If the new lord Black buys Canwest newspapers, this will include selling the Times Colonist into a non profit also
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Cawest shareholders say both the company and union officials, are not representing shareholders interests in Canwest CCAA filing.
http://ottawanewsguild.ca/website/
http://www.vving.ca/officers.shtml
The union needs to get on board, and have the British Columba Canwest newpaper monopoly sold into bits. The new ower of Canwest's Canada prescription newspapers flagships, must sell either the Province or the Vancouver Sun. Competition Canada ruling.http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/00583.html
Wednesday, March 31, 2010
Tuesday, March 30, 2010
Forbearance Agreement Aug31,09 with the LP Entities, not the 8% noteholders
On October 5, 2009, the Canwest Media Entities entered into the Recapitalization Agreement with members of the Ad Hoc Committee pursuant to which they intend to pursue a recapitalization transaction related to the Canwest Media Entities
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
[The CCAA recapitalizaton transaction signed on Oct 5 with the 8% note holders, is after the disiposition of Canwest shareholders cash reserves. ]
CANWEST GLOBAL COMMUNICATIONS CORP.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2009
(UNAUDITED)
Quote, "Effective August 31, 2009, the Canwest LP Entities entered into a forbearance agreement with the administrative agent under the senior secured credit facility (the “Administrative Agent”) under which the lenders agreed to not take any steps with respect to the defaults under the senior secured credit facility and to work with management of Canwest LP to develop and implement a consensual pre-packaged restructuring, recapitalization, or reorganization of Canwest LP and its subsidiaries. In accordance with the terms of the forbearance agreement, the lenders cancelleall undrawn amounts under the revolving credit facility. Canwest LP agreed to pay the interest owing and the continuing interest on its senior secured loans and the interest amounts outstanding under the terminated hedging arrangements. The forbearance agreement was subject to a number of conditions and required the achievement of certain milestones. The forbearance agreement, as extended, expired on November 9, 2009. Canwest LP was also in default under the terms of its senior subordinated unsecured credit facility and senior subordinated unsecured notes and did not enter into any forbearance arrangements with the unsecured lenders or the holders of the unsecured notes."
[Should cite that Sept 15 missed interest payment on the 8% notes.]
Quote, "On September 22, 2009 the Canwest Media Entities entered into a Use of Cash Collateral and Consent Agreement with an ad hoc committee of 8% Notes holders representing over 70% of the 8% Notes issued by Canwest Media (the “Ad Hoc Committee”). On October 1, 2009, the Company sold its interest in Ten Network Holdings Limited (“Ten Holdings”) for net proceeds of $618 million (see notes 9 and 16). In accordance with the Use of Cash Collateral and Consent Agreement the proceeds were advanced to Canwest Media by its wholly-owned Irish subsidiary which held the investment in Ten Holdings and were utilized as follows: $102 million to repay the 12% notes, $85 million to repay the ABL facility and to provide operating liquidity and $431 million to reduce its obligations under its 8% Notes indenture."
[These bonds Canwest bought back dollar per dollar, were trading under .70 cents on the dollar.]
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
[The CCAA recapitalizaton transaction signed on Oct 5 with the 8% note holders, is after the disiposition of Canwest shareholders cash reserves. ]
CANWEST GLOBAL COMMUNICATIONS CORP.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2009
(UNAUDITED)
Quote, "Effective August 31, 2009, the Canwest LP Entities entered into a forbearance agreement with the administrative agent under the senior secured credit facility (the “Administrative Agent”) under which the lenders agreed to not take any steps with respect to the defaults under the senior secured credit facility and to work with management of Canwest LP to develop and implement a consensual pre-packaged restructuring, recapitalization, or reorganization of Canwest LP and its subsidiaries. In accordance with the terms of the forbearance agreement, the lenders cancelleall undrawn amounts under the revolving credit facility. Canwest LP agreed to pay the interest owing and the continuing interest on its senior secured loans and the interest amounts outstanding under the terminated hedging arrangements. The forbearance agreement was subject to a number of conditions and required the achievement of certain milestones. The forbearance agreement, as extended, expired on November 9, 2009. Canwest LP was also in default under the terms of its senior subordinated unsecured credit facility and senior subordinated unsecured notes and did not enter into any forbearance arrangements with the unsecured lenders or the holders of the unsecured notes."
[Should cite that Sept 15 missed interest payment on the 8% notes.]
Quote, "On September 22, 2009 the Canwest Media Entities entered into a Use of Cash Collateral and Consent Agreement with an ad hoc committee of 8% Notes holders representing over 70% of the 8% Notes issued by Canwest Media (the “Ad Hoc Committee”). On October 1, 2009, the Company sold its interest in Ten Network Holdings Limited (“Ten Holdings”) for net proceeds of $618 million (see notes 9 and 16). In accordance with the Use of Cash Collateral and Consent Agreement the proceeds were advanced to Canwest Media by its wholly-owned Irish subsidiary which held the investment in Ten Holdings and were utilized as follows: $102 million to repay the 12% notes, $85 million to repay the ABL facility and to provide operating liquidity and $431 million to reduce its obligations under its 8% Notes indenture."
[These bonds Canwest bought back dollar per dollar, were trading under .70 cents on the dollar.]
Canwest March 30.4 million interest payment missed, no longer owed, with this payment
Needs verification: No interest outstanding before the Sept.15 09 missed interest payment and default; causing full principle repayment on the 8 percent notes
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
http://www.canwestglobal.com/investors/investor_documents/F10/q1/CGCC_FS_Q1_2010_FINAL.pdf
In May 2009, Canwest Media entered into a new $75 million senior secured asset based loan facility (the “ABL facility”) (note 14) and issued $105 million (US$94 million) secured notes (the
“12% Notes”) (note 14) for cash proceeds of $100 million to certain holders of its 8% Notes. The proceeds were used to pay, in full, amounts owing under Canwest Media’s previous senior secured credit facilities and certain secured hedging derivatives, as well as to finance operations.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
http://www.canwestglobal.com/investors/investor_documents/F10/q1/CGCC_FS_Q1_2010_FINAL.pdf
In May 2009, Canwest Media entered into a new $75 million senior secured asset based loan facility (the “ABL facility”) (note 14) and issued $105 million (US$94 million) secured notes (the
“12% Notes”) (note 14) for cash proceeds of $100 million to certain holders of its 8% Notes. The proceeds were used to pay, in full, amounts owing under Canwest Media’s previous senior secured credit facilities and certain secured hedging derivatives, as well as to finance operations.
Canwest's Canada news monopoloy infrastructure, a phoenix corporation
A new provision in the Companies’ Creditors Arrangement Act came into force in September requiring court approval for any disposition of assets by a CCAA-protected company
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
http://www.lawtimesnews.com/201003226571/Headline-News/CCAA-amendment-changes-game-for-dispositions
Quote, "A new provision in the Companies’ Creditors Arrangement Act came into force in September requiring court approval for any disposition of assets by a CCAA-protected company where the transaction was “outside of the ordinary course of business.”
Edward Sellers was disappointed Justice Sarah Pepall didn’t definitively exclude ‘desirable, good-faith steps taken in effecting a reorganization.’The Industry Canada briefing book on the provision, s. 36, cites its purpose as intending “to provide the debtor company with greater flexibility in dealing with its property while limiting the possibility of abuse” by phoenix corporations.Such abuses arise in the context of owners who engage in serial bankruptcies. These individuals incorporate businesses and then cause them to become bankrupt. The same person purchases the assets at a discount and starts a new business using them. As a result, the owner continues with what amounts to the original business while leaving creditors unpaid.
Reference for the National Post Transfer,
That’s the situation Ontario Superior Court Justice Sarah Pepall faced in the CanWest restructuring. In November, CMI Entities, a group of companies that were under CCAA protection, asked Pepall to approve a transition and reorganization agreement among the various CanWest assets, only some of which were under bankruptcy protection. The idea was to restructure the enterprise by transferring the assets of The National Post to a new entity.
CMI, supported by the monitor, described the transactions involved as “inter-entity arrangements” and asked Pepall to declare that the agreement represented an internal corporate reorganization that wasn’t subject to s. 36. Such a reorganization, it argued, was within the ordinary course of business of the insolvent enterprise and therefore didn’t engage the provision.
But, Pepall noted, not every internal corporate reorganization escaped the purview of s. 36.“Indeed, a phoenix corporation to one may be an internal corporate reorganization to another,” she wrote.In this case, however, the businesses of the Post and the parent of the new subsidiary were “highly integrated and interdependent.” The current arrangement reflected an anomaly that hindered the success of the enterprise and that the agreement aimed to remedy.“The transition and reorganization agreement is an internal reorganization transaction that is designed to realign shared services and assets within the CanWest corporate family so as to rationalize the business structure and to better reflect the appropriate business model,” Pepall noted.It would therefore be “commercially unreasonable” to require the parties to engage in the sale approval process contemplated by s. 36, including putting the Post up for grabs by third parties, before permitting a realignment.“In these circumstances, I am prepared to accept that s. 36 is inapplicable,” Pepall concluded.
But Pepall went on to say that even where the provision didn’t apply, court approval was still necessary when the disposition was to a related person and there existed an apprehension that it wasn’t in the ordinary course of business. But even if the court decided the transaction was so, it could still consider the criteria in s. 36 in assessing whether it was fair.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
http://www.lawtimesnews.com/201003226571/Headline-News/CCAA-amendment-changes-game-for-dispositions
Quote, "A new provision in the Companies’ Creditors Arrangement Act came into force in September requiring court approval for any disposition of assets by a CCAA-protected company where the transaction was “outside of the ordinary course of business.”
Edward Sellers was disappointed Justice Sarah Pepall didn’t definitively exclude ‘desirable, good-faith steps taken in effecting a reorganization.’The Industry Canada briefing book on the provision, s. 36, cites its purpose as intending “to provide the debtor company with greater flexibility in dealing with its property while limiting the possibility of abuse” by phoenix corporations.Such abuses arise in the context of owners who engage in serial bankruptcies. These individuals incorporate businesses and then cause them to become bankrupt. The same person purchases the assets at a discount and starts a new business using them. As a result, the owner continues with what amounts to the original business while leaving creditors unpaid.
Reference for the National Post Transfer,
That’s the situation Ontario Superior Court Justice Sarah Pepall faced in the CanWest restructuring. In November, CMI Entities, a group of companies that were under CCAA protection, asked Pepall to approve a transition and reorganization agreement among the various CanWest assets, only some of which were under bankruptcy protection. The idea was to restructure the enterprise by transferring the assets of The National Post to a new entity.
CMI, supported by the monitor, described the transactions involved as “inter-entity arrangements” and asked Pepall to declare that the agreement represented an internal corporate reorganization that wasn’t subject to s. 36. Such a reorganization, it argued, was within the ordinary course of business of the insolvent enterprise and therefore didn’t engage the provision.
But, Pepall noted, not every internal corporate reorganization escaped the purview of s. 36.“Indeed, a phoenix corporation to one may be an internal corporate reorganization to another,” she wrote.In this case, however, the businesses of the Post and the parent of the new subsidiary were “highly integrated and interdependent.” The current arrangement reflected an anomaly that hindered the success of the enterprise and that the agreement aimed to remedy.“The transition and reorganization agreement is an internal reorganization transaction that is designed to realign shared services and assets within the CanWest corporate family so as to rationalize the business structure and to better reflect the appropriate business model,” Pepall noted.It would therefore be “commercially unreasonable” to require the parties to engage in the sale approval process contemplated by s. 36, including putting the Post up for grabs by third parties, before permitting a realignment.“In these circumstances, I am prepared to accept that s. 36 is inapplicable,” Pepall concluded.
But Pepall went on to say that even where the provision didn’t apply, court approval was still necessary when the disposition was to a related person and there existed an apprehension that it wasn’t in the ordinary course of business. But even if the court decided the transaction was so, it could still consider the criteria in s. 36 in assessing whether it was fair.
Saturday, March 27, 2010
CCAU does not understand why the CRTC has not given interested parties more time to file interventions on Goldman Sachs Canwest purchase of Atlantis
CCAU opposes the application because approval by the Commission would give GSCP and its affiliates, which are non-Canadians, overwhelming control in fact of both Alliance Atlantis and the existing television business of CanWest
http://www.wgc.ca/files/CCAU%20Intervention%20-%20CRTC%20-%20CanWest%20AA%202007-08-10.pdf
Re: Application No. 2007-0700-5 (the "Application") by CanWest Media Works Inc. ("CanWest"), on behalf of Alliance Atlantis Communications Inc. (Alliance Atlantis), seeking authority for the transfer of effective control of Alliance Atlantis’ broadcasting companies to CanWest – Broadcasting Notice of Public Hearing CRTC 2007-11,
8. The structure proposed by CanWest and GSCP is relatively complex, and many details of such structure are not provided to interested parties because of extensive claims for confidentiality made by CanWest and GSCP that have been upheld by the Commission.
17. While the Commission had granted CanWest and GSCP confidentiality for the details of the formula to be used in respect of the calculation of CanWest's ultimate equity interest, CanWest's news release of July 31, 2007 revealed possible outcomes of the contribution.
16. A very important feature of the proposed structure is that CanWest and GSCP have agreed that CanWest and its affiliates will contribute CanWest's existing television broadcasting business (the "Contributed Business") to Amalco in 2011 in exchange for an increased equity interest of CanWest in Jointco. The extent to which CanWest's equity interest will increase is dependent upon the combined cash flow of the Contributed Business
12. Approval would also result in CanWest owning 66 2/3% of the voting shares of Jointco. GSCP would own 33 1/3% of the voting shares of Jointco. However, GSCP’s economic interest in the Alliance Atlantis licensees would be substantially greater. In the application as originally filed, CanWest would provide only $200 million of the $702 million investment in equity to be provided by CanWest and GSCP. As a result, CanWest would have had an equity interest of only 29% in Jointco while GSCP would have had an equity interest of 71%.
13. In its July 31, 2007 news release, CanWest announced that its equity investment in Jointco would increase to $262 million, thus resulting in CanWest having an equity interest of 36% in Jointco and GSCP having an equity interest of 64%.
http://www.wgc.ca/files/CCAU%20Intervention%20-%20CRTC%20-%20CanWest%20AA%202007-08-10.pdf
Re: Application No. 2007-0700-5 (the "Application") by CanWest Media Works Inc. ("CanWest"), on behalf of Alliance Atlantis Communications Inc. (Alliance Atlantis), seeking authority for the transfer of effective control of Alliance Atlantis’ broadcasting companies to CanWest – Broadcasting Notice of Public Hearing CRTC 2007-11,
8. The structure proposed by CanWest and GSCP is relatively complex, and many details of such structure are not provided to interested parties because of extensive claims for confidentiality made by CanWest and GSCP that have been upheld by the Commission.
17. While the Commission had granted CanWest and GSCP confidentiality for the details of the formula to be used in respect of the calculation of CanWest's ultimate equity interest, CanWest's news release of July 31, 2007 revealed possible outcomes of the contribution.
16. A very important feature of the proposed structure is that CanWest and GSCP have agreed that CanWest and its affiliates will contribute CanWest's existing television broadcasting business (the "Contributed Business") to Amalco in 2011 in exchange for an increased equity interest of CanWest in Jointco. The extent to which CanWest's equity interest will increase is dependent upon the combined cash flow of the Contributed Business
12. Approval would also result in CanWest owning 66 2/3% of the voting shares of Jointco. GSCP would own 33 1/3% of the voting shares of Jointco. However, GSCP’s economic interest in the Alliance Atlantis licensees would be substantially greater. In the application as originally filed, CanWest would provide only $200 million of the $702 million investment in equity to be provided by CanWest and GSCP. As a result, CanWest would have had an equity interest of only 29% in Jointco while GSCP would have had an equity interest of 71%.
13. In its July 31, 2007 news release, CanWest announced that its equity investment in Jointco would increase to $262 million, thus resulting in CanWest having an equity interest of 36% in Jointco and GSCP having an equity interest of 64%.
Wednesday, March 24, 2010
Canwest shares expropiriated for 11 million; Canwest newspaper executives want 6 million in bonuses
These newspaper executive bonus figure are only half of it; does not include bonuses for Cawest broadcasting assets executives, and Canwest HQ
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Canwest shareholder newspaper widget sabotaged, by senior Canwest executive editors, to steal from Canwest shareholders, by not reporting the Canwest financial numbers right. It is the Law that employees not wreck company product; no difference than for newspaper reports reporting false financial information about Canwest shareholders. An example, Canwest news articles stating that Shaw bought Canwest broadcasting assets --Shaw bought 20 percent of a company that owns 1/3 share in CW Media, that soon will own Canwest TV stations, sold at a discount to Goldman Sachs.]
http://www.thestar.com/business/article/784719--canwest-asks-court-to-boost-executive-bonuses
Troubled CanWest LP, the biggest publisher of major Canadian daily newspapers, wants the court to approve an additional $1.3 million in bonuses for executives who remain on board during the restructuring and sale process. That would bring the total to $6 million in retention bonuses to be paid out to 27 employees over the course of the process, which is expected to end in mid-August.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Canwest shareholder newspaper widget sabotaged, by senior Canwest executive editors, to steal from Canwest shareholders, by not reporting the Canwest financial numbers right. It is the Law that employees not wreck company product; no difference than for newspaper reports reporting false financial information about Canwest shareholders. An example, Canwest news articles stating that Shaw bought Canwest broadcasting assets --Shaw bought 20 percent of a company that owns 1/3 share in CW Media, that soon will own Canwest TV stations, sold at a discount to Goldman Sachs.]
http://www.thestar.com/business/article/784719--canwest-asks-court-to-boost-executive-bonuses
Troubled CanWest LP, the biggest publisher of major Canadian daily newspapers, wants the court to approve an additional $1.3 million in bonuses for executives who remain on board during the restructuring and sale process. That would bring the total to $6 million in retention bonuses to be paid out to 27 employees over the course of the process, which is expected to end in mid-August.
Petition: Canwest shareholders vs Canwest Global Communications Corp.
Motion to stay Canwest CCAA proceeding until an independent inspector can conduct an investigation of the Respondent Canwest Global Communications ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Applicable to Canwest (from Cataylst vs Hollinger)
[1] The Applicant seeks the appointment of an inspector to conduct an investigation of the Respondent [Canwest Global Communications Inc.] (“Inc.”) pursuant to s.229 of the Canada Business Corporations Act, R.S.C. 1985 c.C-44, as amended (the “CBCA.”)
[2] The basis of the request is that the management of Inc., through audited financial statements or otherwise, has failed to explain the purpose, extent or details of a number of related-party transactions that personally benefited a number of individuals who were officers and directors of Inc. and of its lenders Cataylst and other transactions, swaps etc.
[3] The essence of the Applicant’s request is that since the resignation of the members of the audit committee of Inc. (who were all of the independent directors) and of its auditors shortly thereafter, there have been no meaningful steps taken to address the issues or answer the questions raised by the independent directors and the auditors.
Applicable to Canwest (from Cataylst vs Hollinger)
[1] The Applicant seeks the appointment of an inspector to conduct an investigation of the Respondent [Canwest Global Communications Inc.] (“Inc.”) pursuant to s.229 of the Canada Business Corporations Act, R.S.C. 1985 c.C-44, as amended (the “CBCA.”)
[2] The basis of the request is that the management of Inc., through audited financial statements or otherwise, has failed to explain the purpose, extent or details of a number of related-party transactions that personally benefited a number of individuals who were officers and directors of Inc. and of its lenders Cataylst and other transactions, swaps etc.
[3] The essence of the Applicant’s request is that since the resignation of the members of the audit committee of Inc. (who were all of the independent directors) and of its auditors shortly thereafter, there have been no meaningful steps taken to address the issues or answer the questions raised by the independent directors and the auditors.
Hollinger Canada CCAA Ontario filing, during Canwest CCAA Ontario filing
Motion to stay Canwest CCAA proceeding until an independent accountant, appointed by Canwest small shareholders, can audit Canwest and disclose the GAAP and financial irregularities
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
http://www.mediaunion.ca/archives/2010/01/letter-from-media-vp-about-hollinger-ccaa-filing/
Quote, "There is no timeline established for the CCAA proceedings. However, it is expected that the proceedings will last at least four to six months. Although this is a difficult time for everyone involved, you can rest assured that CEP will do everything in its power to protect the interests of its former members in the Hollinger CCAA proceedings."
