mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Tue Apr 14, 2009 10:16 pm Post subject: Canwest on the brink |
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From Macleans:
http://www2.macleans.ca/2009/04/14/the-canwest-watch/
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The media company behind the Global television network, and the country�s biggest chain of daily newspapers, is racing to restructure its prodigious debt load. With another key deadline on Feb. 27 March 11 April 7 April 14 April 21, and the stock changing hands for nickels a share, the question remains whether Canwest can avoid filing for bankruptcy, and whether the Asper family can maintain control of the empire their father, Izzy, created. Signs continue to point to a dire outcome for Canwest shareholders, but the Asper kids want to reassure everyone: don�t worry about them, they�ll be just fine.
Financial Post, April 14, 2009: Lenders give Canwest Media Inc. a one-week extension on a US$30.4 million interest payment originally due March 15.
Reuters, April 13, 2009: Canwest shares have �no residual value,� BMO Capital Markets analyst Tim Casey wrote to clients on Wednesday, and �it seems unlikely to us that Canwest can continue in its current form.� Casey wasn�t the only analyst warning investors to stay away from Canwest as it approached a Tuesday deadline to make a $30.4 million interest payment to bondholders. Moody�s Investors Service said �it appears inevitable� Canwest will miss the key payment; National Bank Financial analyst Adam Shine wrote that there is �no compelling reason to own, let alone buy Canwest shares, which we would continue to avoid;� and GMP Securities analyst Jason Jacobson warned that �we believe Canwest equity value is very limited,� adding that his target price for the share is zero. Canwest shares closed at 25 cents on the Toronto Stock Exchange on Monday, a record low.
Sydney Morning Herald, April 13, 2009: Canwest has until Tuesday to make a US$30.4 million interest payment to noteholders. The company missed last month�s original deadline to make the payment; missing it again could leave Canwest owing noteholders the entire US$761 million principal. Canwest representatives have reportedly been negotiating with noteholders in an effort to get an extension and have warned that, should noteholders request a payment worth the entire debt, �we believe that Canwest Media would not have sufficient liquidity to satisfy any such demand.�
Winnipeg Free Press, April 11, 2009: Free Press columnist Martin Cash puts forth the most stark outlook for Canwest yet, concluding that it�s �inevitable� that the Canwest empire will soon be broken up, and the Aspers will lose control of the company. According to Cash, the
decline in advertising revenue from Canwest�s publishing assets has the company on the verge of breaking another debt covenant, this one worth $1.4 billion. The best case scenario now, in the opinion of one analyst Cash spoke to, would see Canwest shedding its specialty television channels, its newspapers and its Australian assets to
return to its roots as a conventional television company.
Canwest News Service, April 10, 2009: In a conference call with analysts, Canwest executives said they will continue to pressure the government and the CRTC to correct what they described as a �structural imbalance� in Canada�s broadcast industry that disproportionately benefits cable and satellite operators to the detriment of local broadcasters. According to Canwest president and CEO Leonard Asper, only three of the company�s 16 local television stations turned a profit last year. Still, Asper was optimistic about the future, saying his company continues to �outperform the industry in several areas including audience growth. At the same time, our focus on reducing costs while transforming the business should position us to take advantage of a growing advertising market as the economy begins to improve.�
CBC, April 9, 2009: Canwest announced it lost a staggering $1.4 billion in the second quarter, up sharply from the $33.9 million it lost in the same quarter last year. The loss included a $1.19 billion non-cash writedown of its assets prompted the grim economic outlook and a shrinking stable of advertisers. Its newspapers alone have lost more than half their value in the last year, down $895 million to $788.1 million.
The Globe and Mail, April 8, 2009: Canwest has two major problems on its hands as it tries to sell assets to meet debt repayment deadlines: the assets have substantially declined in value, meaning their sale prices won�t be enough to dig the company out from under its massive debt; and Canwest�s corporate structure is making it difficult to finalize the sales. As a result, sources say they�ve effectively stopped pursuing buyers.
Canadian Press, April 8, 2009: The federal government is reportedly considering extending a $150 million lifeline to struggling Canadian broadcasters, including Canwest. The topic came up at a meeting of the cabinet priorities and planning committee this past Tuesday and follows months of lobbying by Canwest and Quebecor, among others, for government assistance. The proposed fund would be aimed at supporting local news and current affairs programming and would include mechanisms to prevent large urban centres like Montreal, Toronto, and Vancouver do not swallow up the money.
Reuters, April 7, 2009: Canwest Media Inc. and its senior lenders agreed to extend talks until April 21 on �certain borrowing conditions.� The company still has a US$30.4 million interest payment due on April 14.
Reuters, April 6, 2009: Aside from Tuesday�s deadline to renegotiate the terms of a credit facility with senior lenders, Canwest is also looking at having to come to terms with the company�s noteholders, who hold $761 million worth of the company�s debt. Canwest missed a $30.4 million interest payment on the notes last March 15; should it fail to make the payment by April 14, bondholders could demand that the entire amount of the principal be repaid. According to Canwest, successful negotiations on both fronts would allow the company to pursue a recapitalization transaction. Canwest has been shedding assets in a bid to stay afloat. So far, however, it has failed to unload any assets that would allow for a significant reduction of its debtload. Meanwhile, analysts have speculated that Fairfax Financial Holdings, which owns 22.4 per cent of Canwest�s subordinate voting shares, could step up with a refinancing proposal.
Sydney Morning-Herald, April 6, 2009: An editorial in the Sydney Morning-Herald laments Canwest�s seemingly �impossible debt burden� of $3.7 billion, concluding that �the solvency of [the Ten Network's] parent company appears to be a lost cause.� The Morning-Herald says the �high-debt model� Canwest used to build its empire is �about to create roadkill on the information superhighway.�
Canadian Press, April 5, 2009: Yet another debt-related deadline is looming for Canwest. The struggling company has until Tuesday to come to terms with lenders on a senior credit facility. Chris Diceman, a senior vice president at credit-rating agency DBRS, says the banks will want to �make sure the company is making progress on selling assets or getting additional capital,� but Diceman suspects they �will be willing to help in some fashion.� Canwest also needs to come up with the necessary funds to make an interest payment on the US$761 million it owes to bondholders by April 14. The payment was initially due last month, though analysts believe Canwest will successfully push for another extension.
The Globe and Mail, April 3, 2009: Australia�s Canwest-owned Ten Network has announced it will not be handing out dividends to its parent company, putting yet another squeeze on Canwest�s cash flow. The Ten Network�s revenue was down 11 per cent over the first six months of its fiscal year and the broadcaster reported $70 million in losses over the same period. Last year, Ten paid out $125 million in dividends, with $60 million going to Canwest. Analysts say the cancellation of dividend payments could force Canwest to sell the once-profitable television network as it approaches an April 14 deadline to pay $761 million for outstanding notes.
CBC, April 3, 2009: Canwest Global Communications Inc. executive vice-president David Asper has agreed to commit $100 million to the construction of a new stadium for the Winnipeg Blue Bombers. The federal and provincial governments, meanwhile, will kick in $15 million and $20 million, respectively, to the project, which is expected to be completed for the start of the 2011 CFL season. In exchange for the funding for the stadium, Asper will become the sole owner of the Blue Bombers franchise, which is currently community-owned.
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I don't think the National Post has ever turned a profit, and Global has been weak for a long while. |
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