CanWest CEO tried to halt sale of newspapers

Posted by Leah McBride Mensching on January 12, 2010 at 3:56 PM

As court documents have been filed, details of arguments between Canada's largest newspaper company and the group's secured lenders have emerged, The Toronto Star reported today. According to these documents, it appears the CEO of Canwest Global Communications Corp. and CanWest Media, Inc. was asking lenders for more time, noting a stabilising economic outlook.

Leonard Asper also wrote that he "profoundly disagrees" with the lenders' move to push CanWest LP (which holds the company's major newspapers) into an "early filing," which could cost the newspaper group as much as C$45 million in fees that would go to "advisory groups that are driving the process." He also asked for six months to find a plan that would be best employees, suppliers and unsecured lenders.

But the Bank of Nova Scotia was not interested. In a letter back to Asper, the bank's executive vice president, Jane Rowe, stated that CanWest LP is behind at least $100 million in payments on several loans, and has been since last May. "It is plain and obvious that [CanWest LP] can not support its massive debt, and that a transaction will have to occur that fundamentally alters the balance sheet of the newspaper business."

Since the letters were exchanged, CanWest LP, which includes 10 dailies and 26 community papers, has filed for bankruptcy.

Four companies are now considering investing in CanWest: Corus Entertainment Inc., Shaw Communications Inc., Fairfax Financial Holdings Ltd. And Jim Pattison Group, the Globe and Mail reported today.

One lawyer working on the restructuring told the Globe and Mail it is likely that when current creditors finish the recapitalisation, they will then sell the company.