Quote, "On December 10, 2009 Hollinger filed for protection from its creditors under the Companies’ Creditors Arrangement Act (”CCAA”)."
http://cepunion.blogspot.com/2010/01/hollinger-ccaa-filing-letter-from-media.html
http://www.canlii.org/eliisa/search.do?language=en&searchTitle=Ontario&sortOrder=relevance&searchPage=eliisa%2FjurisdictionSearch.vm&jurisdiction=on&text=hollinger&id=&startDate=&endDate=&legislation=legislation&caselaw=courts&boardTribunal=tribunals
http://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br02330.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
http://www.mediaunion.ca/archives/2010/01/letter-from-media-vp-about-hollinger-ccaa-filing/
Quote, "There is no timeline established for the CCAA proceedings. However, it is expected that the proceedings will last at least four to six months. Although this is a difficult time for everyone involved, you can rest assured that CEP will do everything in its power to protect the interests of its former members in the Hollinger CCAA proceedings."
Quote, "On December 10, 2009 Hollinger filed for protection from its creditors under the Companies’ Creditors Arrangement Act (”CCAA”)."
http://cepunion.blogspot.com/2010/01/hollinger-ccaa-filing-letter-from-media.html
http://www.canlii.org/eliisa/search.do?language=en&searchTitle=Ontario&sortOrder=relevance&searchPage=eliisa%2FjurisdictionSearch.vm&jurisdiction=on&text=hollinger&id=&startDate=&endDate=&legislation=legislation&caselaw=courts&boardTribunal=tribunals
http://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br02330.html
Tuesday, March 23, 2010
http://www.financialpost.com/story.html?id=152738#ixzz0j3EyHhMw
http://www.canada.com/nationalpost/financialpost/story.html?id=2d43ae3c-fbbf-4722-9b75-c7e8b7462e61
Quote, "Newton Glassman, the managing partner of Catalyst Capital Group Inc., told a private equity seminar last month that his company hasn't made any money on Hollinger Inc. because "he backed the wrong horse." The youthful managing partner of Catalyst Capital Group Inc. told about 100 distressed asset investors at the Toronto Convention Centre that the parent company through which Conrad Black once controlled the world's third-largest media empire wasn't proving to be such a solid investment after all.
The balance has been spent on consulting fees -- including more than US$20-million paid to Richard Breeden, a former chairman of the U.S. Securities and Exchange Commission, for his now-famous investigative report -- and other litigation fees, such as the US$542-million civil suit launched against Lord Black and a group of his former managers.
http://www.canada.com/nationalpost/financialpost/story.html?id=2d43ae3c-fbbf-4722-9b75-c7e8b7462e61
Quote, "Newton Glassman, the managing partner of Catalyst Capital Group Inc., told a private equity seminar last month that his company hasn't made any money on Hollinger Inc. because "he backed the wrong horse." The youthful managing partner of Catalyst Capital Group Inc. told about 100 distressed asset investors at the Toronto Convention Centre that the parent company through which Conrad Black once controlled the world's third-largest media empire wasn't proving to be such a solid investment after all.
The balance has been spent on consulting fees -- including more than US$20-million paid to Richard Breeden, a former chairman of the U.S. Securities and Exchange Commission, for his now-famous investigative report -- and other litigation fees, such as the US$542-million civil suit launched against Lord Black and a group of his former managers.
Monday, March 22, 2010
SEC Canada ruling: Glacier out or running to buy Canada's newspapers
Already purchased some of Hollinger newspapers; bought enough already
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Quote, "Glacier Publications LP has also been named as a party to an arbitration with respect to disputes arising from CanWest Global Communication Inc.’s(“CanWest”) purchase of certain newspaper assets from Hollinger in 2000."
http://www.marketwire.com/press-release/Glacier-Acquires-Hollinger-Canada-Operations-TSX-GVC-575081.htm
The Board of Directors of Glacier Ventures International Corp. ("Glacier" or the "Company") (TSX:GVC) is pleased to announce that Glacier has agreed to acquire substantially all of the remainder of the Canadian interests of Hollinger International Inc. ("Hollinger").Glacier will indirectly acquire Hollinger's 87% interest in Hollinger Canadian Newspapers, Limited Partnership ("HCNLP") for $117.0 million, or $0.737 per HCNLP unit, subject to adjustment in certain circumstances, and indirectly acquire Hollinger's 100% interest in Eco Log Environmental Risk Information Services Ltd. ("Eco Log"), KCN Capital News Company ("KCN") and certain real estate for $4.7 million.Glacier has also entered into lock-up agreements with two other persons for the concurrent acquisition of approximately 3% of the units of HCNLP for $0.737 per HCNLP unit or $4.4 million in the aggregate, subject to positive adjustment in certain circumstances.Following the completion of the acquisitions of in excess of 90% of the HCNLP units, Glacier proposes to amend the limited partnership agreement to consolidate the HCNLP units on the basis of one HCNLP unit for every 25,000,000 HCNLP units held by each holder. The consolidation will result in the holders of the remaining approximately 10% of HCNLP units being paid an amount of $0.737 per unit held prior to the consolidation, subject to positive adjustment in certain circumstances. The holders of these units will be provided with dissent appraisal rights with respect to the units being paid out.The purchase price for 100% of the HCNLP units is $134.8 million.
http://media.integratir.com/T.GVC/financials/Annual%20Report%202007.pdf
Assets acquired
Cash 6,120
Accounts receivable 14,594
Inventories 1,414
Investments 77
Prepaids 1,970
Property, plant and equipment 15,478
Customer relationships 36,420
Trademarks 66,030
Accrued employee future benefit asset 4,055
146,158
Liabilities assumed
Accounts payable and accrued liabilities 10,937
Non-controlling interest 292
Deferred revenue 7,969
Post-retirement and pension benefit obligation 2,913
Future income tax liability 36,834
58,945
Net assets acquired 87,213
Goodwill 98,785
Consideration 185,998
Purchase of Hollinger International Inc. Canadian operations (continued)
Fundata provides investment fund related electronic and print information and
analytics to the Canadian and global investment community and a wide variety of
Canadian newspapers and media. Great West publishes and prints a group of
community newspapers and related publications in Alberta. Glacier Publications LP
owns and operates the Business Information Group in Ontario and daily, community
and specialty newspapers and printing operations in British Columbia and Quebec, as
described. KCN publishes the Merritt News and Merritt News Extra in British Columbia.
Eco Log is an electronic information and report service provider that helps identify
potential environmental risks in Canada for a variety of customers.
The purchase price for these former Hollinger operations was cash of $186.0 million including transaction costs of $4.4 million and a $4.2 million purchase price adjustment relating to working capital. These acquisitions were accounted for by the purchase method and the results of operations have been consolidated with those of the Company from the respective dates of acquisition as noted above. The purchase price has been allocated to the estimated fair value of the assets acquired and liabilities assumed as follows:
21. Contingencies
(a) Under the terms of the purchase agreement with Hollinger described in Note 5 (b), Hollinger has provided a specific indemnity (the “Indemnity”) to defend, indemnify and save harmless Glacier from any losses (up to an amount not more than the aggregate purchase price paid by Glacier for the Glacier Publications LP (formerly Hollinger Canada) operations) suffered or incurred as a result of the resolution of certain outstanding legal matters in which Glacier Publications LP has been named as a codefendant.
Significant items subject to the Indemnity include the following: (i) Glacier Publications LP has been named as a co-defendant in a series of disputes, investigations and legal proceedings relating to transactions between its former parent, Hollinger and certain former officers and directors of Hollinger, its affiliates and Glacier Publications LP. The ultimate outcome of
these proceedings to Hollinger and its current and former affiliates is not determinable.
(ii) Glacier Publications LP has also been named as a party to an arbitration with respect to disputes arising from CanWest Global Communication Inc.’s (“CanWest”) purchase of certain newspaper assets from Hollinger in 2000.
CanWest and Hollinger have competing claims relating to this transaction. Under the terms of the purchase agreement with Hollinger described in Note 5 (b), $20.0 million of the purchase price to acquire Glacier Publications LP has been paid into escrow and will only be released to Hollinger on settlement of this matter.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Quote, "Glacier Publications LP has also been named as a party to an arbitration with respect to disputes arising from CanWest Global Communication Inc.’s(“CanWest”) purchase of certain newspaper assets from Hollinger in 2000."
http://www.marketwire.com/press-release/Glacier-Acquires-Hollinger-Canada-Operations-TSX-GVC-575081.htm
The Board of Directors of Glacier Ventures International Corp. ("Glacier" or the "Company") (TSX:GVC) is pleased to announce that Glacier has agreed to acquire substantially all of the remainder of the Canadian interests of Hollinger International Inc. ("Hollinger").Glacier will indirectly acquire Hollinger's 87% interest in Hollinger Canadian Newspapers, Limited Partnership ("HCNLP") for $117.0 million, or $0.737 per HCNLP unit, subject to adjustment in certain circumstances, and indirectly acquire Hollinger's 100% interest in Eco Log Environmental Risk Information Services Ltd. ("Eco Log"), KCN Capital News Company ("KCN") and certain real estate for $4.7 million.Glacier has also entered into lock-up agreements with two other persons for the concurrent acquisition of approximately 3% of the units of HCNLP for $0.737 per HCNLP unit or $4.4 million in the aggregate, subject to positive adjustment in certain circumstances.Following the completion of the acquisitions of in excess of 90% of the HCNLP units, Glacier proposes to amend the limited partnership agreement to consolidate the HCNLP units on the basis of one HCNLP unit for every 25,000,000 HCNLP units held by each holder. The consolidation will result in the holders of the remaining approximately 10% of HCNLP units being paid an amount of $0.737 per unit held prior to the consolidation, subject to positive adjustment in certain circumstances. The holders of these units will be provided with dissent appraisal rights with respect to the units being paid out.The purchase price for 100% of the HCNLP units is $134.8 million.
http://media.integratir.com/T.GVC/financials/Annual%20Report%202007.pdf
Assets acquired
Cash 6,120
Accounts receivable 14,594
Inventories 1,414
Investments 77
Prepaids 1,970
Property, plant and equipment 15,478
Customer relationships 36,420
Trademarks 66,030
Accrued employee future benefit asset 4,055
146,158
Liabilities assumed
Accounts payable and accrued liabilities 10,937
Non-controlling interest 292
Deferred revenue 7,969
Post-retirement and pension benefit obligation 2,913
Future income tax liability 36,834
58,945
Net assets acquired 87,213
Goodwill 98,785
Consideration 185,998
Purchase of Hollinger International Inc. Canadian operations (continued)
Fundata provides investment fund related electronic and print information and
analytics to the Canadian and global investment community and a wide variety of
Canadian newspapers and media. Great West publishes and prints a group of
community newspapers and related publications in Alberta. Glacier Publications LP
owns and operates the Business Information Group in Ontario and daily, community
and specialty newspapers and printing operations in British Columbia and Quebec, as
described. KCN publishes the Merritt News and Merritt News Extra in British Columbia.
Eco Log is an electronic information and report service provider that helps identify
potential environmental risks in Canada for a variety of customers.
The purchase price for these former Hollinger operations was cash of $186.0 million including transaction costs of $4.4 million and a $4.2 million purchase price adjustment relating to working capital. These acquisitions were accounted for by the purchase method and the results of operations have been consolidated with those of the Company from the respective dates of acquisition as noted above. The purchase price has been allocated to the estimated fair value of the assets acquired and liabilities assumed as follows:
21. Contingencies
(a) Under the terms of the purchase agreement with Hollinger described in Note 5 (b), Hollinger has provided a specific indemnity (the “Indemnity”) to defend, indemnify and save harmless Glacier from any losses (up to an amount not more than the aggregate purchase price paid by Glacier for the Glacier Publications LP (formerly Hollinger Canada) operations) suffered or incurred as a result of the resolution of certain outstanding legal matters in which Glacier Publications LP has been named as a codefendant.
Significant items subject to the Indemnity include the following: (i) Glacier Publications LP has been named as a co-defendant in a series of disputes, investigations and legal proceedings relating to transactions between its former parent, Hollinger and certain former officers and directors of Hollinger, its affiliates and Glacier Publications LP. The ultimate outcome of
these proceedings to Hollinger and its current and former affiliates is not determinable.
(ii) Glacier Publications LP has also been named as a party to an arbitration with respect to disputes arising from CanWest Global Communication Inc.’s (“CanWest”) purchase of certain newspaper assets from Hollinger in 2000.
CanWest and Hollinger have competing claims relating to this transaction. Under the terms of the purchase agreement with Hollinger described in Note 5 (b), $20.0 million of the purchase price to acquire Glacier Publications LP has been paid into escrow and will only be released to Hollinger on settlement of this matter.
SEC Canada ruling: Catalyst disqualified from bid. Catalyst founded in 2002 by Glassman, became a major player in the winding down of Hollinger Inc
http://www.globeinvestor.com/servlet/ArticleNews/story/RTGAM/20050409/webrnewton0409
Hollinger Inc looted, but not by Lord Black
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
[Also am a shareholder of halted chapter 11 company Hollinger Canada, when a penny stock. Hollinger Canada chapter 11 final transaction was it transferring around two hundred million to Hollinger International, and still Hollinger International broke.]
Issues with cerrtain Hollinger shareholders developed investments going to Catalyst and not Hollinger shareholders. For ex. the change in the Hollinger bonds from 12.125 to 8 percent, and Canwest selling other bonds, and given the proceeds to the Hollinger bonds to make them senior; United States Securities Commission and Sec Canada have joint jurisdiction.]
Clear insider trading, racketeering, and irregularities in the Canada US Hollinger Chapter 11; and sale of Canwest bonds and derivative agreements, as Canwest derivative loses should have went to Hollinger. Catalyst founded in 2002 by Glassman and became a major player in the winding down of Hollinger Inc.
Quote, "Catalyst is already a substantial owner of Canwest's bonds and the group said its proposal has the support of Goldman Sachs" [Goldman Sachs also disqualified from offering financing.]
~~~~~~~~
http://www.660news.com/news/local/article/28617--ontario-court-approves-shaw-communications-bid-for-canwest-global-tv-assets
The Catalyst Group proposal treats all the company's unsecured creditors equally and the continuance of a publicly listed Canwest provides creditors and other stakeholders with an immediate path to liquidity," Glassman said in a statement. Catalyst is already a substantial owner of Canwest's bonds and the group said its proposal has the support of Goldman Sachs. Catalyst was founded in 2002 by Glassman and became a major player in the winding down of Hollinger Inc. when it filed motions to remove Conrad Black from the company's board, cancel his move to take the company private and investigate Hollinger's finances.
Catalyst Capital Group announced an 11th-hour bid for Canwest's broadcasting assets, with the support of the Aspers, and two former executives of Rogers Communications - including John Tory, former leader of Ontario's Progressive Conservative party
[Note, Shaw offer increase from 64 to 95 million.]
Under Catalyst's plan, Canwest CEO Leonard Asper would have become non-executive chairman of the company founded by his father and the role of chief executive would go to Rael Merson, a former president and CEO of Rogers Broadcasting. Catalyst's offer was valued at nearly twice Shaw's - $120 million - and would give the investment group a 32 per cent equity interest in Canwest and voting control of the company
A lawyer for Shaw made it clear at a hearing that the cable operator wasn't willing to extend its bid past a Friday deadline and risk heading into an auction for the assets. "Shaw participated within the parameters of this restructuring process," lawyer Robin Schwill said. "We're only willing to play that game if we're not going to be... a stalking horse." Winnipeg-based Canwest, which owes billions of dollars to its creditors, has been operating under court supervision since last year
Hollinger Inc looted, but not by Lord Black
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
[Also am a shareholder of halted chapter 11 company Hollinger Canada, when a penny stock. Hollinger Canada chapter 11 final transaction was it transferring around two hundred million to Hollinger International, and still Hollinger International broke.]
Issues with cerrtain Hollinger shareholders developed investments going to Catalyst and not Hollinger shareholders. For ex. the change in the Hollinger bonds from 12.125 to 8 percent, and Canwest selling other bonds, and given the proceeds to the Hollinger bonds to make them senior; United States Securities Commission and Sec Canada have joint jurisdiction.]
Clear insider trading, racketeering, and irregularities in the Canada US Hollinger Chapter 11; and sale of Canwest bonds and derivative agreements, as Canwest derivative loses should have went to Hollinger. Catalyst founded in 2002 by Glassman and became a major player in the winding down of Hollinger Inc.
Quote, "Catalyst is already a substantial owner of Canwest's bonds and the group said its proposal has the support of Goldman Sachs" [Goldman Sachs also disqualified from offering financing.]
~~~~~~~~
http://www.660news.com/news/local/article/28617--ontario-court-approves-shaw-communications-bid-for-canwest-global-tv-assets
The Catalyst Group proposal treats all the company's unsecured creditors equally and the continuance of a publicly listed Canwest provides creditors and other stakeholders with an immediate path to liquidity," Glassman said in a statement. Catalyst is already a substantial owner of Canwest's bonds and the group said its proposal has the support of Goldman Sachs. Catalyst was founded in 2002 by Glassman and became a major player in the winding down of Hollinger Inc. when it filed motions to remove Conrad Black from the company's board, cancel his move to take the company private and investigate Hollinger's finances.
Catalyst Capital Group announced an 11th-hour bid for Canwest's broadcasting assets, with the support of the Aspers, and two former executives of Rogers Communications - including John Tory, former leader of Ontario's Progressive Conservative party
[Note, Shaw offer increase from 64 to 95 million.]
Under Catalyst's plan, Canwest CEO Leonard Asper would have become non-executive chairman of the company founded by his father and the role of chief executive would go to Rael Merson, a former president and CEO of Rogers Broadcasting. Catalyst's offer was valued at nearly twice Shaw's - $120 million - and would give the investment group a 32 per cent equity interest in Canwest and voting control of the company
A lawyer for Shaw made it clear at a hearing that the cable operator wasn't willing to extend its bid past a Friday deadline and risk heading into an auction for the assets. "Shaw participated within the parameters of this restructuring process," lawyer Robin Schwill said. "We're only willing to play that game if we're not going to be... a stalking horse." Winnipeg-based Canwest, which owes billions of dollars to its creditors, has been operating under court supervision since last year
As at November 30, 2009, there was no amount drawn; yet Canwest monitor using dip financing
http://www.canwestmediasales.com/investors/investor_documents/F10/q1/CWMHI_MDA_Q1_2010_FINAL.pdf CW 1quater2010 sept-nov09
As at November 30, 2009, there was no amount drawn under the revolving term loan. The revolving term loan facility matures on August 15, 2013 and bears interest at prime plus a margin. Principal amounts outstanding under the revolving credit facility are due and payable in full at maturity. The borrowing capacity is reduced by any outstanding letters of credit.
After the filed arrangement, swap agreement made by monitor, or apser? Goldman buys swaps from Goldman for a non arms length Goldman loan.
We have entered into a foreign currency interest rate swap, which expires on February 15, 2015, to fix the interest rate and principal payments on an initial notional amount of US$446.4 million, reduced accordingly as the principal portion of the term loan under the Senior Secured Credit facility is repaid, resulting in a swap adjusted nterest rate of 8.7% and a fixed currency exchange of U.S.$1:$1.064 Canadian dollars until February 2015.
http://www.canwestmediaworks.com/investors/investor_documents/F09/CWMediaHoldings_Q1_2009_FinancialStatements.pdf
CW Media Holdings Inc.
Notes to Consolidated Financial Statements
(Unaudited)
(In thousands of Canadian dollars)
9
(a) U.S.$441,964 (August 31, 2008 – U.S.$443,081)
(b) U.S.$329,393 (August 31, 2008 – U.S.$318,713)
There were no changes to the terms and conditions of the long term debt during the three months ended November 30, 2008. The Senior Secured Credit facility and Senior Unsecured Notes are subject to the Company maintaining certain financial and other covenants. The Company is in compliance with such covenants as at November 30, 2008.
During the three months ended November 30, 2008, $77,346 in foreign exchange gains (2007 - $25,089 losses) were reclassified to the statement of earnings (loss) from accumulated other comprehensive loss,representing foreign exchangegains on the notional amount of the cash flow hedging derivative. These amounts were offset by foreign exchange losses and gains, respectively, recognized on the related U.S. dollar denominated long term debt. During the three months ended November 30, 2008 and 2007, there was no amount recorded in the statement of earnings (loss) as a result of the hedge effectiveness associated with the cash flow hedging instrument. During the three months ended November 30, 2008, the Company
13. Recent Accounting Pronouncements Goodwill and Intangible Assets In February 2008, the CICA issued Handbook Section 3064,“Goodwill and Intangible Assets”. This section replaces Section 3062, “Goodwill and Intangible Assets”, and Section 3450, “Research and Development Costs”, and establishes standards for the recognition, measurement and disclosure ,of goodwill and intangible assets. This new standard is effective to annual and interim financial statements relating to fiscal years beginning on or after October 1, 2008.
Early adoption is encouraged. The Company will adopt this standard effective September 1, 2009. The provisions of this standard are to be applied retrospectively for intangible assets recognized prior to the date of adoption. The Company is currently assessing the impact of adopting this new standard on its consolidated financial statements.
