WINNIPEG – Canwest Global said today it has secured $175 million in new financing that will let it pay debt and continue as-is for about another couple of months, when a deal to recapitalize the company has to be done.
And CEO Leonard Asper told employees to keep plugging, making sure “the trains run on time” during this ongoing process.
In official-press-release-speak the company “announced today that its subsidiaries, Canwest Media Inc. (“CMI”) and Canwest Television Limited Partnership, and certain members (the “Purchasers”) of the ad hoc committee of 8% senior subordinated noteholders (the “Ad Hoc Committee”) have entered into an agreement, pursuant to which the Purchasers will purchase the U.S. dollar equivalent of $105 million principal amount of 12% senior secured notes of CMI and Canwest Television Limited Partnership (“Senior Secured Notes”) for an aggregate purchase price of the U.S. dollar equivalent of $100 million,” it reads.
“CIT Business Credit Canada Inc. (“CIT”) has agreed to provide a senior secured revolving asset-based loan (“ABL”) facility in the amount of $75 million to CMI.”
Both transactions are expected to close tomorrow (May 21st).
Basically, the bondholders and CIT (known as “a lender of last resort,” one Bay Street analyst told Cartt.ca today) have loaned the company another 26 days to come up with a an agreement in principle on recapitalization plan and 56 days in total to finalize that agreement.
(However, as anyone who has followed this story will recall, deadlines have been flexible with Canwest and its lenders and bondholders.)
The new money is intended to provide Canwest with sufficient credit availability to operate its business “and the company will use proceeds from the issue and sale of the Senior Secured Notes and from CIT’s ABL facility to, among other things, repay the current lenders all amounts owing under CMI’s existing senior credit facility and settle related obligations,” says the release.
CMI has also agreed to these two milestones within certain time frames, including:
• On or before June 15, 2009, reaching an agreement in principle with members of the Ad Hoc Committee in respect of a recapitalization transaction.
• On or before July 15, 2009, entering into a definitive agreement with members of the Ad Hoc Committee with respect to such recapitalization transaction.
“By taking this action now,” Canwest CEO Leonard Asper told employees in a company-wide memo, “we will be in a position to take advantage of an improving Canadian economy.”
“I want to reiterate that each of you can play an important part in our success by staying focused on the job at hand. From producing compelling content, selling advertising and finding innovative ways to reach new audiences wherever they may be to making sure the ‘trains run on time’ by protecting our servers and systems, ensuring that commercials run during the right programs and ads gets printed on the right pages – your hard work is a key to our success,” wrote the CEO.
“When combined, the outcome of our actions will ensure the future viability of our company and position us to best capitalize when the Canadian economy begins to grow again.”
– Greg O’Brien
