DBRS downgrades divisions of Canwest, places under review pending credit talks

CanWest News Service
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TORONTO - Dominion Bond Rating Services has downgraded two divisions of Canwest Global Communications Corp. (TSX:CGS), and placed them under further review on concern the broadcasting and publishing company won't be able to dig out from under its debts.
Canwest Media Inc. and Canwest LP were given lower ratings pending the outcome of Canwest's negotiations with banks over its secured credit facility, the rating agency said Monday.
''DBRS believes that Canwest Media's financial flexibility is extremely limited as it is not currently in compliance with its bank covenants regarding its $300 million credit facility,'' it said in a release.
Canwest Media's rating was downgraded to CCC from B-high while Canwest LP was shifted to CCC-high from BB-low.
All the ratings are considered below investment grade, which ranges from AAA at the top end to BBB at the low end in the DBRS rating system.
DBRS said that Canwest is still talking to its bankers, and if it fails to renegotiate its $100 million debt facility by Friday, then it'll be in a default position.
Canwest owns the Global television network in Canada, a chain of big-city Canadian daily newspapers and broadcast businesses in several countries.
The company also owes about $3.9 billion in debt.
RBC Dominion Securities, its adviser, and has been scouring the market searching for last-minute financing.
Canwest is facing a downturn in advertising revenues spurred by a struggling economy, and the company recently cut 560 jobs, or about five per cent of its workforce.
To turnaround its operation it's trying to sell its five E! network conventional television stations across Canada, and cutting expenses throughout the company.
''These factors are not likely great enough to offset the company's operating pressure and put Canwest Media onside with its debt covenants,'' DBRS said.
Canwest shares were unchanged at 35 cents on the Toronto Stock Exchange.

Organizations: Canwest, Dominion Bond Rating Services, TSX RBC Dominion Securities Toronto Stock Exchange

Geographic location: TORONTO, Canada

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