1. Nature of Operations and Basis of Presentation
CW Media Holdings Inc. (the “Company”) was formed on June 27, 2007 to hold investments in the specialty television
operations that were previously owned by Alliance Atlantis Communications Inc. (“Alliance Atlantis”). The Company was
inactive until August 15, 2007. The Company is an indirectly wholly owned subsidiary of CW Investments Co. (“CW
Investments”) in which Canwest Media Inc. (“Canwest”) holds a 35% equity interest and 67% voting interest with the
remaining interests owned by Goldman Sachs Capital Partners.
The Company is a broadcaster of television entertainment content. The business activities consist of a controlling ownership
interest in and operation of 13 Canadian specialty television channels. It also has a 50% interest in two jointly controlled
established Canadian French-language specialty television channels and a non-controlling interest in three other Englishlanguage
Canadian specialty television channels.
The Company’s revenues are primarily earned from subscribers who indirectly through broadcast distribution undertakings
pay a fee, typically monthly, to receive the distribution of the Company’s channel signals and from advertisers who place
advertisements on the channels. Subscriber revenues are earned relatively evenly throughout the year. Advertising revenue is
seasonal; generally highest in the first quarter and lowest in the fourth quarter.
2. Significant Accounting Policies
A summary of the significant accounting policies followed in the preparation of these consolidated financial statements is as
follows:
Basis of presentation
The interim consolidated financial statements are prepared in accordance with accounting principles generally accepted in
Canada for interim financial statements and reflect all adjustments which are, in the opinion of management, necessary for
fair statement of the results of the interim periods presented. However, these interim consolidated financial statements do not
include all of the information and disclosures required for annual consolidated financial statements. The accounting policies
used in the preparation of these interim consolidated financial statements are the same as those used in the most recent annual
consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the
most recent
http://www.canwestmediasales.com/investors/investor_documents/F10/q1/CWMHI_FS_Q1_2010_FINAL.pdf
2009 nov
(c) The Senior Unsecured Notes have a variable prepayment option at a premium of 106.75 in 2011 which declines on a straight line basis
to par in 2013. The prepayment option represents an embedded derivative that is to be accounted for separately at fair value. As at
November 30, 2009 the estimated fair value of the prepayment option was $1,425 (August 31, 2009- nil). During the three months
ended November 30, 2009, the Company recorded a recovery of $1,425 (2008 - nil) in interest expense in the statement of earnings
(loss).
There were no changes to the terms and conditions of the long term debt during the three months ended November 30, 2009.
The Senior Secured Credit facility and Senior Unsecured Notes are subject to the Company maintaining certain financial and
other covenants. The Company is in compliance with such covenants as at November 30, 2009.
As at November 30, 2009, there was no amount drawn under the revolving term loan. The revolving term loan facility matures on August 15, 2013 and bears interest at prime plus a margin. Principal amounts outstanding under the revolving credit facility are due and payable in full at maturity. The borrowing capacity is reduced by any outstanding letters of credit.
After the filed arrangement, swap agreement made by monitor, or apser? Goldman buys swaps from Goldman for a non arms length Goldman loan.
We have entered into a foreign currency interest rate swap, which expires on February 15, 2015, to fix the interest rate and principal payments on an initial notional amount of US$446.4 million, reduced accordingly as the principal portion of the term loan under the Senior Secured Credit facility is repaid, resulting in a swap adjusted nterest rate of 8.7% and a fixed currency exchange of U.S.$1:$1.064 Canadian dollars until February 2015.
http://www.canwestmediaworks.com/investors/investor_documents/F09/CWMediaHoldings_Q1_2009_FinancialStatements.pdf
CW Media Holdings Inc.
Notes to Consolidated Financial Statements
(Unaudited)
(In thousands of Canadian dollars)
9
(a) U.S.$441,964 (August 31, 2008 – U.S.$443,081)
(b) U.S.$329,393 (August 31, 2008 – U.S.$318,713)
There were no changes to the terms and conditions of the long term debt during the three months ended November 30, 2008. The Senior Secured Credit facility and Senior Unsecured Notes are subject to the Company maintaining certain financial and other covenants. The Company is in compliance with such covenants as at November 30, 2008.
During the three months ended November 30, 2008, $77,346 in foreign exchange gains (2007 - $25,089 losses) were reclassified to the statement of earnings (loss) from accumulated other comprehensive loss,representing foreign exchangegains on the notional amount of the cash flow hedging derivative. These amounts were offset by foreign exchange losses and gains, respectively, recognized on the related U.S. dollar denominated long term debt. During the three months ended November 30, 2008 and 2007, there was no amount recorded in the statement of earnings (loss) as a result of the hedge effectiveness associated with the cash flow hedging instrument. During the three months ended November 30, 2008, the Company
13. Recent Accounting Pronouncements Goodwill and Intangible Assets In February 2008, the CICA issued Handbook Section 3064,“Goodwill and Intangible Assets”. This section replaces Section 3062, “Goodwill and Intangible Assets”, and Section 3450, “Research and Development Costs”, and establishes standards for the recognition, measurement and disclosure ,of goodwill and intangible assets. This new standard is effective to annual and interim financial statements relating to fiscal years beginning on or after October 1, 2008.
Early adoption is encouraged. The Company will adopt this standard effective September 1, 2009. The provisions of this standard are to be applied retrospectively for intangible assets recognized prior to the date of adoption. The Company is currently assessing the impact of adopting this new standard on its consolidated financial statements.
1. Nature of Operations and Basis of Presentation
CW Media Holdings Inc. (the “Company”) was formed on June 27, 2007 to hold investments in the specialty television
operations that were previously owned by Alliance Atlantis Communications Inc. (“Alliance Atlantis”). The Company was
inactive until August 15, 2007. The Company is an indirectly wholly owned subsidiary of CW Investments Co. (“CW
Investments”) in which Canwest Media Inc. (“Canwest”) holds a 35% equity interest and 67% voting interest with the
remaining interests owned by Goldman Sachs Capital Partners.
The Company is a broadcaster of television entertainment content. The business activities consist of a controlling ownership
interest in and operation of 13 Canadian specialty television channels. It also has a 50% interest in two jointly controlled
established Canadian French-language specialty television channels and a non-controlling interest in three other Englishlanguage
Canadian specialty television channels.
The Company’s revenues are primarily earned from subscribers who indirectly through broadcast distribution undertakings
pay a fee, typically monthly, to receive the distribution of the Company’s channel signals and from advertisers who place
advertisements on the channels. Subscriber revenues are earned relatively evenly throughout the year. Advertising revenue is
seasonal; generally highest in the first quarter and lowest in the fourth quarter.
2. Significant Accounting Policies
A summary of the significant accounting policies followed in the preparation of these consolidated financial statements is as
follows:
Basis of presentation
The interim consolidated financial statements are prepared in accordance with accounting principles generally accepted in
Canada for interim financial statements and reflect all adjustments which are, in the opinion of management, necessary for
fair statement of the results of the interim periods presented. However, these interim consolidated financial statements do not
include all of the information and disclosures required for annual consolidated financial statements. The accounting policies
used in the preparation of these interim consolidated financial statements are the same as those used in the most recent annual
consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the
most recent
http://www.canwestmediasales.com/investors/investor_documents/F10/q1/CWMHI_FS_Q1_2010_FINAL.pdf
2009 nov
(c) The Senior Unsecured Notes have a variable prepayment option at a premium of 106.75 in 2011 which declines on a straight line basis
to par in 2013. The prepayment option represents an embedded derivative that is to be accounted for separately at fair value. As at
November 30, 2009 the estimated fair value of the prepayment option was $1,425 (August 31, 2009- nil). During the three months
ended November 30, 2009, the Company recorded a recovery of $1,425 (2008 - nil) in interest expense in the statement of earnings
(loss).
There were no changes to the terms and conditions of the long term debt during the three months ended November 30, 2009.
The Senior Secured Credit facility and Senior Unsecured Notes are subject to the Company maintaining certain financial and
other covenants. The Company is in compliance with such covenants as at November 30, 2009.
Saturday, March 20, 2010
Canwest debt before Australian TV network TEN sold, Canwest share 1.2 billion
Issues with Goldman Sachs Atlantis (CW Media) debt not fractioned down to represent that Canwest only owes 1/3 of this debt
LONG-TERM DEBT
Principal Outstanding
August 31, As at As at Maturity 2009 August 31, August 31,
(fiscal year) (millions) 2009 2008
Canwest Media Inc.:
Secured revolving credit facility(1) 2009 $13 12,756 -
Secured notes (net of debt issuance costs of $3 million)(2) 2010 US$94 99,924 -
Senior secured revolving credit facility(3) 2011 - - -
Senior subordinated notes (net of debt issuance
costs of $1 million (2008 - $11 million))(4) 2012 US$761 838,507 828,755
Canwest Limited Partnership:
Senior secured credit facilities - revolver(5) 2012 $116 116,000 96,000
Senior secured credit facilities - credit C
(net of debt issuance costs of $2 million (2008 -$3 million))(5) 2012 $265 262,692 262,028
Senior secured credit facilities - credit D
(net of debt issuance costs of $4 million (2008 - $5 million))(5) 2014 US$458 497,311 483,999
Senior subordinated unsecured credit facility (net of
debt issuance costs of $1 million (2008 -$1 million))(6) 2015 $75 74,235 74,152
Senior subordinated unsecured notes
(net of debt issuance costs of $8 million (2008 -$9 million))(7) 2015 US$400 429,856 415,766
Goldman Sachs loan of 700, 2/3 with Goldman Sachs
CW Media Holdings Inc.:
Senior secured revolving credit facility(8) 2013 - - 8,000
Senior secured credit facility
(net of debt issuance costs of $11 million (2008 - $13 million))(8) 2015 US$439 469,760 457,688
Senior unsecured notes including accrued interest
(net of debt issuance costs of $8 million (2008 -$9 million))(9) 2015 US$338 362,538 329,630
[Debt tranferred with Ten, so not owed by Canwest, Canwest books the better, yet still filing CCAA]
Ten Network Holdings Limited:
Bank loan – revolver(10) 2011 A$90 83,277 250,195
Senior unsecured notes(11) 2013 US$125 144,300 132,322
Senior unsecured notes(12) 2016 A$150 138,795 136,470
3,529,951 3,475,005
Less portion due within one year (2,336,169) (13,063)
LONG-TERM DEBT
Principal Outstanding
August 31, As at As at Maturity 2009 August 31, August 31,
(fiscal year) (millions) 2009 2008
Canwest Media Inc.:
Secured revolving credit facility(1) 2009 $13 12,756 -
Secured notes (net of debt issuance costs of $3 million)(2) 2010 US$94 99,924 -
Senior secured revolving credit facility(3) 2011 - - -
Senior subordinated notes (net of debt issuance
costs of $1 million (2008 - $11 million))(4) 2012 US$761 838,507 828,755
Canwest Limited Partnership:
Senior secured credit facilities - revolver(5) 2012 $116 116,000 96,000
Senior secured credit facilities - credit C
(net of debt issuance costs of $2 million (2008 -$3 million))(5) 2012 $265 262,692 262,028
Senior secured credit facilities - credit D
(net of debt issuance costs of $4 million (2008 - $5 million))(5) 2014 US$458 497,311 483,999
Senior subordinated unsecured credit facility (net of
debt issuance costs of $1 million (2008 -$1 million))(6) 2015 $75 74,235 74,152
Senior subordinated unsecured notes
(net of debt issuance costs of $8 million (2008 -$9 million))(7) 2015 US$400 429,856 415,766
Goldman Sachs loan of 700, 2/3 with Goldman Sachs
CW Media Holdings Inc.:
Senior secured revolving credit facility(8) 2013 - - 8,000
Senior secured credit facility
(net of debt issuance costs of $11 million (2008 - $13 million))(8) 2015 US$439 469,760 457,688
Senior unsecured notes including accrued interest
(net of debt issuance costs of $8 million (2008 -$9 million))(9) 2015 US$338 362,538 329,630
[Debt tranferred with Ten, so not owed by Canwest, Canwest books the better, yet still filing CCAA]
Ten Network Holdings Limited:
Bank loan – revolver(10) 2011 A$90 83,277 250,195
Senior unsecured notes(11) 2013 US$125 144,300 132,322
Senior unsecured notes(12) 2016 A$150 138,795 136,470
3,529,951 3,475,005
Less portion due within one year (2,336,169) (13,063)
CMI is in default of its 8% senior subordinated unsecured notes indenture asa consequence of the non payment of interest due in September 2009
Ten Cash promised on Sept23 officially filed -- Canwest executive intentional default on interest due Sept 30 -- next day Oct 1 Ten cash given to vender financing bonds in default-- and a few days later on Oct 6 CCAA Court date
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Did Canwest promise that the day after the defualt and full interest payment, here's 400 million plus back in prinicple, (bonds trading at below a dollar.)
On October 1, 2009 Canwest completed the sale of all its interest in Ten Network Holdings Limited (“TNHL”). Net proceeds of $618 million were used to repay the 12% & CMI is in default of its 8% senior subordinated unsecured notes indenture asa consequence of the non payment of interest due in September 2009.
Consists of $833 million (US$761 million) (2008 - $808 million (US$761 million)) seniorsubordinated notes which are due in 2012 and bear interest at 8.0%. Canwest Media is in default under the terms of its senior subordinated notes indenture as a result of not making interest payments that were due in September 2009.
On October 1, 2009 we sold our interest in Ten Holdings for net proceeds of $618 million. Four days later file CCAA S.36
For Immediate Release
July 10, 2009
In March 2009, Canwest Media Inc. did not make an interest payment which was due on its8% senior subordinated notes and is in default under the terms of that indenture. The Company is in discussions with various parties, including the members of the ad hoc committee of holders of 8% senior subordinated notes of Canwest Media Inc., regarding the recapitalization of the Company that may involve a cash investment and/or a conversion of certain of its existing debt to equity, to reduce the debt of Canwest Media Inc. The Company believes that a significant reduction in its debt is necessary to resolve its liquidity issues and to continue to operate. Failure tocomplete an agreement in principle on a recapitalizationtransaction with the members of the ad hoc committee of the 8% senior subordinated note holders prior to the expiry of its forbearance agreement on July 17, 2009 or to such later date as maybe agreed could result in a demand to immediately repay all Canwest Media Inc. debt. There can be no assurance that a recapitalization will be completed. Canwest Limited Partnership, is in default under the terms of its senior credit facilities, its senior subordinated credit facility and its senior subordinated notes indenture because it failed to make payments of interest and principal due in May 2009 on its senior credit facility and its related hedging derivative instruments and it failed to satisfy the demand for immediate repayment of its obligations related to the hedging derivative instruments. The defaults under the terms of the debt could result in a demand to immediately repay the debt of the Limited Partnership. The payments were deferred in order to preserve liquidity to fund operations while the Canwest Limited Partnership works to effect a recapitalization transaction.
4
Canwest remains focused on reducing operating expenses and driving revenues to enable the Company to capitalize on the economy when it begins to improve. Canwest continues pursue a reorganization of its capital structure that will allow the Company to satisfy its obligations which are currently in default.
For Immediate Release
April 9, 2009
As previously disclosed and reported in its interim consolidated financial statements for the three and six months ended February 28, 2009, Canwest Media Inc. has not complied with the terms of its senior secured credit facility and has not paid interest under the senior subordinated notes which was due on March 15, 2009. On April 7, 2009, the senior secured lenders agreed to waive the events of default arising as a result of the failure to comply with certain covenants until April 21, 2009. During this period the Company will have limited access to additional credit under the senior secured credit facility. Canwest Media Inc. is in discussions with representatives of an ad hoc committee of holders of 8% senior subordinated note holders representing a significant majority of the aggregate principal amount of the 8% senior subordinated notes regarding a forbearance agreement aimed at allowing sufficient time for a recapitalization of the Company that is satisfactory to all of its stakeholders. Failure to reach agreement on a further waiver from the senior lenders and forbearance from the holders of the senior subordinated notes could result in a demand to immediately repay the related debt.
January 14, 2009
Continuation of negative conditions may affect the Company’s ability to meet certain financial covenants in its credit facilities. Based upon current revenue and expense projections, the Company may not be able to comply with its existing quarterly total financial leverage ratio covenants in fiscal 2009. The Company is reviewing and implementing strategies to ensure compliance with its covenants, including strategies intended to improve profitability and reduce debt.
November 27, 2009
Canwest Global Communications Corp. Reports Fourth Quarter
and Fiscal Year End 2009 Results
Highlights
• On October 5, 2009 Canwest entered into a support agreement with the members of
the ad hoc committee of 8% noteholders (the “Ad Hoc Committee”) of Canwest Media
Inc. (“CMI”), whereby, subject to certain conditions, the Ad Hoc Committee agreed to
support a recapitalization plan in respect of CMI. As part of the implementation of the recapitalization plan, and in accordance with the support agreement, the Company
3 together with certain of its subsidiaries, voluntarily filed for creditor protection under the Companies’ Creditors Arrangement Act (Canada) (“CCAA”) on October 6, 2009.
• On October 1, 2009 Canwest completed the sale of all its interest in Ten Network
Holdings Limited (“TNHL”). Net proceeds of $618 million were used to repay the 12%
secured notes issued by CMI and Canwest Television Limited Partnership, advances
under the CIT Business Credit Canada Inc. (“CIT”) credit facility, partially repay
amounts outstanding under the 8% CMI notes and for general corporate purposes.
• On August 31, 2009 Canwest Limited Partnership reached a forbearance agreement
with the administrative agent under its senior secured credit facility whereby the
administrative agent agreed to forbear from acting on certain defaults in the Limited
Partnership's senior credit agreement to November 9, 2009. Canwest Limited
Partnership and its senior lenders are in discussions regarding a further extension of the forbearance period and regarding the framework for a potential financial restructuring.
CMI is in default under the terms of its 8% senior subordinated unsecured notes indenture as
a consequence of the non payment of interest due in September 2009. On October 5, 2009,
Canwest Global Communications Corp. entered into a Support Agreement with the Ad Hoc
Committee which sets out the terms and conditions of a proposed recapitalization transaction
(the “Recapitalization Agreement”). The proposed recapitalization transaction is supported by
members of the Ad Hoc Committee representing over 70% of the outstanding principal amount
of 8% senior subordinated notes issued by CMI. The support of the proposed recapitalization
transaction by the Ad Hoc Committee is subject to the satisfaction of a number of conditions
and the Recapitalization Agreement may be terminated under certain circumstances.
After consideration of all other alternatives, the Company determined, with the support of the
Ad Hoc Committee that a financial and corporate restructuring could be most effectively
achieved within the framework of creditor protection proceedings. On October 6, 2009,
pursuant to the Recapitalization Agreement Canwest voluntarily applied for and successfully
obtained an order from the Ontario Superior Court of Justice (the “Court”) providing creditor
protection under the CCAA for Canwest Global Communications Corp., Canwest Media Inc.,
Canwest Television Limited Partnership (including Global Television, MovieTime, DejaView
and Fox Sports World), The National Post Company and certain non-operating subsidiaries.
Canwest Limited Partnership (and its subsidiaries including Canwest Publishing Inc.)and CW
Investments Co. (and its subsidiaries including CW Media Holdings Inc.) are not included in
these proceedings.
2009 Annual Report
On September 23, 2009 we announced that we had entered
into an agreement with Macquarie Capital Advisers Limited
for the sale of all of our 50.1% ownership interest in Ten
Holdings for net proceeds of $618 million. Proceeds of this
sale would be used to:
• Repay in full, all amounts outstanding under the 12%
senior secured notes of $102 million issued by Canwest
Media and Canwest Television Limited Partnership;
• To deposit $431 million with the trustee for the benefit of
the holders of the 8% senior subordinated notes;
• Retain $85 million for general corporate and working capital
purposes, including to repay all outstanding borrowings
(other than letters of credit) under the senior secured
revolving asset-based loan facility with CIT Business Credit
Canada Inc., which facility will continue to remain available
to Canwest Media after the repayment
On September 22, 2009 the Canwest Media Entities entered into a Cash Collateral and Consent Agreement with an ad hoc committee of 8% senior subordinated unsecured note holders representing over 70% of the 8% senior subordinated unsecured notes issued by Canwest Media (the “Ad Hoc Committee”). On October 1, 2009 we sold our interest in Ten Holdings for net proceeds of $618 million. The net proceeds were advanced to Canwest Media Inc. by the wholly owned Irish subsidiary which held the investment in Ten Holdings and were used as follows: $102 million to repay the 12% notes, $85 million torepay amounts outstanding under the ABL facility and to provide ongoing liquidity and $431 million to reduce its obligations
under its 8% senior subordinated unsecured notes indenture.
