Broadcaster

Chum raises $85.8 million, releases preliminary Q3 results

7/2/2003

TORONTO - Last week CHUM Ltd. announced new bought deal
financing for $88,849,700, a proposed share split and preliminary third quarter revenue and EBITDA estimates.

Specifically, CHUM Limited and Allan Waters Enterprises Limited (AWEL), a private corporation owned by the Waters family, announced they have entered into an agreement to sell (to a syndicate of underwriters, led by TD Securities Inc.) 1.7 million and 59,400 non-voting class B shares, respectively, at a price of $50.50 per share.

The gross proceeds to CHUM and AWEL from the offering will be $85,850,000 and $2,999,700, respectively.

CHUM has also granted an option to the underwriters, exercisable up to two business days prior to closing of the offering, pursuant to which the underwriters can purchase additional non-voting class B shares. Closing of the offering is expected to occur on or about July 14, 2003 and is subject to approval by securities regulators.

CHUM intends to use the net proceeds to it from the offering to reduce indebtedness owed to its lenders under its credit agreement.

The resulting increased credit availability under its credit agreement will provide enhanced flexibility to finance strategic opportunities as they arise. CHUM will not receive any of the proceeds from the offering by AWEL and AWEL intends to distribute the net proceeds to it from the offering to Sheryl Bourne, a shareholder of AWEL and a director of CHUM.

The company also announced today that its board of directors has approved the submission of a special resolution to shareholders at an annual and special meeting - to be held in December, 2003 - to consider a stock split.

Shareholders will be asked to give authority to Chum's
board to implement a split of its outstanding non-voting class B shares, in its sole discretion, at any time prior to January 31, 2004. If a split is determined to be in the best interests of the company and its shareholders, the board will select a ratio within the range of a two-for-one to three-for-one stock split.

On top of this, the company also announced last week its estimates of some preliminary financial results for its third quarter, ended May 31, 2003.

For the quarter, Chum expects revenue to be in the range of $140 million to $142 million and EBITDA (which the company defines as earnings before interest, income taxes, depreciation, minority interests, interest and other income, and gain on exchange of assets) in the range of $26 million to $27 million, compared with revenues of $131 million and EBITDA of $22 million for the same three month period of fiscal 2002.

"The company's operations for the quarter performed in line with expectations," said the press release.

Based on these preliminary results, Chum expects operating performance to exceed budget for fiscal 2003. The EBITDA estimate includes an anticipated increase in pension costs of $1 million to $1.1 million related in part to a funding shortfall, on a solvency basis, in the CHUM employees pension plan and in part to a change in certain actuarial assumptions underlying the plan. The amount of any pension related costs expensed by the company in any fiscal year depends, in part, on capital market conditions. Final results for the quarter are to be announced as scheduled on July 23, 2003.

CHUM owns and operates 29 radio stations, eight local television stations and 17 specialty channels, as well as an environmental music distribution division. Some of its original programming is seen world-wide.

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