Canwest delays challenge to drug ad ban
Also seeks wage concessions from newspaper unionsTORONTO -- Canadian broadcaster Canwest Global Communications has delayed a federal court challenge to a domestic TV drug advertising ban and asked its newspaper unions for wage concessions as it faced a June 15 deadline with U.S. bondholders for an agreement in principle on a debt restructuring deal.
The latest moves follow six months of talks by Winnipeg, Manitoba-based Canwest Global with senior lenders and U.S. bondholders to stave off bankruptcy protection as it juggles a growing CAN$4 billion debt load. To raise much-needed ad revenue, Canwest Global has pursued the right to air direct-to-consumer drug advertising, a practice banned in Canada while it is permitted in the U.S. market.
But the broadcaster said it will now delay its court challenge while it focuses on selling assets, cutting costs and negotiating with U.S. bondholders and senior lenders on a debt restructuring. Canwest Global has also asked its newspaper union, CWA/SCA, to agree to talks to negotiate wage cuts of up to 5% to save about CAN$20 million in annual costs.
The newspaper union said it will engage in talks with the struggling media group once it receives more details on the wage cuts sought. The latest deadline in separate talks with U.S. bondholders comes after they agreed on May 21 to give Canwest Global $100 million in new financing as CIT Business Credit Canada separately agreed to supply a new $75 million senior credit line to Canwest Media, a division of Canwest Global.
Pending milestones that Canwest Global must now meet in the next few months include by June 15 selling its Turkish media assets to net $13 million in proceeds and opening talks with Canada's TV regulator on its restructuring process. Canwest Global is also to complete by July 15 a restructuring agreement with senior lenders on a CAN$300 million credit facility and U.S bondholders owed $761 million. The broadcaster has defaulted on both loans.
And Canwest Global is committed to complete its restructuring by Oct. 31 when it will have fully repaid outstanding interest payments and loans.