The Initial Order created a number of new charges against substantially all of the current and future assets of the Canwest Applicants which subject to the terms of the Initial Order may rank in priority to certain other security interests, trusts, liens, charges and encumbrances. Certain employee and commodity tax obligations are also subject to a super priority claim under bankruptcy legislation. These charges, in order of priority, include an administration charge to secure amounts owing to certain restructuring advisors, up to maximum of $15 million; a DIP Charge to the extent of any obligations outstanding under the DIP financing arrangement described above; and a directors’ charge to secure the indemnity created under the Initial Order in favour of the directors of the Canwest Applicants and a key employee retention plan (“KERP”) charge, with equal priority, to a maximum of $20 million and $5.9 million, respectively. The directors’ charge and the KERP charge are postponed in right of payment to the extent of the first $85 million payable under the senior secured promissory note issued to an Irish subsidiary in relation to the receipt of proceeds on the sale of Ten Holdings (see note 31 to our audited consolidated financial statements).
Interest expense. Interest expense was $325 million for the year ended August 31, 2009 compared to $329 million in fiscal 2008. The interest expense for the year ended August 31, 2009 included charges of $56 million on the termination of derivative instruments that were previously accounted for as cash flow hedges partly offset by a recovery of $65 million related to a change in the expected cash flows of the 8% senior subordinated notes. The remaining increase is due to increases in outstanding debt and higher effective interest rates.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Did Canwest promise that the day after the defualt and full interest payment, here's 400 million plus back in prinicple, (bonds trading at below a dollar.)
On October 1, 2009 Canwest completed the sale of all its interest in Ten Network Holdings Limited (“TNHL”). Net proceeds of $618 million were used to repay the 12% & CMI is in default of its 8% senior subordinated unsecured notes indenture asa consequence of the non payment of interest due in September 2009.
Consists of $833 million (US$761 million) (2008 - $808 million (US$761 million)) seniorsubordinated notes which are due in 2012 and bear interest at 8.0%. Canwest Media is in default under the terms of its senior subordinated notes indenture as a result of not making interest payments that were due in September 2009.
On October 1, 2009 we sold our interest in Ten Holdings for net proceeds of $618 million. Four days later file CCAA S.36
For Immediate Release
July 10, 2009
In March 2009, Canwest Media Inc. did not make an interest payment which was due on its8% senior subordinated notes and is in default under the terms of that indenture. The Company is in discussions with various parties, including the members of the ad hoc committee of holders of 8% senior subordinated notes of Canwest Media Inc., regarding the recapitalization of the Company that may involve a cash investment and/or a conversion of certain of its existing debt to equity, to reduce the debt of Canwest Media Inc. The Company believes that a significant reduction in its debt is necessary to resolve its liquidity issues and to continue to operate. Failure tocomplete an agreement in principle on a recapitalizationtransaction with the members of the ad hoc committee of the 8% senior subordinated note holders prior to the expiry of its forbearance agreement on July 17, 2009 or to such later date as maybe agreed could result in a demand to immediately repay all Canwest Media Inc. debt. There can be no assurance that a recapitalization will be completed. Canwest Limited Partnership, is in default under the terms of its senior credit facilities, its senior subordinated credit facility and its senior subordinated notes indenture because it failed to make payments of interest and principal due in May 2009 on its senior credit facility and its related hedging derivative instruments and it failed to satisfy the demand for immediate repayment of its obligations related to the hedging derivative instruments. The defaults under the terms of the debt could result in a demand to immediately repay the debt of the Limited Partnership. The payments were deferred in order to preserve liquidity to fund operations while the Canwest Limited Partnership works to effect a recapitalization transaction.
4
Canwest remains focused on reducing operating expenses and driving revenues to enable the Company to capitalize on the economy when it begins to improve. Canwest continues pursue a reorganization of its capital structure that will allow the Company to satisfy its obligations which are currently in default.
For Immediate Release
April 9, 2009
As previously disclosed and reported in its interim consolidated financial statements for the three and six months ended February 28, 2009, Canwest Media Inc. has not complied with the terms of its senior secured credit facility and has not paid interest under the senior subordinated notes which was due on March 15, 2009. On April 7, 2009, the senior secured lenders agreed to waive the events of default arising as a result of the failure to comply with certain covenants until April 21, 2009. During this period the Company will have limited access to additional credit under the senior secured credit facility. Canwest Media Inc. is in discussions with representatives of an ad hoc committee of holders of 8% senior subordinated note holders representing a significant majority of the aggregate principal amount of the 8% senior subordinated notes regarding a forbearance agreement aimed at allowing sufficient time for a recapitalization of the Company that is satisfactory to all of its stakeholders. Failure to reach agreement on a further waiver from the senior lenders and forbearance from the holders of the senior subordinated notes could result in a demand to immediately repay the related debt.
January 14, 2009
Continuation of negative conditions may affect the Company’s ability to meet certain financial covenants in its credit facilities. Based upon current revenue and expense projections, the Company may not be able to comply with its existing quarterly total financial leverage ratio covenants in fiscal 2009. The Company is reviewing and implementing strategies to ensure compliance with its covenants, including strategies intended to improve profitability and reduce debt.
November 27, 2009
Canwest Global Communications Corp. Reports Fourth Quarter
and Fiscal Year End 2009 Results
Highlights
• On October 5, 2009 Canwest entered into a support agreement with the members of
the ad hoc committee of 8% noteholders (the “Ad Hoc Committee”) of Canwest Media
Inc. (“CMI”), whereby, subject to certain conditions, the Ad Hoc Committee agreed to
support a recapitalization plan in respect of CMI. As part of the implementation of the recapitalization plan, and in accordance with the support agreement, the Company
3 together with certain of its subsidiaries, voluntarily filed for creditor protection under the Companies’ Creditors Arrangement Act (Canada) (“CCAA”) on October 6, 2009.
• On October 1, 2009 Canwest completed the sale of all its interest in Ten Network
Holdings Limited (“TNHL”). Net proceeds of $618 million were used to repay the 12%
secured notes issued by CMI and Canwest Television Limited Partnership, advances
under the CIT Business Credit Canada Inc. (“CIT”) credit facility, partially repay
amounts outstanding under the 8% CMI notes and for general corporate purposes.
• On August 31, 2009 Canwest Limited Partnership reached a forbearance agreement
with the administrative agent under its senior secured credit facility whereby the
administrative agent agreed to forbear from acting on certain defaults in the Limited
Partnership's senior credit agreement to November 9, 2009. Canwest Limited
Partnership and its senior lenders are in discussions regarding a further extension of the forbearance period and regarding the framework for a potential financial restructuring.
CMI is in default under the terms of its 8% senior subordinated unsecured notes indenture as
a consequence of the non payment of interest due in September 2009. On October 5, 2009,
Canwest Global Communications Corp. entered into a Support Agreement with the Ad Hoc
Committee which sets out the terms and conditions of a proposed recapitalization transaction
(the “Recapitalization Agreement”). The proposed recapitalization transaction is supported by
members of the Ad Hoc Committee representing over 70% of the outstanding principal amount
of 8% senior subordinated notes issued by CMI. The support of the proposed recapitalization
transaction by the Ad Hoc Committee is subject to the satisfaction of a number of conditions
and the Recapitalization Agreement may be terminated under certain circumstances.
After consideration of all other alternatives, the Company determined, with the support of the
Ad Hoc Committee that a financial and corporate restructuring could be most effectively
achieved within the framework of creditor protection proceedings. On October 6, 2009,
pursuant to the Recapitalization Agreement Canwest voluntarily applied for and successfully
obtained an order from the Ontario Superior Court of Justice (the “Court”) providing creditor
protection under the CCAA for Canwest Global Communications Corp., Canwest Media Inc.,
Canwest Television Limited Partnership (including Global Television, MovieTime, DejaView
and Fox Sports World), The National Post Company and certain non-operating subsidiaries.
Canwest Limited Partnership (and its subsidiaries including Canwest Publishing Inc.)and CW
Investments Co. (and its subsidiaries including CW Media Holdings Inc.) are not included in
these proceedings.
2009 Annual Report
On September 23, 2009 we announced that we had entered
into an agreement with Macquarie Capital Advisers Limited
for the sale of all of our 50.1% ownership interest in Ten
Holdings for net proceeds of $618 million. Proceeds of this
sale would be used to:
• Repay in full, all amounts outstanding under the 12%
senior secured notes of $102 million issued by Canwest
Media and Canwest Television Limited Partnership;
• To deposit $431 million with the trustee for the benefit of
the holders of the 8% senior subordinated notes;
• Retain $85 million for general corporate and working capital
purposes, including to repay all outstanding borrowings
(other than letters of credit) under the senior secured
revolving asset-based loan facility with CIT Business Credit
Canada Inc., which facility will continue to remain available
to Canwest Media after the repayment
On September 22, 2009 the Canwest Media Entities entered into a Cash Collateral and Consent Agreement with an ad hoc committee of 8% senior subordinated unsecured note holders representing over 70% of the 8% senior subordinated unsecured notes issued by Canwest Media (the “Ad Hoc Committee”). On October 1, 2009 we sold our interest in Ten Holdings for net proceeds of $618 million. The net proceeds were advanced to Canwest Media Inc. by the wholly owned Irish subsidiary which held the investment in Ten Holdings and were used as follows: $102 million to repay the 12% notes, $85 million torepay amounts outstanding under the ABL facility and to provide ongoing liquidity and $431 million to reduce its obligations
under its 8% senior subordinated unsecured notes indenture.
The Initial Order created a number of new charges against substantially all of the current and future assets of the Canwest Applicants which subject to the terms of the Initial Order may rank in priority to certain other security interests, trusts, liens, charges and encumbrances. Certain employee and commodity tax obligations are also subject to a super priority claim under bankruptcy legislation. These charges, in order of priority, include an administration charge to secure amounts owing to certain restructuring advisors, up to maximum of $15 million; a DIP Charge to the extent of any obligations outstanding under the DIP financing arrangement described above; and a directors’ charge to secure the indemnity created under the Initial Order in favour of the directors of the Canwest Applicants and a key employee retention plan (“KERP”) charge, with equal priority, to a maximum of $20 million and $5.9 million, respectively. The directors’ charge and the KERP charge are postponed in right of payment to the extent of the first $85 million payable under the senior secured promissory note issued to an Irish subsidiary in relation to the receipt of proceeds on the sale of Ten Holdings (see note 31 to our audited consolidated financial statements).
Interest expense. Interest expense was $325 million for the year ended August 31, 2009 compared to $329 million in fiscal 2008. The interest expense for the year ended August 31, 2009 included charges of $56 million on the termination of derivative instruments that were previously accounted for as cash flow hedges partly offset by a recovery of $65 million related to a change in the expected cash flows of the 8% senior subordinated notes. The remaining increase is due to increases in outstanding debt and higher effective interest rates.
Thursday, March 18, 2010
The notes rank junior to senior debt and are guaranteed by certain
How much cash did Canwest pay the 12.1 bondholders to make their bonds 8 bonds, the 8% Ad Hoc bonds: note Canwest issued bonds at 7.5/8% and gave some of the proceeds to the 12.1/8 bondholders.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Junior subordinated notes (7) 12.1% 881,116 12.1% 783,165
p21
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2004 AND 2003
7) The junior subordinated notes mature in November 2010, and bear interest at a fixed rate of 12.125%. At the Company’s option, interest payments to November 2005 may be paid in cash, the issuance of additional notes, or subject to conditions, the issuance of non-voting shares of the Company. The notes rank junior to senior debt and are guaranteed by certain subsidiaries of the Company. The notes include $96.9 million in notes issued during 2004 in satisfaction of interest as well as an accrual of $9.2 million for notes to be issued in January 2005 (2003 - $110.1 million and $8.2 million respectively). Subsequent to year end these notes were settled through the issuance of new 8% Senior Subordinated notes (s
24. SUBSEQUENT EVENTS
In October 2004, the Company launched an exchange offer to exchange a new series of 8% Senior Subordinated notes due 2012 for the outstanding 12 1/8% Senior notes due 2010 issued by the Hollinger Participation Trust. In the exchange offer, the holders of the trust notes were offered US$1,240 principal amount of new notes in exchange for each US$1,000 of trust notes. In addition, the Company launched a concurrent offer of notes, proceeds of which were used to retire the 12 1/8% junior subordinated notes held by Hollinger, which had not been participated to the Hollinger Participation Trust. The effect of these transactions was to replace the Company’s existing $903.6 million 12 1/8% junior subordinated notes (including accrued interest to November 18, 2004) with new $908.1 million (US$760.1 million) 8% senior subordinated notes. These transactions were completed on November 18, 2004. Also on November 18, 2004, 3815668 Canada Inc., a wholly-owned subsidiary of CanWest and the issuer of the above-mentioned notes, amalgamated with CanWest Media Inc., which is also a wholly-owned subsidiary of CanWest.
The excess of the fair value of the 8% subordinated notes over the carrying value of the 121/8% junior subordinated notes, which has not been determined at this time will be expensed in the quarter ended November 30, 2004.
1st quarter 05 Nov
LONG TERM DEBT On November 18, 2004, the Company completed an exchange offer to exchange a new series of 8% Senior Subordinated notes due 2012 for the outstanding 12 1/8% Senior notes due 2010 issued by the Hollinger Participation Trust. In the exchange offer, the holders of the trust notes received US$1,240 principal amount of new notes in exchange for each US$1,000 of trust notes. In addition, the Company completed a concurrent offer of notes, proceeds of which were used to retire the 12 1/8% junior subordinated notes held by Hollinger, which had not been participated to the Hollinger Participation Trust.
The effect of these transactions replaced the Company’s existing $903.6 million 12 1/8% junior subordinated notes (including accrued interest to November 18, 2004) with new $908.1 million (US$761.1 million) 8% senior subordinated notes. Also on November 18, 2004, 3815668 Canada Inc., a wholly-owned subsidiary of the Company and the issuer of the above-mentioned notes, amalgamated with CanWest Media Inc., which is also a wholly-owned subsidiary of the Company. The issuance of the new notes was recorded at their fair value at November 18, 2004 of $944 million. The difference between the fair value of the new notes and the book value of the junior subordinated notes together with certain other costs of settling the debt totaling $44 million, was charged to earnings as a loss on debt extinguishment.
The Company has entered into a US$761.1 million cross-currency interest rate swap resulting in floating interest rates on its senior subordinated notes at interest rates based on CDOR plus a margin and a fixed currency exchange rate of US$1:$1.1932 until September 2012. Under its Senior Secured Credit facility the Company is required to maintain a fair value of its interest rate swaps and foreign currency and interest rate swaps above a prescribed minimum liability.
There are also prescribed minimum liabilities with individual counterparties, which have two-way recouponing provisions. The Company was required to make recouponing
13 payments of $137.0 million in the three months ended November 30, 2004 (2003 – $11.2 million), $44.1 million of this recouponing payment related to overhanging swaps and accordingly was reflected in cash flows from operating activities. Further strengthening of the Canadian currency and/or declining interest rates may result in further payments to counterparties.
Deborah Jones deborahjones at mac.com
Mon Mar 31 19:10:31 EST 2003
CANWEST GLOBAL COMMUNICATIONS CORP.
Attention Business Editors:
"WINNIPEG, March 31 /CNW/ - CanWest Global Communications Corp. announced today that CanWest Media Inc., an indirect wholly-owned subsidiary, has priced a private placement of U.S.$200 million, or approximately C$294 million, aggregate principal amount of unsecured senior notes. The notes carry a coupon rate of 7 5/8% and have a ten-year term."
"Approximately C$275 million of the proceeds will be used to retire a portion of the 12 1/8% subordinated debentures held by Hollinger International Inc. and Hollinger Canadian Newspapers Limited Partnership, which should reduce CanWest's consolidated interest expense by approximately C$12.7 million annually. Closing of this offering is expected to occur on or about Thursday, April 3, 2003."
"The notes are being offered in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended, and to persons outside the United States under Regulation S of the Securities Act. The notes are being sold in Canada in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Quebec to eligible private placement purchasers. The notes have not been registered, and will not be registered, under the Securities Act or qualified by prospectus for distribution in Canada."
"The notes may not be offered or sold in the United States absent an exemption from registration under the Securities Act and may n not be offered or sold in Canada except in accordance with or pursuant
to available exemption from the registration and prospectus requirements
under applicable Canadian Securities laws."
"CanWest Media Inc. will seek to register substantially identical
notes with the Securities and Exchange Commission in order to give holders
of the notes an opportunity in the future to exchange the notes for notes
that may be publicly traded in the US."
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Junior subordinated notes (7) 12.1% 881,116 12.1% 783,165
p21
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2004 AND 2003
7) The junior subordinated notes mature in November 2010, and bear interest at a fixed rate of 12.125%. At the Company’s option, interest payments to November 2005 may be paid in cash, the issuance of additional notes, or subject to conditions, the issuance of non-voting shares of the Company. The notes rank junior to senior debt and are guaranteed by certain subsidiaries of the Company. The notes include $96.9 million in notes issued during 2004 in satisfaction of interest as well as an accrual of $9.2 million for notes to be issued in January 2005 (2003 - $110.1 million and $8.2 million respectively). Subsequent to year end these notes were settled through the issuance of new 8% Senior Subordinated notes (s
24. SUBSEQUENT EVENTS
In October 2004, the Company launched an exchange offer to exchange a new series of 8% Senior Subordinated notes due 2012 for the outstanding 12 1/8% Senior notes due 2010 issued by the Hollinger Participation Trust. In the exchange offer, the holders of the trust notes were offered US$1,240 principal amount of new notes in exchange for each US$1,000 of trust notes. In addition, the Company launched a concurrent offer of notes, proceeds of which were used to retire the 12 1/8% junior subordinated notes held by Hollinger, which had not been participated to the Hollinger Participation Trust. The effect of these transactions was to replace the Company’s existing $903.6 million 12 1/8% junior subordinated notes (including accrued interest to November 18, 2004) with new $908.1 million (US$760.1 million) 8% senior subordinated notes. These transactions were completed on November 18, 2004. Also on November 18, 2004, 3815668 Canada Inc., a wholly-owned subsidiary of CanWest and the issuer of the above-mentioned notes, amalgamated with CanWest Media Inc., which is also a wholly-owned subsidiary of CanWest.
The excess of the fair value of the 8% subordinated notes over the carrying value of the 121/8% junior subordinated notes, which has not been determined at this time will be expensed in the quarter ended November 30, 2004.
1st quarter 05 Nov
LONG TERM DEBT On November 18, 2004, the Company completed an exchange offer to exchange a new series of 8% Senior Subordinated notes due 2012 for the outstanding 12 1/8% Senior notes due 2010 issued by the Hollinger Participation Trust. In the exchange offer, the holders of the trust notes received US$1,240 principal amount of new notes in exchange for each US$1,000 of trust notes. In addition, the Company completed a concurrent offer of notes, proceeds of which were used to retire the 12 1/8% junior subordinated notes held by Hollinger, which had not been participated to the Hollinger Participation Trust.
The effect of these transactions replaced the Company’s existing $903.6 million 12 1/8% junior subordinated notes (including accrued interest to November 18, 2004) with new $908.1 million (US$761.1 million) 8% senior subordinated notes. Also on November 18, 2004, 3815668 Canada Inc., a wholly-owned subsidiary of the Company and the issuer of the above-mentioned notes, amalgamated with CanWest Media Inc., which is also a wholly-owned subsidiary of the Company. The issuance of the new notes was recorded at their fair value at November 18, 2004 of $944 million. The difference between the fair value of the new notes and the book value of the junior subordinated notes together with certain other costs of settling the debt totaling $44 million, was charged to earnings as a loss on debt extinguishment.
The Company has entered into a US$761.1 million cross-currency interest rate swap resulting in floating interest rates on its senior subordinated notes at interest rates based on CDOR plus a margin and a fixed currency exchange rate of US$1:$1.1932 until September 2012. Under its Senior Secured Credit facility the Company is required to maintain a fair value of its interest rate swaps and foreign currency and interest rate swaps above a prescribed minimum liability.
There are also prescribed minimum liabilities with individual counterparties, which have two-way recouponing provisions. The Company was required to make recouponing
13 payments of $137.0 million in the three months ended November 30, 2004 (2003 – $11.2 million), $44.1 million of this recouponing payment related to overhanging swaps and accordingly was reflected in cash flows from operating activities. Further strengthening of the Canadian currency and/or declining interest rates may result in further payments to counterparties.
Deborah Jones deborahjones at mac.com
Mon Mar 31 19:10:31 EST 2003
CANWEST GLOBAL COMMUNICATIONS CORP.
Attention Business Editors:
"WINNIPEG, March 31 /CNW/ - CanWest Global Communications Corp. announced today that CanWest Media Inc., an indirect wholly-owned subsidiary, has priced a private placement of U.S.$200 million, or approximately C$294 million, aggregate principal amount of unsecured senior notes. The notes carry a coupon rate of 7 5/8% and have a ten-year term."
