MONTREAL – A subsidiary of Canuck broadcaster CanWest Global Communications missed a C$10 million ($9.2 million) interest payment that was due Friday. In a statement, CanWest said its subsidiary, CanWest Limited Partnership, which owns newspapers across Canada, was not making the payment so as “to provide the Limited Partnership with the ability to continue to operate its business in the ordinary course, as it works to effect a recapitalization transaction.”
For the past few months, Winnipeg-based CanWest has been trying to come up with a re-structuring plan to deal with its financial woes, problems due mainly to its heavy debt load – valued at $3.6 billion – and these problems which have been heightened by the economic downturn and the crisis in the broadcast business. Last week, another CanWest subsidiary, CanWest Media, announced that it had secured $160 million in financing in order to keep the business rolling while it tries to come up with an overall deal to solve its issues. It has to come up with a definitive recapitalization agreement by at the latest July 15.
With the failure to make the payment on Friday, this constitutes a default under the company’s senior credit agreement and that allows the lenders under the facility to demand immediate re-payment of the debts owed by the newspaper division.
In March, CanWest had missed a $30 million interest payment on $761 million worth of notes, and following that event, the company had inked a deal with lenders to ensure that they would not ask for re-payment of all the debt owing to give CanWest breathing room to come up with a financial restructuring deal.
The company continues to work toward coming up with an arrangement to deal with this financial crisis.