TORONTO – The financial picture isn’t looking any brighter for Canwest Global Communications, as both Moody’s Investors Service and DBRS downgraded the media conglomerate’s ratings this week.
Moody’s downgraded Canwest Media’s corporate family rating and probability of default rating to Caa3 from B3, while the corporate family’s consolidated speculative grade liquidity rating remained at SGL-4, indicating poor liquidity. The company’s ratings outlook remains negative, the press release said.
At the same time, instrument ratings for Canwest and its two rated affiliates, CW Media Holdings and Canwest Limited Partnership were downgraded, reflecting “the company’s very weak financial results and lack of financial flexibility”.
Saying “non-compliance with financial covenants has become a near term possibility”, Moody’s anticipates that Canwest “will look to restructure its business portfolio and debt structure as it addresses the impact of an adverse advertising environment and elevated financial leverage”.
Moody’s most recent rating action regarding Canwest was on January 8.
Debt ratings agency DBRS also downgraded the issuer rating of Canwest Media to CCC from B (high), and its debt instrument ratings. Canwest Limited Partnership’s issuer rating also dropped to CCC (high) from BB (low). Additionally, the agency placed Canwest’s ratings under review with negative implications, pending the outcome of its negotiations with its banks regarding its secured credit facility.
DBRS had originally placed Canwest Media and Canwest LP’s ratings under review with negative implications on January 15, following the company’s first quarter results and outlook for the 2009 fiscal year. At that time, it expressed concern whether the company could meet its financial leverage ratio covenants this year, saying its “liquidity and financial risk profile could continue to be increasingly pressured.”