"Approximately C$275 million of the proceeds will be used to retire a portion of the 12 1/8% subordinated debentures held by Hollinger International Inc. and Hollinger Canadian Newspapers Limited Partnership, which should reduce CanWest's consolidated interest expense by approximately C$12.7 million annually. Closing of this offering is expected to occur on or about Thursday, April 3, 2003."
"The notes are being offered in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended, and to persons outside the United States under Regulation S of the Securities Act. The notes are being sold in Canada in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Quebec to eligible private placement purchasers. The notes have not been registered, and will not be registered, under the Securities Act or qualified by prospectus for distribution in Canada."
"The notes may not be offered or sold in the United States absent an exemption from registration under the Securities Act and may n not be offered or sold in Canada except in accordance with or pursuant
to available exemption from the registration and prospectus requirements
under applicable Canadian Securities laws."
"CanWest Media Inc. will seek to register substantially identical
notes with the Securities and Exchange Commission in order to give holders
of the notes an opportunity in the future to exchange the notes for notes
that may be publicly traded in the US."
The Company does not enter into financial instruments for trading or speculative purposes
Not speculating, but losing 150 million to financing interest payments of 200 million. GAAP derivative loses should provide specifics on each debt agreement, as Canwest says has derivative swaps program for each debt.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Interest rate and foreign currency swap losses(-110,860 lost 2004) ( -23,015 lost in 2003 )
Interest rate and foreign currency swap losses(-138,639 lost 2006 ) ( -121,064 lost in 2005)
Interest rate and foreign currency swap losses(+15,955 made 2007) (-138,639 lost in 2006)
Interest rate and foreigh currency swap losses(-150 million lost in 2009) (-54 million lost in 2008 )
CONSOLIDATED FINANCIAL STATEMENTS 2004 p12
Quote, "Derivative financial instruments are used to reduce foreign currency and interest rate risk on the Company’s debt. The Company does not enter into financial instruments for trading or speculative purposes.
The Company’s policy is to designate each derivative financial instrument as a hedge of a specifically identified debt instrument at the time the Company enters into the derivative financial instrument.
Interest rate swap agreements are used as part of the Company’s program to manage the fixed and floating interest rate mix of the Company’s total debt portfolio and related overall cost of borrowing. The interest differential to be paid or received under interest rate swap agreements is recognized as an adjustment to interest expense.
Foreign currency interest rate swap agreements are used to manage exchange and interest rate exposures related to debt instruments denominated in foreign currencies. Translation gains and losses on the principal swapped are offset by corresponding translation losses and gains on the related debt in earnings. The Company translates its foreign currency denominated debt that is hedged by foreign currency interest rate swaps at the rate implicit in the swap agreement.
Gains and losses on terminations of interest rate and foreign currency interest rate swap agreements are deferred and amortized as an adjustment to interest expense related to the underlying debt over the remaining term of the original contract life of the terminated swap agreement.
In the event of early extinguishment of the debt obligations, the Company may continue to hold the related derivative financial instruments. The realized or unrealized gain or loss from these swaps is recognized in earnings, and the swaps are recorded on the balance sheet at fair value. Subsequent changes in the fair value of overhanging swaps are recognized in earnings."
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Interest rate and foreign currency swap losses(-110,860 lost 2004) ( -23,015 lost in 2003 )
Interest rate and foreign currency swap losses(-138,639 lost 2006 ) ( -121,064 lost in 2005)
Interest rate and foreign currency swap losses(+15,955 made 2007) (-138,639 lost in 2006)
Interest rate and foreigh currency swap losses(-150 million lost in 2009) (-54 million lost in 2008 )
CONSOLIDATED FINANCIAL STATEMENTS 2004 p12
Quote, "Derivative financial instruments are used to reduce foreign currency and interest rate risk on the Company’s debt. The Company does not enter into financial instruments for trading or speculative purposes.
The Company’s policy is to designate each derivative financial instrument as a hedge of a specifically identified debt instrument at the time the Company enters into the derivative financial instrument.
Interest rate swap agreements are used as part of the Company’s program to manage the fixed and floating interest rate mix of the Company’s total debt portfolio and related overall cost of borrowing. The interest differential to be paid or received under interest rate swap agreements is recognized as an adjustment to interest expense.
Foreign currency interest rate swap agreements are used to manage exchange and interest rate exposures related to debt instruments denominated in foreign currencies. Translation gains and losses on the principal swapped are offset by corresponding translation losses and gains on the related debt in earnings. The Company translates its foreign currency denominated debt that is hedged by foreign currency interest rate swaps at the rate implicit in the swap agreement.
Gains and losses on terminations of interest rate and foreign currency interest rate swap agreements are deferred and amortized as an adjustment to interest expense related to the underlying debt over the remaining term of the original contract life of the terminated swap agreement.
In the event of early extinguishment of the debt obligations, the Company may continue to hold the related derivative financial instruments. The realized or unrealized gain or loss from these swaps is recognized in earnings, and the swaps are recorded on the balance sheet at fair value. Subsequent changes in the fair value of overhanging swaps are recognized in earnings."
Asper's original equity investment for their multi voting shares is 3.2 million, so Asper to pay income tax on selling Canwest shares
Whereas single vote share contributed equity is 820 million, 200 times Asper's equity contribution
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
p23 2004CONSOLIDATED FINANCIAL STATEMENTS
2004 76,785,976 multiple voting shares contributed equity 3,199
2004 98,667,438 subordinate voting shares equity 820,625
2004 1,825,718 non-voting shares contributed equity 24,804
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
p23 2004CONSOLIDATED FINANCIAL STATEMENTS
2004 76,785,976 multiple voting shares contributed equity 3,199
2004 98,667,438 subordinate voting shares equity 820,625
2004 1,825,718 non-voting shares contributed equity 24,804
Wednesday, March 17, 2010
one of the senior credit facilities was cut back to $112-million from $300-million
http://www.theglobeandmail.com/report-on-business/article972785.ece
Quote, "CanWest's borrowing capacity was put on a tighter leash this month when a senior credit facility was cut back to $112-million from $300-million by Bank of Nova Scotia. The new limit is about $20-million above what CanWest has already drawn.
The limit is in place until next Friday and Mr. Asper is now trying to negotiate a new borrowing agreement by that date, in order to have the full amount of credit reinstated. "Options on the table include some sort of recapitalization that would see creditors take a haircut, and the Asper family squeezed out," said one banker working on CanWest."
"At least one investor weighing a proposal said it would insist that Mr. Asper step aside as chief executive officer and that he and his siblings eliminate the dual-class share structure that gives them control of the company, according to sources familiar with the matter." [No more multi voting shares}
Quote, "CanWest's borrowing capacity was put on a tighter leash this month when a senior credit facility was cut back to $112-million from $300-million by Bank of Nova Scotia. The new limit is about $20-million above what CanWest has already drawn.
The limit is in place until next Friday and Mr. Asper is now trying to negotiate a new borrowing agreement by that date, in order to have the full amount of credit reinstated. "Options on the table include some sort of recapitalization that would see creditors take a haircut, and the Asper family squeezed out," said one banker working on CanWest."
"At least one investor weighing a proposal said it would insist that Mr. Asper step aside as chief executive officer and that he and his siblings eliminate the dual-class share structure that gives them control of the company, according to sources familiar with the matter." [No more multi voting shares}
Tuesday, March 16, 2010
11 million dollars is the incentive for sharehodlers to file ccrr36, is a joke
Material Change Report Feb 11, 2009
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Holders of Canwest’s existing 177.6 million shares will receive cash payments in exchange for their shares equivalent in the aggregate to 2.3% of the implied equity value of Restructured Canwest, or approximately $11 million in the aggregate.
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Holders of Canwest’s existing 177.6 million shares will receive cash payments in exchange for their shares equivalent in the aggregate to 2.3% of the implied equity value of Restructured Canwest, or approximately $11 million in the aggregate.
had funds, yet, decision to withhold interest payment
The company said the decision to withhold the interest payment will allow the partnership to operate normally as it continues restructuring talks with its lenders,Aug 3, 2009
http://www.friends.ca/news-item/8549
Despite the payment deferral on the subsidiary's senior subordinated notes, Canwest said creditors are not in a position to demand that the partnership repay the full $400-million it owes until at least Sept. 1.
http://www.friends.ca/news-item/8549
Despite the payment deferral on the subsidiary's senior subordinated notes, Canwest said creditors are not in a position to demand that the partnership repay the full $400-million it owes until at least Sept. 1.
Fitz & Jen excellent articles on Canwest missed interest payements
http://www.fitzandjen.com/2009/05/sp-hangs-red-letter-d-on-canwest-newspaper-unit-after-skipped-payment-.html
Quote, "Canwest skipped a C$10 million (US$9.17 million) payment on its staggering debt Friday, and Standard & Poor’s Ratings Services immediately slashed the nearly rock-bottom credit rating on its newspapers unit to a rock-bottom D."
Canwest acknowledged that the defaulted payment gives its lenders the right to demand immediate payment of its C$75 million credit facility -- and even its US$400 million in senior subordinated notes due 2015.
But Canwest, which has about $4 billion in debt when all its many units are totaled up, is becoming an old hand at skipping payments. It declined to pay a US$304 million interest payment on senior notes that was due March 15. [Not the 30 million interest payement.]
Despite that, it lined up $175 million in new debt financing. A committee of major creditors has agreed to a forbearance period until June 15.
Quote, "Canwest skipped a C$10 million (US$9.17 million) payment on its staggering debt Friday, and Standard & Poor’s Ratings Services immediately slashed the nearly rock-bottom credit rating on its newspapers unit to a rock-bottom D."
Canwest acknowledged that the defaulted payment gives its lenders the right to demand immediate payment of its C$75 million credit facility -- and even its US$400 million in senior subordinated notes due 2015.
But Canwest, which has about $4 billion in debt when all its many units are totaled up, is becoming an old hand at skipping payments. It declined to pay a US$304 million interest payment on senior notes that was due March 15. [Not the 30 million interest payement.]
Despite that, it lined up $175 million in new debt financing. A committee of major creditors has agreed to a forbearance period until June 15.
default/acceleration provisions with a 25 million threshold, should be in financial statements:GAAP
The company's bond indenture contains cross default/acceleration provisions with a $25 million threshold. The missed payment is less than the threshold. Should subsequent payments take the aggregate of missed payments beyond the threshold or should bank lenders accelerate maturity - the entire (approximately) C$1.065 billion bank credit facility is in default - the bonds' cross default/acceleration will be triggered. The bond indenture has a 60 day (post notice) cure for a default and a 30 day (post notice) cure for acceleration. Given the significant potential for the company's defaults to eventually involve all creditors, the ratings outlook is negative. The rating actions effectively conclude a review initiated on April 13, 2009.
http://dealbook.blogs.nytimes.com/2009/10/07/canwest-bankruptcy-filing-hobbles-its-media-holdings/
The PDR's LD suffix indicates a limited default, i.e. only a component of the company's debt structure is in default. The company's bond indenturecontains cross default/acceleration provisions with a $25 million threshold. The missed payment is less than the threshold. Should subsequent payments take the aggregate of missed payments beyond the threshold or should bank lenders accelerate maturity - the entire (approximately) C$1.065 billion bank credit facility is in default - thebonds' cross default/acceleration will be triggered. The bond indenture has a 60 day (post notice) cure for a default and a 30 day (post notice) cure for acceleration. Given the significant potential for the company's defaults to eventually involve all creditors, the ratings outlook is negative. The rating actions effectively conclude a review initiated on April 13, 2009.
http://pulse.alacra.com/analyst-comments/Canwest_Media_Inc-C2535357
http://dealbook.blogs.nytimes.com/2009/10/07/canwest-bankruptcy-filing-hobbles-its-media-holdings/
In a statement, the family said it would provide 15 million Canadian dollars ($13.9 million) of the 65 million Canadian dollars in new financing that the units require.
Chris Diceman, a media analyst with DBRS, a Toronto credit rating agency, told The Times that it was possible that whoever supplied the additional 50 million Canadian dollars in equity would also acquire control. In any case, he anticipated that special voting shares that are now the source of the Asper family’s control would retain little influence after the restructuring. It was also unclear if Leonard J. Asper, the president and chief executive, would remain in that role.
Canwest’s most attractive assets are 13 cable channels it bought in 2007 with a private equity division of Goldman Sachs
http://dealbook.blogs.nytimes.com/2009/10/07/canwest-bankruptcy-filing-hobbles-its-media-holdings/
The PDR's LD suffix indicates a limited default, i.e. only a component of the company's debt structure is in default. The company's bond indenturecontains cross default/acceleration provisions with a $25 million threshold. The missed payment is less than the threshold. Should subsequent payments take the aggregate of missed payments beyond the threshold or should bank lenders accelerate maturity - the entire (approximately) C$1.065 billion bank credit facility is in default - thebonds' cross default/acceleration will be triggered. The bond indenture has a 60 day (post notice) cure for a default and a 30 day (post notice) cure for acceleration. Given the significant potential for the company's defaults to eventually involve all creditors, the ratings outlook is negative. The rating actions effectively conclude a review initiated on April 13, 2009.
http://pulse.alacra.com/analyst-comments/Canwest_Media_Inc-C2535357
http://dealbook.blogs.nytimes.com/2009/10/07/canwest-bankruptcy-filing-hobbles-its-media-holdings/
In a statement, the family said it would provide 15 million Canadian dollars ($13.9 million) of the 65 million Canadian dollars in new financing that the units require.
Chris Diceman, a media analyst with DBRS, a Toronto credit rating agency, told The Times that it was possible that whoever supplied the additional 50 million Canadian dollars in equity would also acquire control. In any case, he anticipated that special voting shares that are now the source of the Asper family’s control would retain little influence after the restructuring. It was also unclear if Leonard J. Asper, the president and chief executive, would remain in that role.
Canwest’s most attractive assets are 13 cable channels it bought in 2007 with a private equity division of Goldman Sachs
Transfer of National Post: has formed the view that Section 36 does not apply to the Canwest Intercompany Reorganization
Transfer on National Post to the other lenders syndicate, away from the Ad Hoc vendor financing debt group: inter alia issues, as unsecured creditors of the National Post are ahead in the credit line, before the vendor financing agreement debt, sale between lenders does not supercede this.
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67. Until recently, the CCAA did not expressly address dispositions or sales of assets. On September 18, 2009, certain amendments to the CCAA were proclaimed intoforce, including Section 36 of the CCAA which sets out the criteria for the sale and/ordisposition of assets in the context of CCAA proceedings and is reproduced in full inSchedule "C" hereto.E F T I"-24-68.
The Monitor has reviewed Section 36 of the CCAA and, after consultation with itscounsel, has formed the view that Section 36 does not apply to the CanwestIntercompany Reorganization for the following reasons:
(a) the purpose of Section 36 is to prevent restructuring debtors from disposing ofvaluable assets outside of the ordinary course of business to the detriment oftheir creditors;
(b) the National Post Company has failed to generate any profits since itsinception and has operated at a loss since;
(c) the transition of some of the assets and liabilities of the National PostCompany is only one aspect of a larger reorganization of the relationshipbetween the LP Entities and the CMI Entities contemplated under the CMI/LPReorganization Agreement;
(d) the business of the National Post Company was always intended to operatefunctionally as a part of the LP Entities;
(e) the business and operations of the National Post Company are not alignedwith that of the CMI Entities, yet are intertwined with the operations of the LPEntities;
(f) the CMI Entities' secured creditors support the Canwest IntercompanyReorganization as a whole, but not in part, and both the Ad Hoc Committeeand the Administrative Agent have indicated that they will only consent to these transactions on the grounds that the NP Transition Agreement and theE F T I'- 25 -Shared Services Transition Agreement will be implementedcontemporaneously pursuant to the CMI/LP Reorganization Agreement; and(g)there is no ability to proceed with either the NP Transition Agreement or theShared Services Agreement alone.RECOMMENDATIONS
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67. Until recently, the CCAA did not expressly address dispositions or sales of assets. On September 18, 2009, certain amendments to the CCAA were proclaimed intoforce, including Section 36 of the CCAA which sets out the criteria for the sale and/ordisposition of assets in the context of CCAA proceedings and is reproduced in full inSchedule "C" hereto.E F T I"-24-68.
The Monitor has reviewed Section 36 of the CCAA and, after consultation with itscounsel, has formed the view that Section 36 does not apply to the CanwestIntercompany Reorganization for the following reasons:
(a) the purpose of Section 36 is to prevent restructuring debtors from disposing ofvaluable assets outside of the ordinary course of business to the detriment oftheir creditors;
(b) the National Post Company has failed to generate any profits since itsinception and has operated at a loss since;
(c) the transition of some of the assets and liabilities of the National PostCompany is only one aspect of a larger reorganization of the relationshipbetween the LP Entities and the CMI Entities contemplated under the CMI/LPReorganization Agreement;
(d) the business of the National Post Company was always intended to operatefunctionally as a part of the LP Entities;
(e) the business and operations of the National Post Company are not alignedwith that of the CMI Entities, yet are intertwined with the operations of the LPEntities;
(f) the CMI Entities' secured creditors support the Canwest IntercompanyReorganization as a whole, but not in part, and both the Ad Hoc Committeeand the Administrative Agent have indicated that they will only consent to these transactions on the grounds that the NP Transition Agreement and theE F T I'- 25 -Shared Services Transition Agreement will be implementedcontemporaneously pursuant to the CMI/LP Reorganization Agreement; and(g)there is no ability to proceed with either the NP Transition Agreement or theShared Services Agreement alone.RECOMMENDATIONS
Canwest moniter 4th filing aspects of shareholder/debtor expropriation disclosed
FOURTH REPORT OF FTI CONSULTING CANADA INC.
IN ITS CAPACITY AS MONITOROctober 28, 2009
Court File No. CV-09-8396-000L
INTRODUCTION
[Party definitions]1. By [Intitial] Order of this Court dated October 6, 2009, Canwest and certain subsidiaries obtained protection from their creditors under the Companies' Creditors Arrangement Act, R.S.C. 1985 c. C-36, as amended (the "CCAA"). The Initial Order also granted relief in respect of certain affiliated partnerships of the Applicants listed in Schedule "B" hereto (collectively,the "Partnerships", and together with the Applicants, the "CMI Entities") andappointed FTI Consulting Canada Inc. ("FTI") as monitor (the "Monitor") of theCMI Entities. The proceedings commenced by the CMI Entities under the CCAAwill be referred to herein as the "CCAA Proceedings".
2 Following the granting of the Initial Order, on October 6, 2009 and October 15, 2009, the Monitor obtained Orders under Chapter 15 of the US. Bankruptcy Code from the United States Bankruptcy Court (Southern District of New York) a result of the commencement of the CCAA Proceedings.
3. The basis of a plan of arrangement for the CMI Entities under the CCAA (the"Recapitalization Transaction") is a going concern recapitalization transaction, the terms and conditions of which were agreed upon following intensive and extendednegotiations between the CMI Entities and the ad hoc committee (the "Ad HocCommittee") of the CMI Senior Subordinated Noteholders ' . The terms of theproposed Recapitalization Transaction are set out in the Recapitalization TransactionTerm Sheet (the "Term Sheet").
4. Further background information regarding the CMI Entities and the CCAAProceedings is provided in the Pre-filing Report and in the affidavit of John E.Maguire sworn October 5, 2009 (the "Maguire Affidavit"), copies of which havebeen posted on the Monitor's website http://cfcanada.fticonsulting.com/cmi/
Capitalized terms used but not defined herein have the meanings ascribed to them in FTI's pre-filing reportdated October 5, 2009 (the "Pre-filing Report").E F T l°3PURPOSE OF THIS REPORT5. The purpose of this Fourth Report is to inform the Court on the CMI Entities' requestfor an Order approving the Transition and Reorganization Agreement dated October26, 2009 (the "CMI/LP Reorganization Agreement"), which provides a frameworkfor the CMI Entities and the LP Entities (as defined below) to properly restructuretheir inter-entity arrangements for the benefit of their respective stakeholders.
TheCMI/LP Reorganization Agreement provides, inter alia, for:
(a) a reorganization, orderly transition and subsequent termination of certainshared services arrangements between the CMI Entities and the LP Entitiespursuant to the terms of the Agreement on Shared Services and Employeesdated October 26, 2009 (the "Shared Services Transition Agreement"); and
(b) a transition of substantially all of the assets of The National Post Company/LaPublication National Post (the "National Post Company") and certainintellectual property of Canwest Global (collectively, the "Assets") andcertain liabilities of the National Post Company to the LP Entities pursuant tothe terms of the National Post Transition Agreement dated October 26, 2009(the "NP Transition Agreement").DIVISIONS OF CANWEST GLOBAL6. Canwest Global's business operations consist of the following two major divisions:(a) television business (the "Canwest TV Group"), and (b) newspaper publishingand digital media business (the "Canwest Publishing Group").E F T I
9. The debt structure and current financial position of the CMI Entities is described indetail in the Pre-filing Report and the Maguire Affidavit.
