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Canwest Communications May File for Bankruptcy

Company Faces Series of Financial Deadlines

Apr 6, 2009 Laura Steiner

Canwest Communications is facing a series of April deadlines to deal with its heavy debt. If it fails, the company could seek bankruptcy protection.

The entire industry is affected by declining advertising revenues. Canwest Communications is also affected by debt from the purchase of Hollinger International, and Alliance Atlantis which included specialty channels like: HGTV, and Mystery.

Canwest's April Financial Deadlines, Possible Industry Bailout

April is a month of deadlines for Canwest. The company has until April 7th to make a re-financing deal with senior lenders. By April 14th, it must make a $30.4 million interest payment or else creditors can demand repayment of $761 million. Experts say if creditors demand the money it would destroy the company, and it could result in a claim for bankruptcy protection. Fairfax Financial Holdings owns part of the company, and there’s a possibility they could come up with a plan to save Canwest.

The federal government recently spoke of bailing out the troubled industry via tax breaks and the relaxation of Canadian content rules. There is also a possibility of the implementation of a fee-for-carriage service where cable providers would be charged for the station’s signals. If enacted, it could raise up to $150 million/yr. Hearings on the idea begin later this month before the CRTC (Canadian Radio Telecommunications Commission).

Industry Observer, Chris Diceman, held out hope that if a restructuring agreement could be reached, banks would be willing to assist. He told the Canadian Press: “Provided that the company has a business plan and can get through this liquidity crisis and the pressures on its business given the economy… Then I think the banks will be able to help in some fashion.”

Canwest Assets Being Sold Include CH, Network Ten

Their financial problems have forced Canwest to begin selling off assets. It’s sold one of Hollinger’s former newspapers the New Republic to a group of private investors led by the newspaper’s editor-in chief. It’s looking to sell its five conventional television stations including Hamilton Ontario’s CH TV, which, may be sold to a community-based group including station employees.

Australian Network Ten recently announced an $80 million loss, and cancelled its dividend. Reportedly parent company Canwest is looking to sell some of its 57% share in the company. Industry observers say even selling off assets may not put a dent in the $3.7 billion debt.

CTV Globemedia, owners of CTV have been forced to cut employees and close stations. The CBC (Canadian Broadcast Corporation) has cut programming, and laid off up to 800 employees.

In 2000 Canwest purchased Hollinger International for $3.2 billion. In 2007 they acquired Alliance-Atlantis and all its specialty channels for $2.3 billion. If Canwest declares bankruptcy it may be sold off on a piece-by-piece basis.

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