Canwest Media and some 8% noteholders carry on recapitalization talks

By Susanna Moon

Chicago, July 20 - Canwest Global Communications Corp. said its subsidiary, Canwest Media Inc., is continuing discussions with the members of an ad hoc committee of its 8% noteholders regarding a recapitalization.

Holders of 12% senior secured notes issued by Canwest Media and Canwest Television LP as well as CIT Business Credit Canada Inc., the provider of a senior secured revolving asset-based loan facility to Canwest Media, have agreed to extend to July 31 some milestones that were to be have been achieved by July 17.

The company and members of the ad hoc committee also have entered into another extension of the agreement and forbearance to July 31.

Under the extended forbearance agreement, the company has until July 31 to reach an agreement in principal regarding a recapitalization transaction. Failure to complete an agreement could result in a demand to repay all Canwest Media debt.

Recapitalization talks progress

Canwest Global said on July 10 that it is making headway in its discussions with bondholders and lenders regarding a potential recapitalization transaction.

Canwest's goal is to position the company's assets to take advantage of future economic improvement by implementing a proper capital structure, Leonard Asper, the company's chief executive officer, said during its third-quarter earnings conference call on July 10.

The CEO said Canwest remains focused on the potential transaction, though not at the expense of running the business so that it can post solid results in the current economy.

Asper declined to provide any further comment on the potential transaction.

For the quarter ended May 31, Canwest reported revenues of C$727 million, compared with revenues of C$846 million for the same period in 2008. Publishing revenues were down 19% from the prior-year period. Revenues from Canadian television operations were down 2%, while revenues from Australian television were down 22%.

"The results reported today reflect the continuing challenges of the current economy," Asper said.

Canwest had total debt of C$3.76 billion at May 31, compared with C$3.66 billion at Aug. 31, 2008.

Canwest defaults on 8% notes

As previously reported, Canwest Media failed to make an interest payment due on its 8% senior subordinated notes in March and is in default under the terms of the indenture.

In addition, Canwest LP is in default under the terms of its senior credit facilities, its senior subordinated credit facility and its senior subordinated notes indenture because it failed to make roughly $10 million in interest and principal payments due May 29 on its senior credit facility and related hedging derivative instruments.

Canwest chief financial officer John Maguire said the company skipped the payments to preserve liquidity to continue to run the business.

Canwest Global is a Winnipeg, Manitoba-based media company.

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