10. The LP Entities are also currently in default under their various credit facilities, noteindenture or guarantee obligations, and, in particular, under a credit agreement (the"LP Secured Credit Agreement") dated as of July 10, 2007, as amended, between,inter alia, the predecessor of the Canwest Limited Partnership and The Bank of NovaScotia, as Administrative Agent (in such capacity, the "Administrative Agent") for asyndicate of lenders (the "LP Secured Lenders").
11. Following intensive and extended negotiations, on August 31, 2009, the LP Entitiesand the Administrative Agent agreed on the terms and conditions of a forbearanceagreement, as amended (the "Forbearance Agreement"), pursuant to which theAdministrative Agent on behalf of the LP Secured Lenders holding more than 50% ofadvances under the LP Secured Credit Agreement (the "Majority LP SecuredLenders") agreed to forbear, subject to certain terms and conditions, from takingE F T 195steps to proceed with enforcement of their security in order to allow the CanwestLimited Partnership and the LP Secured Lenders an opportunity to negotiate a prepackagedrestructuring or reorganization of the affairs of the LP Entities.12. The Forbearance Agreement provides, inter alia, that arrangements (satisfactory tothe Administrative Agent) with the applicable CMI Entities with respect torestructuring or termination of the Shared Services (as defined below) will be reachedby October 30, 2009.13. Under the Forbearance Agreement, the LP Entities are prohibited from entering intothe transactions contemplated under the NP Transition Agreement and the SharedServices Transition Agreement without the consent of the Administrative Agent.14.The Forbearance Agreement expires on, inter alia, the LP Entities' failure to complywith their obligations under the Forbearance Agreement.SHARED SERVICES15. Pursuant to a number of inter-company service agreements, the CMI Entities and theLP Entities share certain business services (collectively, the "Shared Services"). Forexample, Canwest Media Inc. ("CMI") and Canwest Limited Partnership provideeach other (in addition to providing certain other Canwest entities) with certainadministrative and advisory services and engage in certain cross-promotionalactivities and inter-company services which are integral to the overall Canwestenterprise.16.A summary of the Shared Services agreements affected by the CMI/LPF T !'6-Reorganization Agreement (collectively, the "Shared Services Agreements")(including the nature of the services provided, the service provider and the servicerecipient) is attached as Appendix "A" to this report. Among others, CMI providesCanwest Television Limited Partnership, the CW Media Segment and the CanwestLimited Partnership the following services:(a) executive advisory and other services based upon various fee and costallocation agreements and practices;(b) corporate and administrative services related to, inter alia, legal matters, taxcompliance, and financial reporting; and(c) negotiation and placement of insurance coverage for which insurancepremiums are shared.
17.The Canwest Limited Partnership provides the following services to the followingentities:
(a) certain information technology infrastructure and support, on-line and digitalmedia support, receivables and payables management, corporate, accountingand human resources administrative and infrastructure services to CMI, theCanwest Television Limited Partnership, and the CW Media Segment;E F T IR7
(b) certain information technology infrastructure and support, on-line and digitalmedia support, receivables and payables management, accounting, humanresources administrative, financial, accounting, infrastructure, sales, printingand distribution services to the National Post Company; and
(c) management, invoicing and collection of advertising and circulation revenuesservices on behalf of the National Post Company, and the management,invoicing and collection of on-line advertising for the CW Media Segmentand the Canwest Television Limited Partnership.
18. Canwest Global, which is one of the CMI Entities, also grants to CMI and theCanwest Limited Partnership a non-exclusive, royalty-free, non-transferable licenseto use some or all of the Canwest trademarks in Canada and to sublicense the use ofthe Canwest trademarks to its subsidiaries.19. FTI reviewed the Shared Services Agreements which, by their terms, generallyprovide that the service provider (whether CMI, the Canwest Limited Partnership orotherwise) is entitled to reimbursement for all costs and expenses incurred in theprovision of the services. Costs and expenses that are shared between the serviceprovider and the service recipient are allocated between the parties on a reasonablebasis. FTI is advised that neither the reimbursement of costs and expenses nor thepayment of fees is intended to result in any material financial gain or loss to theservice provider. Fees charged under the Shared Services Agreements are based onannual budgeted costs, with the service provider bearing the risk of exceeding orbenefitting from performing better than budget. Fees are reviewed and revisedE F T8annually with no mechanism in the Shared Services Agreements for a retrospectivetrue up of fees to reflect actual versus budgeted costs of the service provider.
20. Under the Initial Order, the CMI Entities and the Canwest Limited Partnership are prohibited from modifying, ceasing to provide or terminating the provision or payment of the Shared Services except with the consent of, inter alia, the Monitorand the party receiving such services or further Order of this Honourable Court(except with respect to certain portions of the CMI Entities' business which may beshut down).
THE NATIONAL POST COMPANYThe Nationa2l 1P. ost Company is a general partnership with units held by CMI andNational Post Holdings Ltd. (a wholly owned subsidiary of CMI).22.The National Post Company carries on business publishing the National Post nationalnewspaper and operating related online publications.23. The National Post is one of only two national daily newspapers and is second in itsmarket position to The Globe and Mail. In 2008, the National Post had a reportedaverage daily paid circulation of almost 200,000 and an estimated weekly readershipof 1.1 million people.24.The National Post was founded in 1998 by Conrad Black and was acquired byCanwest Global from Hollinger Inc. by way of two transactions in 2000 and 2002.E F T I°9-Employees & Related Obligations
25. As at the date of this report, the National Post Company employed approximately 277employees. Three of its employees provide services exclusively to the LP Entitiesand the National Post Company is reimbursed by the LP Entities for all associatedemployment costs. In addition, ten of the LP Entities' employees provide servicesexclusively to the National Post Company which reimburses the LP Entities for allassociated employment costs.26. The National Post Company maintains a defined benefit pension plan registeredunder the Ontario Pension Benefits Act (the "NP Pension Plan"). FTI is advised thatthe solvency deficiency of the NP Pension Plan effective as of December 31, 2006was $1.5 million and the winding up deficiency was $1.6 million. The annual servicecontributions for the NP Pension Plan estimated at the last valuation of the NPPension Plan totaled $662,000 and annual special payments totaled $360,000. Thelast actuarial valuation of the NP Pension Plan was carried out in 2006 and thefunding status of the NP Pension Plan may have deteriorated further in the interimdue to market factors.Creditors of the National Post Company27. As described in greater detail in the Pre-filing Report, the National Post Company (asguarantor of certain of CMI's and/or Canwest Global's secured and unsecuredindebtedness) is indebted in the following amounts pursuant to the followingobligations:E F" T I-10-(a) Irish Holdco Secured Note - $187.3 million(b) CIT Facility - $10.7 million (in connection with outstanding letters of credit)(c) CMI Senior Subordinated Notes - US$393.2 million(d) Irish Holdco Unsecured Note - $430.6 millionRelationship of the National Post Company with other Canwest Global Divisions
28. Prior to 2005, the newspaper assets of the LP Entities and the National Post assetswere owned by a single Canwest Global entity. In 2005, the predecessor of theCanwest Limited Partnership was formed to acquire Canwest Global's newspaperpublishing and digital media entities and to operate such businesses, as well as certainshared services operations (including information technology, accounting, financialreporting, and benefits administration) as part of a planned income trust spin-off ofCanwest Global's newspaper publishing and digital media assets. Based on its poorfinancial performance at that time, the National Post was not included in the newlyformedincome trust and was instead separated into a standalone general partnership.
29. The National Post Company and National Post Holdings Ltd. are the only entities inthe Canwest Publishing Group that are guarantors of certain secured and unsecuredindebtedness of CMI (as described above) and were, for that reason, included in theCCAA Proceedings. With the exception of the commonality of creditors (and beingbeneficiaries under certain Canwest Global national procurement contracts), theNational Post Company and the CMI Entities do not have any common services,licenses, or material synergies.F T-11-30. The management and operations of the LP Entities and the National Post Company,although separate legal entities, are intertwined as evidenced by, inter alia, thefollowing:(a) the headquarters of the Canwest Limited Partnership and the National PostCompany are both located at 1450 Don Mills Road in Toronto;(b) the National Post Company executives report to the President and CEO of theCanwest Limited Partnership;(c) the LP Entities provide various sales, operational, back-office and othersupport services to the National Post Company including:(i) IT support;(ii) Accounting and finance;(iii) Human Resources;(iv) Digital Media;(v) National and Digital sales representation;(vi) Canwest Editorial Services;(vii) FPlnfomart.ca (archival services);(viii) Canwest News Services; andE F T I'-12-(ix)Printing and distribution services in Montreal, Ottawa, Calgary,Edmonton and Vancouver.
31. As a result of the National Post Company's dependence on the intercompany servicesprovided by the LP Entities, it would be unable to operate independently from the LPEntities.
32. Due to the integrated operations of the National Post Company and the LP Entities,the National Post Company absorbs significant fixed costs which would otherwise becarried by the LP Entities. In the fiscal year ending August 31, 2009, such coststotaled approximately $23 million.33. As a result, and despite the National Post Company's inability to generate profits as astandalone publication, closure of the National Post Company would negativelyimpact the financial performance of the LP Entities, as they would continue to bearcosts currently being allocated to the National Post Company. Management of the LPEntities estimates that closure of the National Post would increase the LP Entities'cost burden by approximately $14 million in fiscal year ending August 31, 2010.
34. Integration of the National Post Company's business will also allow the LP Entities tocontinue to benefit from various news gathering, production, distribution and othersynergies currently shared with the National Post Company.Financial Performance & Current Status of the National Post CompanyThe National3 5P. ost Company has been unprofitable since its inception, recordingannual losses as high as approximately $60 million in 2001. Through various costE F T- 13 -cutting measures and improved distribution, sales and marketing efficiencies, losseshave been reduced but the company has still recorded annual net losses ranging from$9 million to $12 million in each year since 2005.
36. The National Post Company continues to operate at a loss and is projected to suffer anet loss of $9.3 million in fiscal year ending August 31, 2009 and a net loss of $0.9million in September 2009.37. The National Post Company's losses for the past 7 years have been fully funded byCMI. As a result, the National Post Company is currently indebted to CMI in theamount of $139.1 million.38.The Ad Hoc Committee has advised that they are no longer prepared to supportfunding the losses of the National Post Company by CMI after October 30, 2009.39. The LP Entities, in recognition of the financial and strategic benefits that would beafforded to them by transition of the business of the National Post Company to them,agreed to fund 50% the losses suffered by the National Post Company in October2009 (to a maximum of $1 million), but only if the CMI/LP ReorganizationAgreement is approved by this Court and the transition of the assets and liabilitiescontemplated by the NP Transition Agreement (the "NP Transition Transaction")closes.40. In addition, the Recapitalization Transaction is subject to a condition that a definitiveagreement in respect of the transfer of the business operated by the National PostCompany to the Canwest Limited Partnership be entered into by October 15, 2009,E F T I`-14-which deadline was subsequently extended to October 30, 2009, with a closing of thetransaction to take place no later than October 30, 2009. The Ad Hoc Committeeadvised that should the transition of the National Post Company's business fail to takeplace by the above deadline (and in the absence of funding by the LP Entities), it willno longer support the funding of the National Post Company by CMI. Withoutongoing funding, it is anticipated that the National Post Company would be forced tocease operations and commence liquidation proceedings.PROPOSED INTERCOMPANY REORGANIZATION
41. Both the LP Entities and the CMI Entities experienced deterioration in their respective financial performances in 2008-2009 and have commenced reorganizations of their respective corporate and debt structures. The LP Entities and the CMIEntities determined that an orderly transition from their current intertwined corporatestructures to two standalone enterprises will likely be necessary to facilitate and effecttheir respective restructurings.
42. In furtherance of such transition, the CMI Entities and the LP Entities determined thatan orderly disentanglement, transition and subsequent termination of the SharedServices would be mutually beneficial and should be effected. As the businesses ofthe National Post Company and the LP Entities are integrated and interdependent (asdescribed above), the CMI Entities and the LP Entities have also recognized that thebusiness of the National Post Company ought to be integrated into the corporatestructure of the LP Entities.E F T I- 15 -
43. The CMI Entities and the LP Entities have been engaged in negotiations to carry out the transition and subsequent termination of the Shared Services and transition of the business of the National Post Company to the LP Entities since July 2009. However,due to, inter alia, the financial difficulties encountered by both the CMI Entities andthe LP Entities in 2008-2009 and management's focus on recapitalization efforts, the contemplated intercompany reorganization was not effected prior to the commencement of the CCAA Proceedings.
44. Following lengthy and intensive negotiations between the CMI Entities, the LPEntities, their respective chief restructuring and financial advisors, the Ad HocCommittee and the Administrative Agent, the LP Entities and certain of the CMIEntities have entered into the CMI/LP Reorganization Agreement which provides forthe framework to properly restructure their inter-entity arrangements by effecting acomprehensive reorganization of the Shared Services and a transition of substantiallyall of the assets of the National Post Company to the LP Entities (collectively, the"Canwest Intercompany Reorganization "). The Shared Services TransitionAgreement and the NP Transition Agreement are attached as Schedules "A" and "B"to the CMI/LP Reorganization Agreement, respectively. A copy of the CMI/LPReorganization Agreement (together with Schedules) is attached as Exhibit "A" to theaffidavit of John E. Maguire sworn October 27, 2009 (the "October 27 MaguireAffidavit").
45. Both the transition and subsequent termination of the Shared Services and thetransition of the Assets and certain liabilities of the National Post Company areintegral components of the LP Entities' and the CMI Entities' efforts to reorganizeE F T !x-16-their respective business affairs. The terms of the Shared Services TransitionAgreement were informed by and negotiated, in part, based on the terms of the NPTransition Agreement and vice versa.
46. Furthermore, the consummation of the transactions contemplated under each of theShared Services Transition Agreement and the NP Transition Agreement is acondition to the consummation of the transaction contemplated under the otheragreement. Each of the Administrative Agent and the Ad Hoc Committee has beenclear that it will only support the CMI/LP Reorganization Agreement as a whole andwould not support a consummation of either of the Shared Services TransitionAgreement or the NP Transition Agreement without the concurrent consummation ofthe other agreement.The Shared Services Transition Agreement47. The Shared Services Transition Agreement provides for the orderly transition andsubsequent termination of the Shared Services Agreements. The terms of the SharedServices Transition Agreement, include, inter alia, the following:(a) a transition of employees between the CMI Entities and LP Entities andadjustment of amounts currently payable for the Shared Services inaccordance with section 2.5 of the Shared Services Transition Agreementfrom the date of closing of the Shared Services Transition Agreement until theShared Services Agreements are terminated; andE F T 1"-17-(b)all Shared Services Agreements will be terminated by certain dates rangingfrom February 28, 2010 to February 28, 2011.48. A summary of the proposed amendments to the Shared Services Agreements(including the revised payment terms and termination dates) is attached as Appendix"B" to this report.49. The Shared Services Transition Agreement also sets out procedures for offeringemployment to the various employees of the LP Entities and the CMI Entities andmodifies their obligations under certain pension plans maintained for the benefit oftheir respective employees.50. The Shared Services Transition Agreement is conditional on and subject to, inter alia,obtaining (a) an Order of this Court approving the Shared Services TransitionAgreement, and (b) the written consent of the Administrative Agent.The NP Transition AgreementThe NP Tran5s1.ition Agreement provides for the transition of the business of theNational Post Company as a going concern.
52. Pursuant to the NP Transition Agreement, a new wholly-owned subsidiary (the "LPNominee") of Canwest Publishing Inc./Publications Canwest Inc. (which owns all ofthe newspaper and online assets held by the LP Entities), will acquire substantially allof the assets of the National Post Company and certain intellectual property ofCanwest Global in consideration for the Transfer Price/Transition Cost (as defined inthe NP Transition Agreement) which includes: (a) the assumption of certain liabilitiesE F T 1"-18-up to a maximum amount of $6.3 million (plus certain pension and employee benefitsliabilities); and (b) payment of the cash component of the Transfer Price/TransitionCost (as described in greater detail in paragraph 53(f) hereof).53.The terms of the NP Transition Agreement include, inter alia, the following:(a) the LP Nominee has agreed to take title to the Assets (which constitutesubstantially all of the assets of the National Post Company) on an "as is,where is" basis;(b) the LP Nominee will assume certain liabilities of the National Post Company,including certain trade payables and accrued expenses;(c) the following liabilities, among others, are not being assumed by the LPNominee and will remain as claims in the estate of the National PostCompany:(i) breach of contract or license claims, product liability claims and allother litigation claims;(ii) all employment obligations (including severance and terminationclaims) relating to those employees who do not accept the LPNominee's offer of employment;(iii) liabilities of the National Post Company to the other CMI Entities,except for any amounts owing in connection with the Shared Services;andE F T 1?-19-(iv) certain pre-filing payables of the National Post Company (defined asthe Stayed Payables in the NP Transition Agreement).(d) the following assets, among others, are not being transitioned to the LPNominee pursuant to the NP Transition Agreement and will remain in theestate of the National Post Company:(i)the benefit of all insurance policies related to the business of theNational Post Company;(ii) all cash and cash equivalents, including certificates of deposit,commercial paper; and(iii) any amounts owing to the National Post Company by the other CMIEntities;(e)the LP Nominee is offering employment to all of the National PostCompany's employees and will be assuming:(i)all wage related employee obligations owing to the employees it hiresup to and from the date the NP Transition Transaction closes;(ii) all vacation pay owing (as at the date the NP Transition Transactioncloses) to the employees it hires; and(iii) the National Post Company's obligations and liabilities under the NPPension Plan.ETF°- 20 -under the NP Transition Agreement, the LP Nominee must pay a portion ofthe Transfer Price/Transition Cost to the National Post Company in cash. Thecash component is equal to (i) the sum of $2 million and 50% of the NationalPost Company's negative net cash flow during the month of October 2009 (toa maximum of $1 million), less (ii) a reduction equal to the amount, if any, bywhich the Assumed Liabilities Estimate (as defined in the NP TransitionAgreement) exceeds $6.3 million;the NP Transition Agreement is conditional, among other things, on obtainingthe consent of the Administrative Agent on behalf of the Majority LP SecuredLenders.Alternatives to Transitioning the Business of the National Post Company to the LP Entities
54. For the reasons outlined below, it does not appear that there are currently any viablealternatives to transitioning the business of the National Post Company to the LPEntities pursuant to the NP Transition Agreement.55. In December 2008, Canwest Global engaged RBC Dominion Securities Inc. ("RBC")to assist it in considering and evaluating recapitalization alternatives. FTI is advisedby RBC that in the course of conducting its engagement RBC did not conduct aseparate sales process with respect to the National Post Company. However, while itreceived a number of solicited and unsolicited expressions of interest in various otherassets of Canwest Global, it received no expressions of interest from parties seekingto acquire the National Post Company.(f)(g)ETF'-21-56. The Support Agreement, which includes the condition that a definitive agreement inrespect of the transfer of the business operated by the National Post Company toCanwest Limited Partnership be completed by October 15, 2009 (which deadline wassubsequently amended to October 30, 2009 with a closing of the transaction no laterthan October 30, 2009), has been in the public domain since the date of the InitialOrder (October 6, 2009). The Monitor has not been contacted by any interested partywith respect to acquiring the business of the National Post Company.57. The Ad Hoc Committee has continued to support the National Post Company's shortterm liquidity needs, but only on the basis and understanding that the NP TransitionTransaction is being advanced and will be completed. The Ad Hoc Committee hasindicated that it will not continue to support funding the National Post Company inthe long or short term past October 30, 2009 and will not finance the National PostCompany through any marketing process.58. The National Post Company is also precluded from borrowing any funds from CIT orany other lender without the consent of the Ad Hoc Committee, which has indicatedthat such consent would not be granted.
59. The LP Entities have refused to advance any funds to the National Post Companyuntil the terms of the CMI/LP Reorganization Agreement are finalized and the NPTransition Transaction closes.60.Accordingly, the National Post Company has no sources of funding its ongoinglosses.E F T !°- 22 -61. Accordingly, failure to transition the business carried on by the National PostCompany by October 30, 2009 to the LP Entities would likely result in the forcedcessation of its operations and commencement of liquidation proceedings in respectof the National Post Company.62. The Monitor has prepared a preliminary liquidation analysis (the "LiquidationAnalysis") based on certain information provided by the National Post Company.The Liquidation Analysis is an estimate of the potential recovery from the NationalPost Company's assets pursuant to a forced liquidation following a cessation ofoperations.63. It is evident from the Liquidation Analysis that if the National Post Company issubject to a forced liquidation after a cessation of operations, the estimated netrecovery available to its creditors, before costs of liquidation, would range from anegative amount to an amount not materially higher than the transfer price under theNP Transition Agreement.64. The CIT Facility Lenders and Irish Holdco are (subject only to Court-ordered chargesin the CCAA Proceedings) the senior secured creditors of the National Post Companyand there will be no recovery to any of the other of National Post Company's securedor unsecured creditors under either the NP Transition Transaction or the liquidationscenario.
