By Susan Taylor
OTTAWA (Reuters) - Canwest Global Communications
Trying to stay afloat, as it wrestles with a debt load of close to C$4 billion ($3.4 billion), the company said it is in default under terms of its credit facilities and continues work on a recapitalization plan.
That plan may involve a cash investment and/or a conversion of some existing debt to equity, it said.
"The company believes a significant reduction in its debt is necessary to resolve its liquidity issues and to continue to operate," Canwest said in a statement.
If it fails to find an acceptable recapitalization plan with holders of 8 percent senior subordinated notes by July 17, the company said it could face a demand to immediately repay all debt.
Facing a sharp decline in advertising, Canwest said it lost C$109.6 million, or 62 Canadian cents a share, in its fiscal third quarter, ended May 31.
That compares with a loss of C$28.4 million, or 16 Canadian cents a share, in the same period last year.
In the most recent quarter, the loss included a noncash C$247 million writedown of goodwill in its publishing operations, interest rate and foreign currency swap losses of C$177 million and foreign exchange gains of C$368 million.
Excluding items, Canwest lost an adjusted C$57 million or 32 Canadian cents. That compares with the breakeven, or nil cents per share, that analysts expected on average, according to Reuters Estimates.
Canwest, which owns the Global TV network and a stable of daily newspapers across Canada, said revenue fell 14 percent to C$726.8 million.
The company said it is focusing on cutting operating costs and increasing revenue.
"While much attention has been focused on our efforts to recapitalize, we are continuing to invest in our businesses in order to drive operating results," Chief Executive Leonard Asper said in a statement.
That includes the sale of noncore assets and purchasing a strong television line-up for next season, he said.
Shares of the Winnipeg-based company closed at 6.5 Canadian cents on the Toronto Stock Exchange on Thursday. The stock has shed about 97 percent of its value in the last 12 months.
($1=$1.16 Canadian)
(Additional reporting by Chakradhar Adusumilli in Bangalore; Editing by Steve Orlofsky)
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