Down but not out – another extension for Canwest
The net gets a week's grace.
Canwest Global Communications dodged another bankruptcy bullet after it received a debt deadline extension from US bondholders on Tuesday.
A majority of the American creditors late Tuesday agreed not to call in US$761 million in 8% senior subordinated notes after Canwest Media failed to make a missed $30.4-million interest payment.
This is the second deadline extension after the interest payment was initially due on March 15.
Canwest Global now has until next Tuesday to strike a deal with the US bondholders. On that same day, Canwest Global also faces a separate deadline to hammer out new terms on a $300-million credit facility with senior lenders.
‘Under the terms of the extension agreement, the [US] noteholders have agreed not to demand payment of their notes for a period ending on April 21, 2009, to coincide with the expiry date of [Canwest Media's] waiver agreement with its senior lenders,’ Canwest Global said in a statement.
The broadcaster is attempting to open up wider debt recapitalization talks on its $4-billion debt burden, but to do so, must secure permission from lenders with whom it has breached key debt covenants.
Canwest Global also must make a $10-million payment by mid-May and another $57-million payment by mid-August on a separate debt swap liability.
The debt-strapped broadcaster has also attempted to buy time from its creditors by selling off non-core assets. But Canwest Global has so far failed to line up buyers for key assets that will put a significant dent in its overall debt burden.
Rating agency Moody’s on Monday downgraded Canwest Media on the expectation that it would not make the overdue interest payment to the US bondholders by the April 14 deadline.
Financial analysts also this week in separate notes to investors advised them to steer clear of Canwest Global’s stock while it attempts to stave off bankruptcy protection.
From Playback Daily