Canwest Global seeks creditor protection
In order to complete a controlled recapitalization planTORONTO -- Following marathon talks with bankers, Canwest Global Communications Corp. is to file for bankruptcy protection Tuesday to complete a controlled recapitalization plan.
Debt-laden Canwest Global said it will voluntarily file for creditor protection under Canada's Companies' Creditors Arrangement Act.
A majority of U.S. bondholders owed $761 million and a missed interest payment by Canwest Global agreed to the move that will effectively place the Canadian broadcaster in the hands of distressed debt and vulture funds.
"This pre-packaged financial restructuring is intended to minimize business disruption and preserve the value of these business operations," Canwest president and CEO Leonard Asper said in a statement.
Asper added Canwest and its 1,700 employees expect to emerge from CCAA protection in four to six months "on a stronger footing for the future."
As part of the proposed restructuring, U.S. bondholders and senior lenders will exchange debt for equity in Canwest Global, which operates TV, newspaper and digital assets nationwide.
Through the restructuring, Canwest Media Inc., a holding company for Canwest Global, has $100 million in debtor in possession financing and another $65 million in cash to fund affected business units, which do not include cable channels that Canwest Global operates in partnership with Goldman Sachs & Co.
Under the terms of the agreed restructuring, existing Canwest Global shareholders will receive 2.3% of common shares in the restructured broadcaster.
Asper and his family are to lose control of Canwest Global as part of the recapitalization.
The U.S. bondholders and senior lenders who now control Canwest Global's destiny agreed to allow the Asper family to invest up to $15 million in a restructured broadcaster, subject to conditions that include securing a co-investment from one or more Canadians, acceptable to all parties.
"Canwest has not made any determination with respect to the terms of any proposed equity investment by the Aspers or any other parties but welcomes the commitment of the Asper family to assist Canwest in achieving a successful recapitalization," the broadcaster said in a statement.
This marks the latest in a series of extensions Canwest Global has received as it juggles $4 billion in debt and attempts to stave off bankruptcy protection.
The voluntary filing and creditor protection is the latest blow to Canwest Global as it deals with mounting debt during the economic downturn and an advertising slump.
Before it recently sold a controlling stake in Australia's Network TEN, and erased $1.2 billion in debt from its balance sheet, Canwest Global was juggling a $3.8 billion debt mountain after a string of costly acquisitions in better times.