TORONTO - Canwest Global Communications Corp. (TSX:CGS) received Wednesday a reprieve from its bankers until April 7 and said it will not make a US$30.4-million interest payment on some its debt due this week.
The company had faced a Wednesday deadline for renegotiating borrowing conditions on its debt.
Canwest said it will continue talks with its senior lenders and representatives of an ad hoc committee of noteholders that, if successful, would allow for a recapitalization of the company.
"Discussions with representatives of this group are aimed at allowing sufficient time for a recapitalization of Canwest that is satisfactory to all of its stakeholders, including its senior lenders and noteholders," Canwest said in a statement.
Based on current cash flow projections, the company said it believes that it will have sufficient liquidity to continue to operate normally through April 7.
The company said a failure to make the interest payment on its notes due Friday does not permit the noteholders to demand repayment of the approximately US$761 million principal amount if the interest payment is made on or before April 14.
Canwest also said Wednesday that it has ended certain currency and interest rate swap agreements relating to its senior subordinated notes, resulting in net proceeds of about $105 million, which has been used to reduce obligations under the senior credit agreement.
As a result, the senior subordinate notes are no longer hedged against currency fluctuations.
The Winnipeg-based company has been shopping around some of its assets and making small deals to sell certain divisions.
Canwest has been under pressure from its lenders to prove that it's making inroads in its struggle to repay debt. The company was given 12 extra days in late February to continue talks intended to stave off a potential bankruptcy protection filing.
Canwest has been hit hard by the downturn in the broadcasting industry, which relies heavily on advertising, as well as debts it accumulated over the years because of various acquisitions.
"The underlying problem is that they lack liquidity," said Chris Diceman, senior vice-president of debt rating service DBRS.
"That is the root of our concern at this stage. What are the ways they can help to add to that liquidity."
Earlier this week the company sold American political magazine New Republic back to a group of investors which include the editor-in-chief.
While the value of the deal was undisclosed, several industry observers suggest the price tag is non-material, especially since Canwest probably sold it for a fraction of the US$7 million price it paid at the time.
Two weeks ago Canwest sold part of its 26 per cent stake in sports broadcaster the Score for $6.62 million and hired an investment bank to find a buyer for the remaining $3.6 million in shares of Score Media Inc. (TSX:SCR).
The company has also placed its five E! network television stations up for sale, and could shut them down if a buyer isn't found.
The media industry has been flooded with major changes as broadcasters and newspapers grapple with declining advertising revenues and the economic slowdown.
CTV Television Inc., owned by owned by CTVglobemedia (TSX:BCE, TSX:TS.B), has been slashing jobs and axing newscasts across the country at both its main network and A Channel television stations.
Duncan Stewart, director of research and analysis at DSam Consulting, says that despite the flurry of layoffs over the past two weeks, very little has changed in the broadcast industry.
"All of the things that are causing them problems are bad now ... and they don't look like they're getting (better) any time in the next three months."
Stewart said Canwest should continue to urge lenders to give the company more time.
"Keep asking for extensions, try to sell assets and see if you can get onside with the various covenants."
