Shaw cracks vault for CanWest

Shaw Communications is expected to drop a total of $2-billion to become a major player in Canadian televison.

In a tribute to the cable company's financial strength, ratings agencies said Monday that this splurge can be financed without a downgrade in the company's investment grade-rating.

Shaw announced Monday that it will dole out $1.2-billion to take full control of CanWest Global Communication's televison assets. (The company's newspaper division is being sold separately.)

Family-controlled Shaw has always been conservatively financed, and is one of the best operators in North American cable. That prudent approach from founder J.R. Shaw, and son Jim Shaw, put the company in a position to make this move into television when a rival stumbled.

Shaw will write a $700-million cheque to Goldman Sachs, as the investment bank sells its majority stake in CanWest's money-spinning stable of 18 speciality TV stations. CanWest creditors will receive $478-million.

In addition, Shaw will shoulder $850-million of debt and derivative liabilities that come from the specialty TV division - look for those bonds and futures contracts to be refinanced by the cable company at the earliest opportunity.

Shaw plans to fund the $1.2-billion equity portion of this deal with cash on hand (it had $700-million at the end of February) and borrowing under its undrawn $1-billion credit facility, according to a report Monday from DBRS.

Both DBRS and Moody's said there will be no change to their credit ratings on Shaw as a result of the CanWest purchases.