Canwest Media to skip interest payment on 8% senior subordinated notes, gets waiver extension

By Caroline Salls

Pittsburgh, March 11 - Canwest Global Communications Corp. subsidiary Canwest Media Inc. will not make the $30.4 million interest payment due March 15 on its 8% senior subordinated notes in connection with an agreement by the subsidiary's senior lenders to extend a waiver of borrowing conditions to April 7, according to a company news release.

The company has until April 14 to make the interest payment before noteholders can demand payment of the roughly $761 million principal amount of the notes.

According to the release, Canwest Media is in discussions with representatives of an informal committee of noteholders aimed at allowing enough time for a recapitalization of Canwest.

Canwest Media said it will continue discussions with its senior lenders and representatives of the noteholder committee to extend access to the credit facility beyond April 7 and enable the subsidiary to move forward with a recapitalization transaction.

Canwest Global said the subsidiary and a group of financial institution counterparties have terminated some currency and interest rate swap agreements related to the senior subordinated notes, resulting in about $105 million of net proceeds to Canwest Media.

The company said the proceeds have been used to reduce obligations under the senior credit agreement, and the 8% senior subordinated notes are no longer hedged against currency fluctuations.

In addition, Canwest Media said it has reduced the principal outstanding under the senior secured credit facility to about $42 million in letters of credit, has cash on hand of $30 million and has access to a further $20 million of liquidity through its senior credit facility.

About $20 million in cash has also been placed on deposit by Canwest Media as collateral with its senior lenders.

Based on current cash flow projections, the company said it believes that it will have enough liquidity to enable it to continue to operate normally through April 7.

Canwest is a Winnipeg, Manitoba-based media company.

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