65.The Monitor notes that the NP Transition Transaction has the following advantagesover a liquidation:E F T 1"- 23 -(a) as an integral part of the CMI/LP Reorganization Agreement, it facilitates thereorganization and orderly transition and subsequent termination of the SharedServices arrangements between the CMI Entities and the LP Entities;(b)it preserves approximately 277 jobs in an already highly distressed newspaperpublishing industry;(c) it will help maintain and promote competition in the national daily newspapermarket for the benefit of Canadian consumers; and(d) the LP Nominee will assume substantially all of the National Post Company'strade payables (including those owing to various suppliers) and variousemployment costs associated with the transferred employees.
66. The National Post Company's senior secured creditors, namely the CIT FacilityLenders and Irish Holdco, and the Ad Hoc Committee support the NP TransitionTransaction as part of the Canwest Intercompany Reorganization. IMPACT OF CCAA AMENDMENTS ON THE PROPOSED REORGANIZATION
67. Until recently, the CCAA did not expressly address dispositions or sales of assets. On September 18, 2009, certain amendments to the CCAA were proclaimed intoforce, including Section 36 of the CCAA which sets out the criteria for the sale and/ordisposition of assets in the context of CCAA proceedings and is reproduced in full inSchedule "C" hereto.E F T I"-24-68.
The Monitor has reviewed Section 36 of the CCAA and, after consultation with itscounsel, has formed the view that Section 36 does not apply to the CanwestIntercompany Reorganization for the following reasons:
(a) the purpose of Section 36 is to prevent restructuring debtors from disposing ofvaluable assets outside of the ordinary course of business to the detriment oftheir creditors;
(b) the National Post Company has failed to generate any profits since itsinception and has operated at a loss since;
(c) the transition of some of the assets and liabilities of the National PostCompany is only one aspect of a larger reorganization of the relationshipbetween the LP Entities and the CMI Entities contemplated under the CMI/LPReorganization Agreement;
(d) the business of the National Post Company was always intended to operatefunctionally as a part of the LP Entities;
(e) the business and operations of the National Post Company are not alignedwith that of the CMI Entities, yet are intertwined with the operations of the LPEntities;
(f) the CMI Entities' secured creditors support the Canwest IntercompanyReorganization as a whole, but not in part, and both the Ad Hoc Committeeand the Administrative Agent have indicated that they will only consent to these transactions on the grounds that the NP Transition Agreement and theE F T I'- 25 -Shared Services Transition Agreement will be implementedcontemporaneously pursuant to the CMI/LP Reorganization Agreement; and(g)there is no ability to proceed with either the NP Transition Agreement or theShared Services Agreement alone.RECOMMENDATIONS AND CONCLUSIONS
69. The LP Entities and the CMI Entities agree that it is in their mutual best interests totransition and subsequently terminate the Shared Services Agreements. As thebusinesses of the National Post Company and the LP Entities are integrated andinterdependent (as described above), the CMI Entities and the LP Entities also agreethat the business of the National Post Company ought to be integrated into thecorporate structure of the LP Entities.
70.Disposition of the National Post Company will improve the CMI Entities' cash flowsand financial results.
71. Irish Holdco, the CIT Facility Lenders and the Ad Hoc Committee support theproposed reorganization of the LP Entities' and the CMI Entities' relationship inaccordance with the terms of the CMI/LP Reorganization Agreement.
72. Pursuant to the terms of the Recapitalization Transaction, failure to transition thebusiness carried on by the National Post Company by October 30, 2009 constitutes adefault under the Term Sheet and Support Agreement and relieves the ConsentingNoteholders from any obligations to support the Recapitalization Transaction.- 26 -
73. Completion of the Canwest Intercompany Reorganization appears to be in the bestinterest of a broad constituency of stakeholders of the CMI Entities, the National PostCompany, including its employees, suppliers and customers, and the LP Entities.
74. Accordingly, the Monitor respectfully recommends that this Honourable Court grant an Order approving the CMI/LP Reorganization Agreement, including the Shared Services Transition Agreement and the NP Transition Agreement, and vesting title in and to the Assets in the LP Nominee.
All of which is respectfully submitted this 28th of October, 2009. FTI Consulting Canada Inc.,in its capacity as the Monitor of Canwest Global Communications Corp. and the other Applicants listed in Schedule "A" and Partnerships listed in Schedule "B"PerGreg WatsonSenior Managing DirectorE F T I"Schedule"A"The Applicants1. Canwest Global Communications Corp.2. Canwest Media Inc.3. 30109, LLC4. 4501063 Canada Inc.5. 4501071 Canada Inc.6. Canwest Finance Inc./Financiere Canwest Inc.7. Canwest Global Broadcasting Inc./Radiodiffusion Canwest Global Inc.8. Canwest International Communications Inc.9. Canwest International Distribution Limited10. Canwest International Management Inc.11. Canwest Irish Holdings (Barbados) Inc.12. Canwest MediaWorks Turkish Holdings (Netherlands) B.V.13. Canwest MediaWorks (US) Holdings Corp.14. Canwest Television GP Inc.15. CGS Debenture Holding (Netherlands) B.V.16. CGS International Holdings (Netherlands) B.V.17. CGS NZ Radio Shareholding (Netherlands) B.V.18. CGS Shareholding (Netherlands) B.V.19. Fox Sports World Canada Holdco Inc.20. Global Centre Inc.21. MBS Productions Inc.22. Multisound Publishers Ltd.23. National Post Holdings Ltd.24. Western Communications Inc.25. Yellow Card Productions Inc.5605861 v8E F T I`Schedule "B"PartnershipsCanwest T1e.levision Limited Partnership2.Fox Sports World Canada Partnership3.The National Post Company/La Publication National Post5605861
1) A debtor company in respect of which an order hasbeen made under this Act may not sell or otherwisedispose of assets outside the ordinary course of businessunless authorized to do so by a court. Despite any requirement for shareholder approval, including one under federal or provincial law, the court may authorizethe sale or disposition even if shareholder approval was not obtained.
Notice to creditors(2) A company that applies to the court for an authorization is to give notice of the application to the secured creditors who are likely to be affected by the proposed sale or disposition.Factors to be considered(3) In deciding whether to grant the authorization, thecourt is to consider, among other things,
(a) whether the process leading to the proposed sale ordisposition was reasonable in the circumstances;
(b) whether the monitor approved the process leadingto the proposed sale or disposition;
(c) whether the monitor filed with the court a reportstating that in their opinion the sale or dispositionwould be more beneficial to the creditors than asale or disposition under a bankruptcy;
(d) the extent to which the creditors were consulted;(e) the effects of the proposed sale or disposition onthe creditors and other interested parties; and(
f) whether the consideration to be received for theassets is reasonable and fair, taking into accounttheir market value.F T 1°-2-Additional factors - related persons(
4) If the proposed sale or disposition is to a person who isrelated to the company, the court may, after consideringthe factors referred to in subsection
(3), grant theauthorization only if it is satisfied that(a) good faith efforts were made to sell or otherwisedispose of the assets to persons who are not relatedto the company; and(b) the consideration to be received is superior to theconsideration that would be received under anyother offer made in accordance with the processleading to the proposed sale or disposition.Related persons
(
5) For the purpose of subsection (4), a person who is related to the company includes(a) a director or officer of the company;(b) a person who has or has had, directly or indirectly,control in fact of the company; and(c) a person who is related to a person described inparagraph (a) or (b).Assets may be disposed of free and clear
(6) The court may authorize a sale or disposition free and clear of any security, charge or other restriction and, if it does, it shall also order that other assets of the companyor the proceeds of the sale or disposition be subject to asecurity, charge or other restriction in favour of the creditor whose security, charge or other restriction is to be affected by the order. Restriction - employers
(7) The court may grant the authorization only if the court is satisfied that the company can and will make the payments that would have been required underparagraphs 6(4)(a) and (5)(a) if the court had sanctionedthe compromise or arrangement.5605861 v8E F
[Reimbursements not required for shareholders to given lenders.
ReimbursementArrangements
Description of Services▪ Financial, tax and other regulatory supportservicesFinancial reportingPreparation of regulatory and other filings(e.g.tax)▪ The Pension Plan Participation Agreementsprovide for intercompany charges betweenCanwest entities to align pension relatedcosts of employees of one Canwest entitywho participate in the pension plan ofanother Canwest entity._
[Canwest shareholders funds funding their shareholder expropriation.]
Executive Advisory CMI CorporateCanwest LimitedServices Agreement $250,000 (includes bothExecutive Advisory andPartnership Services)February 28, 20102.
IN ITS CAPACITY AS MONITOROctober 28, 2009
Court File No. CV-09-8396-000L
INTRODUCTION
[Party definitions]1. By [Intitial] Order of this Court dated October 6, 2009, Canwest and certain subsidiaries obtained protection from their creditors under the Companies' Creditors Arrangement Act, R.S.C. 1985 c. C-36, as amended (the "CCAA"). The Initial Order also granted relief in respect of certain affiliated partnerships of the Applicants listed in Schedule "B" hereto (collectively,the "Partnerships", and together with the Applicants, the "CMI Entities") andappointed FTI Consulting Canada Inc. ("FTI") as monitor (the "Monitor") of theCMI Entities. The proceedings commenced by the CMI Entities under the CCAAwill be referred to herein as the "CCAA Proceedings".
2 Following the granting of the Initial Order, on October 6, 2009 and October 15, 2009, the Monitor obtained Orders under Chapter 15 of the US. Bankruptcy Code from the United States Bankruptcy Court (Southern District of New York) a result of the commencement of the CCAA Proceedings.
3. The basis of a plan of arrangement for the CMI Entities under the CCAA (the"Recapitalization Transaction") is a going concern recapitalization transaction, the terms and conditions of which were agreed upon following intensive and extendednegotiations between the CMI Entities and the ad hoc committee (the "Ad HocCommittee") of the CMI Senior Subordinated Noteholders ' . The terms of theproposed Recapitalization Transaction are set out in the Recapitalization TransactionTerm Sheet (the "Term Sheet").
4. Further background information regarding the CMI Entities and the CCAAProceedings is provided in the Pre-filing Report and in the affidavit of John E.Maguire sworn October 5, 2009 (the "Maguire Affidavit"), copies of which havebeen posted on the Monitor's website http://cfcanada.fticonsulting.com/cmi/
Capitalized terms used but not defined herein have the meanings ascribed to them in FTI's pre-filing reportdated October 5, 2009 (the "Pre-filing Report").E F T l°3PURPOSE OF THIS REPORT5. The purpose of this Fourth Report is to inform the Court on the CMI Entities' requestfor an Order approving the Transition and Reorganization Agreement dated October26, 2009 (the "CMI/LP Reorganization Agreement"), which provides a frameworkfor the CMI Entities and the LP Entities (as defined below) to properly restructuretheir inter-entity arrangements for the benefit of their respective stakeholders.
TheCMI/LP Reorganization Agreement provides, inter alia, for:
(a) a reorganization, orderly transition and subsequent termination of certainshared services arrangements between the CMI Entities and the LP Entitiespursuant to the terms of the Agreement on Shared Services and Employeesdated October 26, 2009 (the "Shared Services Transition Agreement"); and
(b) a transition of substantially all of the assets of The National Post Company/LaPublication National Post (the "National Post Company") and certainintellectual property of Canwest Global (collectively, the "Assets") andcertain liabilities of the National Post Company to the LP Entities pursuant tothe terms of the National Post Transition Agreement dated October 26, 2009(the "NP Transition Agreement").DIVISIONS OF CANWEST GLOBAL6. Canwest Global's business operations consist of the following two major divisions:(a) television business (the "Canwest TV Group"), and (b) newspaper publishingand digital media business (the "Canwest Publishing Group").E F T I
9. The debt structure and current financial position of the CMI Entities is described indetail in the Pre-filing Report and the Maguire Affidavit.
10. The LP Entities are also currently in default under their various credit facilities, noteindenture or guarantee obligations, and, in particular, under a credit agreement (the"LP Secured Credit Agreement") dated as of July 10, 2007, as amended, between,inter alia, the predecessor of the Canwest Limited Partnership and The Bank of NovaScotia, as Administrative Agent (in such capacity, the "Administrative Agent") for asyndicate of lenders (the "LP Secured Lenders").
11. Following intensive and extended negotiations, on August 31, 2009, the LP Entitiesand the Administrative Agent agreed on the terms and conditions of a forbearanceagreement, as amended (the "Forbearance Agreement"), pursuant to which theAdministrative Agent on behalf of the LP Secured Lenders holding more than 50% ofadvances under the LP Secured Credit Agreement (the "Majority LP SecuredLenders") agreed to forbear, subject to certain terms and conditions, from takingE F T 195steps to proceed with enforcement of their security in order to allow the CanwestLimited Partnership and the LP Secured Lenders an opportunity to negotiate a prepackagedrestructuring or reorganization of the affairs of the LP Entities.12. The Forbearance Agreement provides, inter alia, that arrangements (satisfactory tothe Administrative Agent) with the applicable CMI Entities with respect torestructuring or termination of the Shared Services (as defined below) will be reachedby October 30, 2009.13. Under the Forbearance Agreement, the LP Entities are prohibited from entering intothe transactions contemplated under the NP Transition Agreement and the SharedServices Transition Agreement without the consent of the Administrative Agent.14.The Forbearance Agreement expires on, inter alia, the LP Entities' failure to complywith their obligations under the Forbearance Agreement.SHARED SERVICES15. Pursuant to a number of inter-company service agreements, the CMI Entities and theLP Entities share certain business services (collectively, the "Shared Services"). Forexample, Canwest Media Inc. ("CMI") and Canwest Limited Partnership provideeach other (in addition to providing certain other Canwest entities) with certainadministrative and advisory services and engage in certain cross-promotionalactivities and inter-company services which are integral to the overall Canwestenterprise.16.A summary of the Shared Services agreements affected by the CMI/LPF T !'6-Reorganization Agreement (collectively, the "Shared Services Agreements")(including the nature of the services provided, the service provider and the servicerecipient) is attached as Appendix "A" to this report. Among others, CMI providesCanwest Television Limited Partnership, the CW Media Segment and the CanwestLimited Partnership the following services:(a) executive advisory and other services based upon various fee and costallocation agreements and practices;(b) corporate and administrative services related to, inter alia, legal matters, taxcompliance, and financial reporting; and(c) negotiation and placement of insurance coverage for which insurancepremiums are shared.
17.The Canwest Limited Partnership provides the following services to the followingentities:
(a) certain information technology infrastructure and support, on-line and digitalmedia support, receivables and payables management, corporate, accountingand human resources administrative and infrastructure services to CMI, theCanwest Television Limited Partnership, and the CW Media Segment;E F T IR7
(b) certain information technology infrastructure and support, on-line and digitalmedia support, receivables and payables management, accounting, humanresources administrative, financial, accounting, infrastructure, sales, printingand distribution services to the National Post Company; and
(c) management, invoicing and collection of advertising and circulation revenuesservices on behalf of the National Post Company, and the management,invoicing and collection of on-line advertising for the CW Media Segmentand the Canwest Television Limited Partnership.
18. Canwest Global, which is one of the CMI Entities, also grants to CMI and theCanwest Limited Partnership a non-exclusive, royalty-free, non-transferable licenseto use some or all of the Canwest trademarks in Canada and to sublicense the use ofthe Canwest trademarks to its subsidiaries.19. FTI reviewed the Shared Services Agreements which, by their terms, generallyprovide that the service provider (whether CMI, the Canwest Limited Partnership orotherwise) is entitled to reimbursement for all costs and expenses incurred in theprovision of the services. Costs and expenses that are shared between the serviceprovider and the service recipient are allocated between the parties on a reasonablebasis. FTI is advised that neither the reimbursement of costs and expenses nor thepayment of fees is intended to result in any material financial gain or loss to theservice provider. Fees charged under the Shared Services Agreements are based onannual budgeted costs, with the service provider bearing the risk of exceeding orbenefitting from performing better than budget. Fees are reviewed and revisedE F T8annually with no mechanism in the Shared Services Agreements for a retrospectivetrue up of fees to reflect actual versus budgeted costs of the service provider.
20. Under the Initial Order, the CMI Entities and the Canwest Limited Partnership are prohibited from modifying, ceasing to provide or terminating the provision or payment of the Shared Services except with the consent of, inter alia, the Monitorand the party receiving such services or further Order of this Honourable Court(except with respect to certain portions of the CMI Entities' business which may beshut down).
THE NATIONAL POST COMPANYThe Nationa2l 1P. ost Company is a general partnership with units held by CMI andNational Post Holdings Ltd. (a wholly owned subsidiary of CMI).22.The National Post Company carries on business publishing the National Post nationalnewspaper and operating related online publications.23. The National Post is one of only two national daily newspapers and is second in itsmarket position to The Globe and Mail. In 2008, the National Post had a reportedaverage daily paid circulation of almost 200,000 and an estimated weekly readershipof 1.1 million people.24.The National Post was founded in 1998 by Conrad Black and was acquired byCanwest Global from Hollinger Inc. by way of two transactions in 2000 and 2002.E F T I°9-Employees & Related Obligations
25. As at the date of this report, the National Post Company employed approximately 277employees. Three of its employees provide services exclusively to the LP Entitiesand the National Post Company is reimbursed by the LP Entities for all associatedemployment costs. In addition, ten of the LP Entities' employees provide servicesexclusively to the National Post Company which reimburses the LP Entities for allassociated employment costs.26. The National Post Company maintains a defined benefit pension plan registeredunder the Ontario Pension Benefits Act (the "NP Pension Plan"). FTI is advised thatthe solvency deficiency of the NP Pension Plan effective as of December 31, 2006was $1.5 million and the winding up deficiency was $1.6 million. The annual servicecontributions for the NP Pension Plan estimated at the last valuation of the NPPension Plan totaled $662,000 and annual special payments totaled $360,000. Thelast actuarial valuation of the NP Pension Plan was carried out in 2006 and thefunding status of the NP Pension Plan may have deteriorated further in the interimdue to market factors.Creditors of the National Post Company27. As described in greater detail in the Pre-filing Report, the National Post Company (asguarantor of certain of CMI's and/or Canwest Global's secured and unsecuredindebtedness) is indebted in the following amounts pursuant to the followingobligations:E F" T I-10-(a) Irish Holdco Secured Note - $187.3 million(b) CIT Facility - $10.7 million (in connection with outstanding letters of credit)(c) CMI Senior Subordinated Notes - US$393.2 million(d) Irish Holdco Unsecured Note - $430.6 millionRelationship of the National Post Company with other Canwest Global Divisions
28. Prior to 2005, the newspaper assets of the LP Entities and the National Post assetswere owned by a single Canwest Global entity. In 2005, the predecessor of theCanwest Limited Partnership was formed to acquire Canwest Global's newspaperpublishing and digital media entities and to operate such businesses, as well as certainshared services operations (including information technology, accounting, financialreporting, and benefits administration) as part of a planned income trust spin-off ofCanwest Global's newspaper publishing and digital media assets. Based on its poorfinancial performance at that time, the National Post was not included in the newlyformedincome trust and was instead separated into a standalone general partnership.
29. The National Post Company and National Post Holdings Ltd. are the only entities inthe Canwest Publishing Group that are guarantors of certain secured and unsecuredindebtedness of CMI (as described above) and were, for that reason, included in theCCAA Proceedings. With the exception of the commonality of creditors (and beingbeneficiaries under certain Canwest Global national procurement contracts), theNational Post Company and the CMI Entities do not have any common services,licenses, or material synergies.F T-11-30. The management and operations of the LP Entities and the National Post Company,although separate legal entities, are intertwined as evidenced by, inter alia, thefollowing:(a) the headquarters of the Canwest Limited Partnership and the National PostCompany are both located at 1450 Don Mills Road in Toronto;(b) the National Post Company executives report to the President and CEO of theCanwest Limited Partnership;(c) the LP Entities provide various sales, operational, back-office and othersupport services to the National Post Company including:(i) IT support;(ii) Accounting and finance;(iii) Human Resources;(iv) Digital Media;(v) National and Digital sales representation;(vi) Canwest Editorial Services;(vii) FPlnfomart.ca (archival services);(viii) Canwest News Services; andE F T I'-12-(ix)Printing and distribution services in Montreal, Ottawa, Calgary,Edmonton and Vancouver.
31. As a result of the National Post Company's dependence on the intercompany servicesprovided by the LP Entities, it would be unable to operate independently from the LPEntities.
