February 28, 2009 / 12:04 AM / in 9 years

UPDATE 2-Canwest, lenders extend talks on credit facility

* Extends talks with lenders

* Pursuing opportunities to divest non-core operations (Adds details from release, background)

NEW YORK, Feb 27 (Reuters) - Canada’s biggest media company Canwest Global Communications Corp CGS.TO said on Friday it has agreed to extend until March 11 discussions with lenders relating to a senior credit facility.

The media company said its subsidiary Canwest Media Inc (CMI) and its senior lenders have agreed to extend the waiver of certain borrowing conditions. The two parties have also agreed to permanently reduce the borrowing limit under the senior credit facility to C$112 million.

In early February, Canwest said its banks had limited borrowing on a C$300 million senior credit facility until Feb. 27 to just C$20 million above the C$92 million that had already been advanced to its Canwest Media unit.

The Winnipeg, Manitoba-based company, at that time had said talks were continuing to try to lift the borrowing cap and enable the key subsidiary to comply with its debt covenants.

The parties will continue discussions, which, if successful, would extend CMI’s access to its credit facility beyond March 11, said Canwest in a press release.

Based upon cash on hand and current cash flow projections, the company believes that it will have sufficient liquidity to enable it to continue to operate normally through this period.

Canwest said it is reviewing its strategic alternatives and continues to actively pursue opportunities to divest of non-core operations and assets, and collect other amounts that it is owed.

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

Canwest said it continues to take proactive steps to reduce its operating and capital costs, restructure its operations and improve efficiencies.

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

That deal made Canwest the country’s biggest publisher of daily newspapers and 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 GS.N to buy specialty TV group Alliance Atlantis Communications for C$2.3 billion.

Canwest’s asset base means it is reliant on advertising revenue. Because of the global economic downturn, many companies have slashed their spending on TV and newspaper ads, which doesn’t bode well for firms like Canwest.

Now, Canwest is trying to slash its operating and capital costs and is looking at divesting non-core assets. It is considering selling five conventional TV stations and this week said it has agreed to sell its stake in sports broadcaster Score Media.

Canwest is controlled by the Asper family of Winnipeg. Aside from its Global television network and its newspaper holdings, it also has TV holdings in Australia through its stake in Network Ten. ($1= C$1.27) (Reporting by Euan Rocha in New York and Wojtek Dabrowski in Toronto; Editing by Gary Hill)

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