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.
The company owns a chain of Canadian daily newspapers, including the flagship National Post, as well as Canada’s Global television network. It also has television operations in Australia, through its stake in Network Ten.
Last month, Canwest posted a net loss of C$1.44 billion for the three months that ended February 28. This included a C$1.19 billion writedown related mostly to its publishing operations.
Analysts have said Canwest could file for bankruptcy protection, but the company thus far has continued to negotiate with creditors rather than involve the courts.
Canwest has been considering selling five conventional TV stations and has agreed to sell its stake in sports broadcaster Score Media. It has already sold the New Republic magazine in the United States to a group of private investors.
However, no large-scale asset sale that would make a significant dent in its debtload has materialized so far.
A big part of its debt dates back to the C$3.2 billion deal with Hollinger International.
The acquisition made Canwest the country’s biggest publisher of daily newspapers. It included 13 big-city dailies as well as 126 community newspapers, Internet assets and a 50 percent stake in the National Post. The company later bought full control of the Post.
In 2007, Canwest expanded its television holdings by partnering with an affiliate of U.S. investment bank Goldman Sachs to buy specialty-TV group Alliance Atlantis Communications for C$2.3 billion.
Canwest is controlled by the Asper family of Winnipeg. In November, the company eliminated 560 jobs at its newspapers and television stations to cut costs and cope with the advertising slowdown.
($1= $1.17 Canadian)
Reporting by Wojtek Dabrowski and Euan Rocha, editing by Dave Zimmerman and Maureen Bavdek