news anwest faces Tuesday deadline for restructuring debt agreement with lenders

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Canwest faces Tuesday deadline for restructuring debt agreement with lenders



Sun Apr 5, 11:24 AM





By David Friend, The Canadian Press


TORONTO - Canwest Global Communications Corp. (TSX:CGS) is heading towards another deadline to restructure a debt agreement with its bankers on Tuesday, but time could be running out for the broadcaster and newspaper publisher which has already been given an extension by lenders to solve its financial woes.

The Winnipeg-based company is walking a fine line that could include filing for bankruptcy protection, and industry observers have been focusing on the possibility Canwest may eventually be carved up.

Both Canwest's international assets and newspapers could be sold as part of a streamlining of its operations.

On Tuesday, the debt-laden company will have to amend the terms of its credit with senior lenders.

"What the banks want to do is make sure the company is making progress on selling assets or getting additional capital," said Chris Diceman, senior vice president at DBRS.

"Provided that the company has a business plan and can get through this liquidity crisis and the pressures on its business given the economy ... then I think the banks will be willing to help in some fashion."

Then, Canwest faces what's considered a more critical April 14 deadline for its missed interest payments to bondholders, who hold US$761 million in debt.

The best case scenario will be that Canwest reaches new arrangements with its lenders, and the worst case would force the company to enter into court protection from creditors and let its lenders sell off the company's assets.

"We've seen so many delays up until now that my gut tells me there's going to be yet another one," said Carmi Levy, an analyst at AR Communications Inc.

"I don't think creditors have reached the end of their patience with Canwest. They're getting there - the thread is getting shorter - but you don't just rearrange hundreds of millions of dollars worth of credit on a dime, and you certainly don't do it under the gun."

However, even if it resolves the April deadlines Canwest isn't in the clear. Overall, the company has $3.9 billion in debt, which it is trying to recapitalize.

"The question is when will the economy pick up to the point that Canwest will be able to work itself out of the hole it has dug for itself through cash flow," Levi said.

"Because until advertising begins to pick up, Canwest is hardly in the position to finance anything."

Last week, the company hit another financial snag when its Australian broadcaster Ten Network Holdings Ltd., which it has a 57 per cent stake in, posted a near A$80 million loss and cancelled its dividend payments.

Canwest received A$10 million dividend payment for this quarter, but Ten said it didn't expect any further dividends for the rest of the 2009 financial year.

Reports have suggested that the Canadian broadcaster is looking to auction off at least part of its holdings in Ten, after backing off of a proposed equity offering when the offers were too low.

Canwest has been selling off non-core assets, like American political magazine New Republic and a 26 per cent stake in sports broadcaster the Score, in an attempt to shore up cash.

Other alternatives to bankruptcy protection could include getting additional financing through banks or another lender, or an equity injection.

Last month, Canwest gave a stay of execution to its five E! branded channels until the end of the summer after previously threatening to shut them down if it couldn't find a buyer this spring.