyst Capital Group Inc. ("Catalyst") today released a new open letter to the Shaw family, the controlling shareholders of both Shaw Communications Inc. ("Shaw") and Corus Entertainment Inc. ("Corus") (TSX:CJR.B), posing questions of continued concern related to the proposal for Corus to overpay to acquire Shaw Media Inc. ("Shaw Media").

The full text of the open letter appears below. Catalyst's full analysis and alternatives are available at

For questions or assistance related to the Corus-Shaw Media transaction, please contact Kingsdale Shareholder Services, at 1-866-851-2484 toll-free in North America, or 1-416-867-2272 outside of North America (collect calls accepted), or by e-mail at

About The Catalyst Capital Group Inc. (
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.



Dear Shaw Family,

Last week, the Catalyst Capital Group sent you an open letter asking some simple and critical questions that go to the heart of your fiduciary duty and conduct to the minority shareholders of both Corus Entertainment and Shaw Media.

We asked that you tell shareholders whether you followed the M&A best practice of running an arm's-length sale process to determine the market value of Shaw Media; and, if you did, that you disclose the detailed process and results before you ask Corus shareholders to vote on an acquisition that would have them pay $2.65 billion for Shaw Media, plus approximately $130 million in fees.

We also asked you to release the terms and conditions of any and all other offers, so that we can see whether Corus really had to provide the Shaw family with benefits not proportionately available to all the company's minority shareholders.

Yes, we are pressing for answers. We have no choice, as you have created an artificial and unnecessary deadline by rushing Corus shareholders into a vote on an acquisition that would not close until later in the year – while material disclosure and process issues remain unresolved.

You know why this is so important. You are asking Corus shareholders to pay a very high price, one that has hurt analyst confidence in Corus stock.

You control both the buyer and the seller, yet have far greater economic interests in the seller --- $1.2 billion in Shaw Communications versus $100 million in Corus. You will enjoy enormous financial benefit from the deal. We would like a better understanding as to why the Shaw family engaged in trades (potentially amongst themselves and/or entities controlled by the Shaw family) in November of 2015 when you knew the transaction was not yet public‎. These trades appear to move Shaw shares between family members intentionally and not automatically (as is the normal course for 'family planning' matters when dealing with public companies by a controlling family) ahead of the transactions becoming known publicly.

In addition, the valuation you are using came not from the market, but from paid advisors with no incentive to press for a lower price for Corus shareholders. Quite the contrary: the higher the purchase price, the more RBC would earn in both success fees and on bridge financing for Corus. Barclays then failed to point out the lack of a competitive arms-length process and instead accepted the projections without independent verification of the completeness, accuracy or fair presentation of the information.

So, there are a few potential scenarios:

  1. You ran an arm's-length sale process, which confirmed that $2.65 billion was a fair value for Shaw Media, tested by the market.
  2. You ran an arm's-length process, but didn't like the results – harming either the interests of Shaw or Corus shareholders (given the excessive price, we suspect the latter).
  3. You ran no such process, which, given the stakes involved, would be untenable in a related-party transaction.

No matter what the answer, it is inescapable that you have a disclosure duty now, so that Corus minority shareholders can be properly informed before you rush them into a vote on March 9th. Not doing so would layer harm on harm, adding to a long series of disclosure problems on this deal – which alone is a reason for minority shareholders to vote NO.

These are fair questions, building on the others we have raised incrementally – first privately, then publicly. But instead of answering the questions, you have attacked us for daring to raise them -- doubling down on abuse of your minority shareholders.

But unlike other minority shareholders, as Canada's second-largest private equity firm, we have both the ability and the responsibility to put our money where our mouth is – to benefit all minority shareholders, and to hold you accountable.

As Professor Richard Leblanc, a corporate governance expert, said in commenting on Friday's deliberations, companies involved in deals this intimate should "be seen as going above and beyond the normal disclosure obligations — if you've got nothing to hide."

If you have nothing to hide, we suggest you tell us – and every Corus minority shareholder. It's not too late to do the right thing.

SOURCE Catalyst Capital Group Inc.

For further information: The Catalyst Capital Group,


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