April 8, 2009 / 5:21 PM / in 9 years

Canwest, lenders extend talks on borrowing

TORONTO (Reuters) - The senior lenders of Canwest Global Communications Corp, Canada’s largest media company, have agreed to extend talks until April 21 over certain borrowing conditions for its media unit, the company said on Tuesday.

Canwest, based in Winnipeg, Manitoba, had until Tuesday to cut a deal with its banks that would let the company stay in business while it works to shore up its finances.

“Canwest announced today that its subsidiary Canwest Media Inc and its senior lenders have agreed to extend the waiver of certain borrowing conditions until April 21, 2009,” the company said in a statement.

“CMI continues to discuss with its senior lenders the terms under which the waiver might be extended for a longer period to allow CMI to pursue a recapitalization transaction.”

The company has until April 14 to make a $30.4 million interest payment on its 8 percent senior subordinated notes. It has already missed that payment, which was due on March 15, once.

“During the two week period, senior lenders have agreed to provide additional access to credit availability,” the company said. “Based on current cash flow projections, the company believes that it will have sufficient liquidity to continue to operate normally through the period.”

In a separate announcement, the company said it completed its sale of holdings in Score Media Inc and had received gross proceeds of $6.6 million.

Canwest owns the Global television network and a stable of daily newspapers, including the National Post.

Analysts have said it is possible Canwest, with its debt load of about C$3.7 billion, may file for bankruptcy protection as the weak economy wreaks havoc on advertising revenue at its television stations and newspapers.

Canwest is trying to slash its operating and capital costs and is looking at divesting non-core assets.

However, no large-scale asset sale that would make a significant dent in Canwest’s debtload has materialized.

Canadian financial services giant Fairfax Financial Holdings owns about 22.4 percent of Canwest’s subordinate voting shares and analysts have speculated it could step up with some sort of refinancing proposal.

A big part of Canwest’s debt dates back to its 2000 acquisition of a stable of Canadian newspapers from Hollinger International for about C$3.2 billion.

Reporting by Grant McCool and Wojtek Dabrowski; Editing by Gary Hill

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