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This article was published 22/4/2009 (4206 days ago), so information in it may no longer be current.
TORONTO - Canwest Global Communications Corp. (TSX:CGS) has arranged yet another reprieve on its debt - the fourth in two months - leaving observers divided on the likelihood of bankruptcy.
Canwest, whose previous extensions expired Tuesday, said Wednesday morning it had won another two-week breathing space and would continue discussions with its secured lenders and a committee of noteholders.
It said the lenders have agreed to stretch out the waiver of borrowing conditions until May 5, and during that period they will continue to provide credit to the owner of the Global television network, various speciality TV channels, a chain of big-city newspapers and the National Post.
Shares in Canwest were up 25 per cent on the news, rising six cents to 30 cents, down from over $4 a year ago and from $20 when it bought the papers in 2000.
Carmi Levy, an analyst at consulting firm AR Communications Inc., said the media company is "rapidly running out of time," and a filing for court protection from bankruptcy is likely if it can't find a solution soon.
"They've got a limited number available, I'd say at most two or three extensions, before everyone just says, 'Enough,"' Levy said.
But Eamon Hoey, of Hoey Associates Management Consultants, said there are very few interested buyers for struggling media assets at present, and this may keep Canwest out of bankruptcy court for the time being.
"That's why we've had these postponements and that's why we've basically seen no one willing to pull the curtain down. There aren't any serious options," Hoey said.
"There's really limited opportunities from a strategic perspective as to where you can go with this."
Hoey added that he thinks Canwest will eventually reach a deal, if only because its lenders don't have a choice in the current marketplace.
Levy said Canwest might avoid insolvency if the federal government comes through with a $150-million fund it is considering to help private broadcasters maintain local programming.
"A lot of (Canwest's) profits are being sucked back into debt service, so if it could direct some of the federal funding towards its local properties it could free up some of its cash flow and then be able to service its debt more effectively," Levy said.
But he added that without outside help - and soon - Canwest "has essentially nowhere to go" besides bankruptcy court.
The Winnipeg-based media conglomerate has violated terms of a senior secured credit facility, and failed to pay US$30.4 million in interest due since March 15 on the notes.
The noteholders are entitled to demand repayment of the US$761 million outstanding as well as the missed interest.
Canwest has been crushed by its debt load after buying the former Southam group of papers from Conrad Black's Hollinger group in 2000 for $3.2 billion, then spending $2.3 billion in 2007 for the Alliance Atlantis specialty TV channels. The economic slump has worsened its troubles by shrivelling ad revenue.
Goldman Sachs supplied 85 per cent of the financing for the Alliance Atlantis takeover, but Levy said it's unclear what role the Wall Street investment bank would play if Canwest filed for bankruptcy protection.
Canwest, controlled by the family of founder Izzy Asper, has been trying to unload assets to reduce its $4.1-billion debt, but it has been unable to make major sales into the disastrous global media market.
It had a net loss of $1.44 billion in its latest quarter including a $1.2-billion writedown of newspaper assets, which followed a $1-billion writedown of TV holdings late last year.
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