Canwest gets another extension from lenders

Wed May 6, 2009 9:50am EDT
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TORONTO (Reuters) - Canwest Global Communications Corp, Canada's largest media company, announced yet another extension to lender talks on Wednesday as it fights a massive downturn in the advertising market.

Canwest Media Inc (CMI) said it would continue discussions with its senior lenders and representatives of an ad hoc committee of 8 percent noteholders.

"During the extension period, CMI`s senior lenders have agreed to provide the company with additional access to credit," the Winnipeg, Manitoba-based company said.

Canwest already owes a $30.4 million interest payment to the noteholders, who now also have the right to demand the payment of about $761 million in principal. However, the investors have agreed not to do this until at least May 19 while talks continue.

That date also coincides with a deadline for a deal in the talks between Canwest and its senior lenders, who have spent recent months in negotiations. Repeated deadlines have been set before, only to be extended while talks continue.

While critical, the interest payment is only the tip of the iceberg for Canwest, which has a debtload of about C$3.7 billion ($3.16 billion), some of it dating back to its 2000 acquisition of newspaper assets from Hollinger International.

The company had been in talks with both the noteholders and its banks to restructure its debtload and recapitalize its balance sheet. Meanwhile, lenders have clamped down on the amount of credit they are willing to advance to the company.

Analysts on Monday said Canwest shares were worthless and should be avoided by investors while the company grapples with its debtload.

The recession continues to severely depress the advertising market, which is the lifeblood of Canwest's stable of newspapers and television stations. It has also dampened the appetites of potential buyers of Canwest's assets.   Continued...

<p>The CanWest Global building is seen on Portage Avenue in Winnipeg, MB on November 14, 2008. REUTERS/Fred Greenslade</p>