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Canwest Mediaworks Share Offer Launched

30 June 2004

Canwest Mediaworks Share Offer Launched

CanWest MediaWorks (NZ) Limited Chairman, Tom Strike, welcomed the launch today of the offer for sale of 68.0 million ordinary shares in CanWest MediaWorks (NZ) Limited. An additional 13.6 million shares may be made available for sale to the public by the CanWest Global Group. The indicative price range is between $1.50 and $1.65 per share.

The offer is expected to raise between NZ$102 million and NZ$134.6 million. CanWest MediaWorks has been established to acquire the New Zealand radio and television businesses of the CanWest Global Group, including the largest radio group in New Zealand and the leading privately-owned free-to-air television network.

“The offer represents a rare opportunity for New Zealanders to invest in what will be New Zealand’s leading mainstream media company,” said Mr Strike. “Through its suite of high-profile, high-performing media brands, CanWest MediaWorks will touch almost every community in New Zealand and will be well-positioned for further growth opportunities.”

CanWest MediaWorks’ stable of radio and television brands – under the banners of RadioWorks and TVWorks – will include More FM, The Edge, The Rock, Channel Z, Radio Pacific and Solid Gold, and 22 regional radio stations, as well as TV3 and C4 television networks.

“Combined, CanWest MediaWorks’ radio and television assets will reach 99% of New Zealanders. Their extensive coverage and broad range of programmes will attract significant audience shares, and offer comprehensive advertising options for businesses,” said Mr Strike.

RadioWorks has a combined audience share of 43% of 18-49 year olds, and a 45% share of all radio advertising revenue. Its six national brands span a range of demographics while its 22 local stations provide services to communities throughout New Zealand.

TV3 reaches 99% of the population with a range of programmes covering news, current affairs, sports and entertainment. The channel offers advertisers services in five individual regions and across the country as a whole. TV3’s news and current affairs programming is very competitive in New Zealand, and is particularly strong in the crucial Auckland market. During the past several years, 3 News’ share of the 18-49 age demographic in the Auckland market has grown from 28% to 38% in 2003.

C4, TVWorks’ recently launched free-to-air music network, is developing its audience and advertising revenue bases, and like TV3, also operates on SKY Digital. The channel runs themed or “destination” programming focused on specific musical genres. CanWest MediaWorks believes that C4 has significant audience and revenue growth potential and is a powerful tool for leveraging its radio brands. It has exceeded expectations in its first year of operations.

Together, TV3 and C4 have an audience share of 26% of 18-49 year olds, and a 26% share of all TV advertising revenue.

CanWest MediaWorks is on track to achieve a pro forma EBITDA of $60.0m for the 2004 financial year. Going forward, CanWest MediaWorks is expected to have both a strong balance sheet and strong cashflows from its operations.

Other highlights of the offer include:

International backing and an experienced, media savvy management team –Association with CanWest Global will provide access to international multi-media expertise in television programming, equipment-buying, strategic planning and development, and corporate financing. In addition, RadioWorks and TVWorks will have exceptional management teams, which have played important roles in the financial performance of those operations and are committed to the ongoing success of the business.

Attractive dividend expectations and yield – Fully imputed dividends for the 2005 financial year aggregating approximately 6.7 cents are expected to be distributed to shareholders, which will produce an effective gross yield of 6.7% (assuming a final price of $1.50 per share). The first interim dividend is expected to be paid in May 2005 in respect of CanWest MediaWorks’ 2005 financial year.

Continuing growth opportunities – In the domestic market and in new markets, combined with limited competitor opportunities in the domestic radio or free-to-air television markets.

Following completion of the Offer, the CanWest Global Group will be the majority shareholder in CanWest MediaWorks, with the balance of the shares owned by institutional investors and members of the public, including directors, management and employees of the CanWest MediaWorks Group. The shares will not be guaranteed by any shareholder.

“The CanWest Global Group’s ongoing commitment to CanWest MediaWorks underscores our confidence in the company’s management, which has maintained the consistent high performance of its radio brands, while unlocking the potential of its television and radio brands. Its achievements in radio and the sustained strong performance of TV3 over the last few years are a real success story,” said Mr. Strike.

The CanWest Global Group is an experienced international media operator headquartered in Canada. It began extending its operations in the 1990s and now owns significant media operations and investments in Canada, the United Kingdom, Ireland and Australia, in addition to its operations in New Zealand.

The IPO will close on 21 July and it is proposed that CanWest MediaWorks will list on the NZSX on 29 July. The offer will comprise a retail offer for general investors, employees and clients of brokers, and an institutional offer. The final price for the shares will be determined by way of an institutional bookbuild. The maximum retail price will be $1.65, and will be the same as the final price, unless the final price is greater than $1.65.

The Offer Prospectus and Investment Statement was registered on 25 June 2004 and is available by calling 0800 642 246 or by contacting any Primary Market Participant.

Goldman Sachs JBWere is Lead Manager and Organising Participant to the offer.

Key offer statistics at a glance
Indicative price range $1.50 - $1.65 per share
Maximum retail price $1.65 per share
Minimum number of shares available under the offer 68.0 million
Number of over-allotment shares 13.6 million
Total shares on issue following the offer 226.7 million
CanWest Global Group % shareholding following the offer 64%-70%
Offer size $102.0 million - $134.6 million
Market capitalisation $340.0 million - $374.0 million
EBITDA (forecast 2005 FY) $61.1 million
Price earnings ratio before goodwill amortisation (forecast 2005 FY) 15.8 – 17.4
Effective gross dividend yield (forecast 2005 FY) 6.7% - 6.1%

Price earnings ratio is calculated on the indicative Market Capitalisation divided by the forecast 2005 NPAT before goodwill amortisation.

Application has been made to NZX for permission to list the securities and all the requirements of NZX relating thereto than can be complied with on or before the date of the distribution of the advertisement have been duly complied with. However, NZX accepts no responsibility for any statement in this advertisement.


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