Canwest Global Communications Corp., the parent holding company of the Vancouver Sun and the Province, filed for creditor protection Tuesday to begin recapitalizing the company burdened by billions in debt.
The filing under the Companies' Creditors Arrangement Act (CCAA) will give the company time to implement a controlled and orderly financial restructuring after months of negotiations with Canwest's senior debt holders.
In a message to shareholders, Leonard Asper, Canwest's president and CEO, said the restructuring is expected to take between four to six months and will result in a stronger, recapitalized company prepared for a stronger Canadian economy.
He said an abrupt and unprecedented decline in advertising revenues reduced the company's operating profits to the point that it could not service its debt. "In this environment, Canwest simply had too much debt."
Cutting operational expenses in Canada by $100 million over the past several months as well as sales of various divisions were not enough to reduce its debt load in the current economic climate.
The CCAA filing applies to Canwest Global Communications Corp., Canwest Media Inc., the National Post Company and Canwest Television LP, which includes Global Television, MovieTime, DejaView and Fox Sports World.
It does not include any of Canwest's 13 specialty channel properties, TVtropolis, Mystery TV, Men TV or Canwest LP, which includes its Canadian publishing and online operations including the Vancouver Sun and the Province.
Canwest LP is said to be continuing negotiations with its own set of major debt holders.
Debt holders of Canwest Media are affected by the CCAA filing, but noteholders of CW Media Holdings or Canwest LP are not impacted.
Companies that are part of the filing are expected to continue operating as usual with $100 million in court-approved debtor-in-possession (DIP) financing to provide for its obligations to employees and its suppliers.
As a result of the filing, Canwest's shares trading on the TSX were suspended Wednesday. The Toronto Stock Exchange is reviewing Canwest's shares to see if they will continue to meet listing requirements.