Spending cash for Canwest
The Canadian 'caster has secured a $175 million financial lifeline in a deal that transfers control from shareholders to bondholders.
Canwest Global Communications says it has secured $175 million in new financing, just in time for purchases at the Los Angeles Screenings, which get underway today.
But new June deadlines in creditor talks still loom for the cash-strapped broadcaster as it continues attempts to complete a wider debt recapitalization.
Canwest said Wednesday it has secured buyers for $100 million in new 12% senior-secured notes for two of its subsidiaries, Canwest Media and Canwest Television Limited Partnership.
As well, CIT Business Credit Canada is to provide a new $75 million asset-based revolving loan to Canwest Media.
The new financing will be used to repay outstanding debt obligations, which includes an existing $300 million senior line of credit.
The broadcaster said its senior lenders agreed to extend to June 2 a waiver agreement on the $300 million credit line, and the American bondholders will extend to June 15 their own creditor talks to allow the sale of the new 12% senior-secured notes and the new $75 million revolver to be completed by May 21.
‘These facilities are intended to provide Canwest with sufficient credit availability to operate its business in the ordinary course as it continues its work to effect a recapitalization transaction,’ the company said in a statement.
The refinancing stands to remove the uncertainty that surrounds Canwest Global as it buys new and returning US network series from its American studio suppliers.
It also comes after a midnight deadline Tuesday to refinance its $300 million credit line with senior lenders and US$761 million in senior subordinated notes.
As an indication of the urgency that surrounds Canwest Global, and of creditor talks that went well into the night, news of the latest refinancing did not come until late Wednesday morning.
The American bondholders are owed a US$30.4 million interest payment originally due on March 15, but agreed not to call Canwest Global on the US$761 million principal as long as debt talks continued.
The latest June deadlines will also enable Canwest Global to avoid a possible trip to the courts for protection from its creditors as it continues its debt renegotiation talks.
At the same time, the $175 million in new financing will only go so far in easing a growing debt of around $4.1 billion. Much of that debt resulted from the 2000 acquisition of newspaper assets from Hollinger International and the 2007 purchase of Alliance Atlantis Communications for $2.3 billion in partnership with Goldman Sachs & Co.
The ongoing debt talks have been complicated by worsening TV ad revenue climate and a recession that has hampered efforts by the broadcasters to sell non-core assets.
The latest sale included four Turkish radio stations going to Spectrum Medya for an undisclosed price.
Stock in Canwest Global was up five cents on Wednesday, or 15%, to $0.40.
From Playback Daily