Thursday, October 15, 2009

Update on Bankruptcy Protection for Owners of the Windsor Star

CanWest Global Communications Corporation, the large media company and owners of the Windsor Star is moving quickly to restructure. The company filed for protection under the Companies' Creditors Arrangement Act (CCAA) in the past week or so.  I thought for sure we would have seen a feature story on this on the front page of the Star, but I couldn't find it.

CanWest's lawyer, Lyndon Barnes, was before an Ontario judge on Tuesday October 13/09 asking for a very tight time line to restructure the company. He was also there to fight with lawyers representing Goldman Sachs whose lawyers have claimed their interests are not being protected. This fight is just starting, my bet is that Goldman will play hardball with CanWest. I think they see an opportunity here.

The big problem with CanWest is debt and more debt. Most of the huge debt piled on by CanWest came from the $3.5-billion purchase in 2000 of the Hollinger Inc. newspaper chain, and later the $2.3-billion buyout of Alliance Atlantis Communications Inc. in 2007.

There are very few ways to get rid of debt. You can pay it off. CanWest cannot do that. Everybody takes a haircut. Which is what CanWest would like, but people like Goldman don't like. Or the company is sold off in pieces and creditors agree on how to divide up the spoils.

Anyway this is all very interesting, I will try to keep you up to date.