Canwest granted bankruptcy protection

Canwest granted bankruptcy protection

Canwest Global, Canada’s largest media conglomerate, successfully filed for bankruptcy protection in a Toronto court on October 6.

The company – whose holdings include Global Television, the National Post, the Financial Post, and the Montreal Gazette – was granted protection from creditors under the Companies’ Creditors Arrangement Act (CCAA), ensuring that Canwest will be able to promptly and more profitably restructure its businesses without collapsing under the weight of its approximately $4-billion debt.

“We’re a very profitable company, [but] we had too much debt,” said Canwest CEO Leonard Asper in a public statement last week. “This is about getting rid of that debt and driving forward.”

In an article in the Financial Post, Canwest attributed its ailing financial condition to “a combination of declining ad revenues, slumping profitability, loss of audience, and the need to switch from analog to digital transmission.”

Filing for bankruptcy protection under the CCAA allows companies temporary relief from creditors while they restructure their businesses. Canwest presented a “pre-packaged plan of arrangement” to eventually settle their debts that was already approved by a majority of creditors. If the plan is approved by the court and the remaining creditors, CCAA protection can be extended for the duration of the restructuring.

“This virtually assures that the restructuring plan we set out will succeed,” Asper said. Once all groups are on board, Canwest’s business operations can go forward uninterrupted.

Bankruptcy protection will affect the debt related to approximately 30 per cent of Canwest’s revenue stream. Debt related to Canwest’s chain of 11 newspapers and the specialty TV channels it owns jointly with Goldman Sachs will be negotiated separately.