CanWest Global Communications Corp.'s newspaper subsidiary is skipping a $10-million interest payment due Friday to conserve cash as the struggling media empire works on a debt restructuring.
CanWest Limited Partnership, which owns 12 city daily papers, 26 community newspapers and 80 Internet operations, said it expects to breach debt covenants in the coming days and needs the cash to continue operating.
The Winnipeg-based company has been in negotiations with its lenders for months to find a way out from under a crippling debt load that, along with a slump in advertising, has left the company bleeding cash. Last week, the company said it had new financing and all indications were that a solution was expected by early summer.
The default and the covenant breach mean that the company's lenders could immediately demand full repayment, which could throw off the planned restructuring, but the company expressed optimism that that won't happen.
“The deferral of these payments is intended to provide the Limited Partnership with the ability to continue to operate its business in the ordinary course, as it works to effect a recapitalization transaction,” CanWest said in a statement.