Canwest Global Communications Corp. has announced that it will shut down Victoria-based CHEK-TV on August 31. Staff received layoff notices on July 22, according to a story on the station's Web site.
CHEK-TV was founded in 1956 and was originally headed by David Armstrong, who operated CKDA radio. Canwest continues to operate a Global TV station in Burnaby as well as the Global TV network.
In a July 22 news release, Canwest Broadcasting president Peter Viner also announced the closure of CHCA-TV in Red Deer on August 31. Viner noted that the company's Kelowna station, CHBC-TV, would be rebranded as a Global affiliate on September 1.
Last month, Canwest announced the sale of two other stations, CHCH-TV in Hamilton and CJNT-TV in Montreal, to a subsidiary of Channel Zero Inc., pending approval by the Canadian Radio-television and Telecommunications Commission.
Canwest's announcement comes as the Winnipeg-based corporation struggles to deal with a $3.7-billion debt. On July 22, the company's share price rose from 11 to 17 cents on the Toronto Stock Exchange.
The company is controlled by the Asper family. The president and CEO, Leonard Asper, is the son of deceased company founder Izzy Asper.
Canwest's fate could be in the hands of five different financial houses, none of which have any direct experience publishing newspapers or producing television programming. Earlier this year CIBC and CIT Group put up $75 million to keep the company operating. CIT Group is a New York–based holding company with $60 billion in financing and leasing assets.
In May, the Globe and Mail's Andrew Willis noted in a blog posting that three creditors—GoldenTree Asset Management, Beach Point Capital Management, and West Face Capital—put up $100 million to help Canwest satisfy creditors and continue operating. This occurred after Canwest failed to make a payment on Canwest Media's US$761-million debt to holders of senior subordinated notes.
Canwest has announced that it must complete a recapitalization agreement with an ad hoc committee of these note holders by July 31. If it fails to do this, it could be forced into bankruptcy protection, at which point company assets could be sold off to pay creditors.
Meanwhile, Canwest's publishing subsidiary—which owns the Vancouver Sun, Province, Vancouver Courier, North Shore News, and many other community and daily newspapers—is not in compliance with its financial covenants, either. The recent financial statements show that $874.2 million was due under the senior secured credit facility as of May 31, 2009.
As a result of a default, counterparties terminated hedging arrangements with this subsidiary, Canwest Limited Partnership, and demanded $69 million, the company reported. “Canwest Limited Partnership has not satisfied this demand and does not have adequate liquidity to satisfy this or any other such demand,” it stated on July 9.
According to the company's most recent “management discussion and analysis” document, “circulation volume” was down seven percent nationwide in the last quarter ending May 31 compared to the same quarter a year ago.