While Alliance Atlantis Communications, perhaps Canada’s most delicious takeover target, is positioning itself for some major acquisitions, talks, if any, are being kept firmly under wraps.

At the company’s recent agm, when asked who aac is in talks with, president and ceo Michael MacMillan deeked the question by pointing out how the Alliance-Atlantis merger was the industry’s best kept secret until it was announced more than two years ago.

It’s no secret that aac, now more broadcast-driven than ever, has its eye on ctv’s 40% interest in Sportsnet and Corus Entertainment’s 50% interest in The Family Channel. But will the media giant, with its new focus on kids properties, make a play for Cinar?

‘We’ve looked from a distance,’ says MacMillan. ‘They have a terrific-looking library, they own a piece of Teletoon, which is an excellent channel. But the situation there is, from our perspective, murky at best, so until that clarifies itself we’re not interested in doing anything.’

Over the past 14 months, aac has added $450 million of capital to the balance sheet of the company. ‘The result of that is we’ve never been so liquid…we think we’re going to have opportunities to buy other assets, so we want to make sure that when those opportunities do come up we’re financed, we’re liquid and we’re ready,’ says MacMillan.

At the agm, aac exec vp and cfo Judson Martin outlined a handful of initiatives designed to ‘bullet proof’ the balance sheets and ensure the company’s long-term liquidity.

Firstly, the company will run receivables worth roughly $150 million and assets such as its film library, consisting of roughly 16,000 hours (7,000 film, 2,000 tv), through a securitization process from which proceeds would go toward paying down aac’s debt. It is the company’s opinion that its library is under-valued and as such the company is in the process of a third-party valuation of it. aac’s overall debt equates to roughly 42% of the company’s capital and MacMillan says he’d liked to see it drop to 35% in the year ahead.

Also in the works is a new senior bank facility worth $500 million, which would replace the company’s existing bank line set up at the time of the merger (which expires in 2003).

Meantime, Martin says, ‘We will continue to prudently remove capital from our film and tv production operations and re-deploy in support of our broadcast growth strategy.’

How much money will be reallocated was not disclosed. *

-www.allianceatlantis.com