32. Due to the integrated operations of the National Post Company and the LP Entities,the National Post Company absorbs significant fixed costs which would otherwise becarried by the LP Entities. In the fiscal year ending August 31, 2009, such coststotaled approximately $23 million.33. As a result, and despite the National Post Company's inability to generate profits as astandalone publication, closure of the National Post Company would negativelyimpact the financial performance of the LP Entities, as they would continue to bearcosts currently being allocated to the National Post Company. Management of the LPEntities estimates that closure of the National Post would increase the LP Entities'cost burden by approximately $14 million in fiscal year ending August 31, 2010.
34. Integration of the National Post Company's business will also allow the LP Entities tocontinue to benefit from various news gathering, production, distribution and othersynergies currently shared with the National Post Company.Financial Performance & Current Status of the National Post CompanyThe National3 5P. ost Company has been unprofitable since its inception, recordingannual losses as high as approximately $60 million in 2001. Through various costE F T- 13 -cutting measures and improved distribution, sales and marketing efficiencies, losseshave been reduced but the company has still recorded annual net losses ranging from$9 million to $12 million in each year since 2005.
36. The National Post Company continues to operate at a loss and is projected to suffer anet loss of $9.3 million in fiscal year ending August 31, 2009 and a net loss of $0.9million in September 2009.37. The National Post Company's losses for the past 7 years have been fully funded byCMI. As a result, the National Post Company is currently indebted to CMI in theamount of $139.1 million.38.The Ad Hoc Committee has advised that they are no longer prepared to supportfunding the losses of the National Post Company by CMI after October 30, 2009.39. The LP Entities, in recognition of the financial and strategic benefits that would beafforded to them by transition of the business of the National Post Company to them,agreed to fund 50% the losses suffered by the National Post Company in October2009 (to a maximum of $1 million), but only if the CMI/LP ReorganizationAgreement is approved by this Court and the transition of the assets and liabilitiescontemplated by the NP Transition Agreement (the "NP Transition Transaction")closes.40. In addition, the Recapitalization Transaction is subject to a condition that a definitiveagreement in respect of the transfer of the business operated by the National PostCompany to the Canwest Limited Partnership be entered into by October 15, 2009,E F T I`-14-which deadline was subsequently extended to October 30, 2009, with a closing of thetransaction to take place no later than October 30, 2009. The Ad Hoc Committeeadvised that should the transition of the National Post Company's business fail to takeplace by the above deadline (and in the absence of funding by the LP Entities), it willno longer support the funding of the National Post Company by CMI. Withoutongoing funding, it is anticipated that the National Post Company would be forced tocease operations and commence liquidation proceedings.PROPOSED INTERCOMPANY REORGANIZATION
41. Both the LP Entities and the CMI Entities experienced deterioration in their respective financial performances in 2008-2009 and have commenced reorganizations of their respective corporate and debt structures. The LP Entities and the CMIEntities determined that an orderly transition from their current intertwined corporatestructures to two standalone enterprises will likely be necessary to facilitate and effecttheir respective restructurings.
42. In furtherance of such transition, the CMI Entities and the LP Entities determined thatan orderly disentanglement, transition and subsequent termination of the SharedServices would be mutually beneficial and should be effected. As the businesses ofthe National Post Company and the LP Entities are integrated and interdependent (asdescribed above), the CMI Entities and the LP Entities have also recognized that thebusiness of the National Post Company ought to be integrated into the corporatestructure of the LP Entities.E F T I- 15 -
43. The CMI Entities and the LP Entities have been engaged in negotiations to carry out the transition and subsequent termination of the Shared Services and transition of the business of the National Post Company to the LP Entities since July 2009. However,due to, inter alia, the financial difficulties encountered by both the CMI Entities andthe LP Entities in 2008-2009 and management's focus on recapitalization efforts, the contemplated intercompany reorganization was not effected prior to the commencement of the CCAA Proceedings.
44. Following lengthy and intensive negotiations between the CMI Entities, the LPEntities, their respective chief restructuring and financial advisors, the Ad HocCommittee and the Administrative Agent, the LP Entities and certain of the CMIEntities have entered into the CMI/LP Reorganization Agreement which provides forthe framework to properly restructure their inter-entity arrangements by effecting acomprehensive reorganization of the Shared Services and a transition of substantiallyall of the assets of the National Post Company to the LP Entities (collectively, the"Canwest Intercompany Reorganization "). The Shared Services TransitionAgreement and the NP Transition Agreement are attached as Schedules "A" and "B"to the CMI/LP Reorganization Agreement, respectively. A copy of the CMI/LPReorganization Agreement (together with Schedules) is attached as Exhibit "A" to theaffidavit of John E. Maguire sworn October 27, 2009 (the "October 27 MaguireAffidavit").
45. Both the transition and subsequent termination of the Shared Services and thetransition of the Assets and certain liabilities of the National Post Company areintegral components of the LP Entities' and the CMI Entities' efforts to reorganizeE F T !x-16-their respective business affairs. The terms of the Shared Services TransitionAgreement were informed by and negotiated, in part, based on the terms of the NPTransition Agreement and vice versa.
46. Furthermore, the consummation of the transactions contemplated under each of theShared Services Transition Agreement and the NP Transition Agreement is acondition to the consummation of the transaction contemplated under the otheragreement. Each of the Administrative Agent and the Ad Hoc Committee has beenclear that it will only support the CMI/LP Reorganization Agreement as a whole andwould not support a consummation of either of the Shared Services TransitionAgreement or the NP Transition Agreement without the concurrent consummation ofthe other agreement.The Shared Services Transition Agreement47. The Shared Services Transition Agreement provides for the orderly transition andsubsequent termination of the Shared Services Agreements. The terms of the SharedServices Transition Agreement, include, inter alia, the following:(a) a transition of employees between the CMI Entities and LP Entities andadjustment of amounts currently payable for the Shared Services inaccordance with section 2.5 of the Shared Services Transition Agreementfrom the date of closing of the Shared Services Transition Agreement until theShared Services Agreements are terminated; andE F T 1"-17-(b)all Shared Services Agreements will be terminated by certain dates rangingfrom February 28, 2010 to February 28, 2011.48. A summary of the proposed amendments to the Shared Services Agreements(including the revised payment terms and termination dates) is attached as Appendix"B" to this report.49. The Shared Services Transition Agreement also sets out procedures for offeringemployment to the various employees of the LP Entities and the CMI Entities andmodifies their obligations under certain pension plans maintained for the benefit oftheir respective employees.50. The Shared Services Transition Agreement is conditional on and subject to, inter alia,obtaining (a) an Order of this Court approving the Shared Services TransitionAgreement, and (b) the written consent of the Administrative Agent.The NP Transition AgreementThe NP Tran5s1.ition Agreement provides for the transition of the business of theNational Post Company as a going concern.
52. Pursuant to the NP Transition Agreement, a new wholly-owned subsidiary (the "LPNominee") of Canwest Publishing Inc./Publications Canwest Inc. (which owns all ofthe newspaper and online assets held by the LP Entities), will acquire substantially allof the assets of the National Post Company and certain intellectual property ofCanwest Global in consideration for the Transfer Price/Transition Cost (as defined inthe NP Transition Agreement) which includes: (a) the assumption of certain liabilitiesE F T 1"-18-up to a maximum amount of $6.3 million (plus certain pension and employee benefitsliabilities); and (b) payment of the cash component of the Transfer Price/TransitionCost (as described in greater detail in paragraph 53(f) hereof).53.The terms of the NP Transition Agreement include, inter alia, the following:(a) the LP Nominee has agreed to take title to the Assets (which constitutesubstantially all of the assets of the National Post Company) on an "as is,where is" basis;(b) the LP Nominee will assume certain liabilities of the National Post Company,including certain trade payables and accrued expenses;(c) the following liabilities, among others, are not being assumed by the LPNominee and will remain as claims in the estate of the National PostCompany:(i) breach of contract or license claims, product liability claims and allother litigation claims;(ii) all employment obligations (including severance and terminationclaims) relating to those employees who do not accept the LPNominee's offer of employment;(iii) liabilities of the National Post Company to the other CMI Entities,except for any amounts owing in connection with the Shared Services;andE F T 1?-19-(iv) certain pre-filing payables of the National Post Company (defined asthe Stayed Payables in the NP Transition Agreement).(d) the following assets, among others, are not being transitioned to the LPNominee pursuant to the NP Transition Agreement and will remain in theestate of the National Post Company:(i)the benefit of all insurance policies related to the business of theNational Post Company;(ii) all cash and cash equivalents, including certificates of deposit,commercial paper; and(iii) any amounts owing to the National Post Company by the other CMIEntities;(e)the LP Nominee is offering employment to all of the National PostCompany's employees and will be assuming:(i)all wage related employee obligations owing to the employees it hiresup to and from the date the NP Transition Transaction closes;(ii) all vacation pay owing (as at the date the NP Transition Transactioncloses) to the employees it hires; and(iii) the National Post Company's obligations and liabilities under the NPPension Plan.ETF°- 20 -under the NP Transition Agreement, the LP Nominee must pay a portion ofthe Transfer Price/Transition Cost to the National Post Company in cash. Thecash component is equal to (i) the sum of $2 million and 50% of the NationalPost Company's negative net cash flow during the month of October 2009 (toa maximum of $1 million), less (ii) a reduction equal to the amount, if any, bywhich the Assumed Liabilities Estimate (as defined in the NP TransitionAgreement) exceeds $6.3 million;the NP Transition Agreement is conditional, among other things, on obtainingthe consent of the Administrative Agent on behalf of the Majority LP SecuredLenders.Alternatives to Transitioning the Business of the National Post Company to the LP Entities
54. For the reasons outlined below, it does not appear that there are currently any viablealternatives to transitioning the business of the National Post Company to the LPEntities pursuant to the NP Transition Agreement.55. In December 2008, Canwest Global engaged RBC Dominion Securities Inc. ("RBC")to assist it in considering and evaluating recapitalization alternatives. FTI is advisedby RBC that in the course of conducting its engagement RBC did not conduct aseparate sales process with respect to the National Post Company. However, while itreceived a number of solicited and unsolicited expressions of interest in various otherassets of Canwest Global, it received no expressions of interest from parties seekingto acquire the National Post Company.(f)(g)ETF'-21-56. The Support Agreement, which includes the condition that a definitive agreement inrespect of the transfer of the business operated by the National Post Company toCanwest Limited Partnership be completed by October 15, 2009 (which deadline wassubsequently amended to October 30, 2009 with a closing of the transaction no laterthan October 30, 2009), has been in the public domain since the date of the InitialOrder (October 6, 2009). The Monitor has not been contacted by any interested partywith respect to acquiring the business of the National Post Company.57. The Ad Hoc Committee has continued to support the National Post Company's shortterm liquidity needs, but only on the basis and understanding that the NP TransitionTransaction is being advanced and will be completed. The Ad Hoc Committee hasindicated that it will not continue to support funding the National Post Company inthe long or short term past October 30, 2009 and will not finance the National PostCompany through any marketing process.58. The National Post Company is also precluded from borrowing any funds from CIT orany other lender without the consent of the Ad Hoc Committee, which has indicatedthat such consent would not be granted.
59. The LP Entities have refused to advance any funds to the National Post Companyuntil the terms of the CMI/LP Reorganization Agreement are finalized and the NPTransition Transaction closes.60.Accordingly, the National Post Company has no sources of funding its ongoinglosses.E F T !°- 22 -61. Accordingly, failure to transition the business carried on by the National PostCompany by October 30, 2009 to the LP Entities would likely result in the forcedcessation of its operations and commencement of liquidation proceedings in respectof the National Post Company.62. The Monitor has prepared a preliminary liquidation analysis (the "LiquidationAnalysis") based on certain information provided by the National Post Company.The Liquidation Analysis is an estimate of the potential recovery from the NationalPost Company's assets pursuant to a forced liquidation following a cessation ofoperations.63. It is evident from the Liquidation Analysis that if the National Post Company issubject to a forced liquidation after a cessation of operations, the estimated netrecovery available to its creditors, before costs of liquidation, would range from anegative amount to an amount not materially higher than the transfer price under theNP Transition Agreement.64. The CIT Facility Lenders and Irish Holdco are (subject only to Court-ordered chargesin the CCAA Proceedings) the senior secured creditors of the National Post Companyand there will be no recovery to any of the other of National Post Company's securedor unsecured creditors under either the NP Transition Transaction or the liquidationscenario.
65.The Monitor notes that the NP Transition Transaction has the following advantagesover a liquidation:E F T 1"- 23 -(a) as an integral part of the CMI/LP Reorganization Agreement, it facilitates thereorganization and orderly transition and subsequent termination of the SharedServices arrangements between the CMI Entities and the LP Entities;(b)it preserves approximately 277 jobs in an already highly distressed newspaperpublishing industry;(c) it will help maintain and promote competition in the national daily newspapermarket for the benefit of Canadian consumers; and(d) the LP Nominee will assume substantially all of the National Post Company'strade payables (including those owing to various suppliers) and variousemployment costs associated with the transferred employees.
66. The National Post Company's senior secured creditors, namely the CIT FacilityLenders and Irish Holdco, and the Ad Hoc Committee support the NP TransitionTransaction as part of the Canwest Intercompany Reorganization. IMPACT OF CCAA AMENDMENTS ON THE PROPOSED REORGANIZATION
67. Until recently, the CCAA did not expressly address dispositions or sales of assets. On September 18, 2009, certain amendments to the CCAA were proclaimed intoforce, including Section 36 of the CCAA which sets out the criteria for the sale and/ordisposition of assets in the context of CCAA proceedings and is reproduced in full inSchedule "C" hereto.E F T I"-24-68.
The Monitor has reviewed Section 36 of the CCAA and, after consultation with itscounsel, has formed the view that Section 36 does not apply to the CanwestIntercompany Reorganization for the following reasons:
(a) the purpose of Section 36 is to prevent restructuring debtors from disposing ofvaluable assets outside of the ordinary course of business to the detriment oftheir creditors;
(b) the National Post Company has failed to generate any profits since itsinception and has operated at a loss since;
(c) the transition of some of the assets and liabilities of the National PostCompany is only one aspect of a larger reorganization of the relationshipbetween the LP Entities and the CMI Entities contemplated under the CMI/LPReorganization Agreement;
(d) the business of the National Post Company was always intended to operatefunctionally as a part of the LP Entities;
(e) the business and operations of the National Post Company are not alignedwith that of the CMI Entities, yet are intertwined with the operations of the LPEntities;
(f) the CMI Entities' secured creditors support the Canwest IntercompanyReorganization as a whole, but not in part, and both the Ad Hoc Committeeand the Administrative Agent have indicated that they will only consent to these transactions on the grounds that the NP Transition Agreement and theE F T I'- 25 -Shared Services Transition Agreement will be implementedcontemporaneously pursuant to the CMI/LP Reorganization Agreement; and(g)there is no ability to proceed with either the NP Transition Agreement or theShared Services Agreement alone.RECOMMENDATIONS AND CONCLUSIONS
69. The LP Entities and the CMI Entities agree that it is in their mutual best interests totransition and subsequently terminate the Shared Services Agreements. As thebusinesses of the National Post Company and the LP Entities are integrated andinterdependent (as described above), the CMI Entities and the LP Entities also agreethat the business of the National Post Company ought to be integrated into thecorporate structure of the LP Entities.
70.Disposition of the National Post Company will improve the CMI Entities' cash flowsand financial results.
71. Irish Holdco, the CIT Facility Lenders and the Ad Hoc Committee support theproposed reorganization of the LP Entities' and the CMI Entities' relationship inaccordance with the terms of the CMI/LP Reorganization Agreement.
72. Pursuant to the terms of the Recapitalization Transaction, failure to transition thebusiness carried on by the National Post Company by October 30, 2009 constitutes adefault under the Term Sheet and Support Agreement and relieves the ConsentingNoteholders from any obligations to support the Recapitalization Transaction.- 26 -
73. Completion of the Canwest Intercompany Reorganization appears to be in the bestinterest of a broad constituency of stakeholders of the CMI Entities, the National PostCompany, including its employees, suppliers and customers, and the LP Entities.
74. Accordingly, the Monitor respectfully recommends that this Honourable Court grant an Order approving the CMI/LP Reorganization Agreement, including the Shared Services Transition Agreement and the NP Transition Agreement, and vesting title in and to the Assets in the LP Nominee.
All of which is respectfully submitted this 28th of October, 2009. FTI Consulting Canada Inc.,in its capacity as the Monitor of Canwest Global Communications Corp. and the other Applicants listed in Schedule "A" and Partnerships listed in Schedule "B"PerGreg WatsonSenior Managing DirectorE F T I"Schedule"A"The Applicants1. Canwest Global Communications Corp.2. Canwest Media Inc.3. 30109, LLC4. 4501063 Canada Inc.5. 4501071 Canada Inc.6. Canwest Finance Inc./Financiere Canwest Inc.7. Canwest Global Broadcasting Inc./Radiodiffusion Canwest Global Inc.8. Canwest International Communications Inc.9. Canwest International Distribution Limited10. Canwest International Management Inc.11. Canwest Irish Holdings (Barbados) Inc.12. Canwest MediaWorks Turkish Holdings (Netherlands) B.V.13. Canwest MediaWorks (US) Holdings Corp.14. Canwest Television GP Inc.15. CGS Debenture Holding (Netherlands) B.V.16. CGS International Holdings (Netherlands) B.V.17. CGS NZ Radio Shareholding (Netherlands) B.V.18. CGS Shareholding (Netherlands) B.V.19. Fox Sports World Canada Holdco Inc.20. Global Centre Inc.21. MBS Productions Inc.22. Multisound Publishers Ltd.23. National Post Holdings Ltd.24. Western Communications Inc.25. Yellow Card Productions Inc.5605861 v8E F T I`Schedule "B"PartnershipsCanwest T1e.levision Limited Partnership2.Fox Sports World Canada Partnership3.The National Post Company/La Publication National Post5605861
1) A debtor company in respect of which an order hasbeen made under this Act may not sell or otherwisedispose of assets outside the ordinary course of businessunless authorized to do so by a court. Despite any requirement for shareholder approval, including one under federal or provincial law, the court may authorizethe sale or disposition even if shareholder approval was not obtained.
Notice to creditors(2) A company that applies to the court for an authorization is to give notice of the application to the secured creditors who are likely to be affected by the proposed sale or disposition.Factors to be considered(3) In deciding whether to grant the authorization, thecourt is to consider, among other things,
(a) whether the process leading to the proposed sale ordisposition was reasonable in the circumstances;
(b) whether the monitor approved the process leadingto the proposed sale or disposition;
(c) whether the monitor filed with the court a reportstating that in their opinion the sale or dispositionwould be more beneficial to the creditors than asale or disposition under a bankruptcy;
(d) the extent to which the creditors were consulted;(e) the effects of the proposed sale or disposition onthe creditors and other interested parties; and(
f) whether the consideration to be received for theassets is reasonable and fair, taking into accounttheir market value.F T 1°-2-Additional factors - related persons(
4) If the proposed sale or disposition is to a person who isrelated to the company, the court may, after consideringthe factors referred to in subsection
(3), grant theauthorization only if it is satisfied that(a) good faith efforts were made to sell or otherwisedispose of the assets to persons who are not relatedto the company; and(b) the consideration to be received is superior to theconsideration that would be received under anyother offer made in accordance with the processleading to the proposed sale or disposition.Related persons
(
5) For the purpose of subsection (4), a person who is related to the company includes(a) a director or officer of the company;(b) a person who has or has had, directly or indirectly,control in fact of the company; and(c) a person who is related to a person described inparagraph (a) or (b).Assets may be disposed of free and clear
(6) The court may authorize a sale or disposition free and clear of any security, charge or other restriction and, if it does, it shall also order that other assets of the companyor the proceeds of the sale or disposition be subject to asecurity, charge or other restriction in favour of the creditor whose security, charge or other restriction is to be affected by the order. Restriction - employers
(7) The court may grant the authorization only if the court is satisfied that the company can and will make the payments that would have been required underparagraphs 6(4)(a) and (5)(a) if the court had sanctionedthe compromise or arrangement.5605861 v8E F
[Reimbursements not required for shareholders to given lenders.
ReimbursementArrangements
Description of Services▪ Financial, tax and other regulatory supportservicesFinancial reportingPreparation of regulatory and other filings(e.g.tax)▪ The Pension Plan Participation Agreementsprovide for intercompany charges betweenCanwest entities to align pension relatedcosts of employees of one Canwest entitywho participate in the pension plan ofanother Canwest entity._
[Canwest shareholders funds funding their shareholder expropriation.]
Executive Advisory CMI CorporateCanwest LimitedServices Agreement $250,000 (includes bothExecutive Advisory andPartnership Services)February 28, 20102.
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