TORONTO – With several reporters pursuing tips and rumours asking if and when Canwest Global will seek bankruptcy protection (this reporter, too), company CEO Leonard Asper sent a memo to staff today that tried to sound hopeful.
The Globe and Mail ran a story Friday saying the company was looking for a cash infusion of $300 million and speculation has begun on which companies would pick up the pieces of a bankrupt Canwest needing to sell more assets than just its foreign operations and E!.
“Over the last week or so – and likely into this weekend – you have and will be reading and hearing a lot about Canwest in the media. Unfortunately, this is one of the challenges of working for a public company when we are dealing with financial matters that require public disclosures. We are not helped in this matter by our competitors who will try to use opportunities like this to undermine our effectiveness in competing against them. (We are equally confident that experienced people in the industry will see through this tactic.)” reads Asper’s memo.
“We are in the midst of a very structured process that has a number of checkpoints. Getting a financial agreement with our lenders is one of those checkpoints as is potentially selling some assets (such as the recent announcement about our secondary conventional network), reducing our cost structures and finding new sources of revenue. We are currently gathering information and examining any number of options so we can make good, sound business decisions that are in the best interests of Canwest shareholders and employees over the long-term,” he wrote.
Asper also mentioned that the recent coverage about the company his father founded in the 1970s overlook that Canwest’s businesses are highly profitable and generate well over $500 million a year in operating profits. “Our issue is that in this recession, those profits have been reduced by a serious downturn in revenue so our ‘mortgage’ is too high for our lenders liking,” said Asper.
The company is said to have nearly $4 billion in debt owing and would likely not get much for its 56% stake in Australia’s TEN Network nor for the five E! stations – four of which are in secondary markets.
“Regardless of the paths that we follow, these businesses are strong. They will continue to operate and need talented people to keep them strong. We still have to produce newspapers, web pages and television programs and these all need to be supported with advertising. From what I can see, we are doing this as well, if not better than anyone out there right now,” Asper continued.
“I am leading an excellent team to deal with the banks. You can help all of us by continuing to do what you do well; proving the value of our people, brands and strategy. It will give our lenders and the market more confidence and we’ll all do better in the end.”
Asper also outlined some of the good news Canwest has recorded recently, saying the National Post just recently signed a contract worth more than $2 million with a major auto manufacturer while page views to its web site are up 83% year-over-year; unique visitors to its Canada.com network crossed 7.5 million for the first time ever; conventional television sites are closing in on two million unique visitors a month – an increase of 134%.
Canwest’s specialty channels (the primary assets those circling the troubled company would want to acquire) continue to generate double-digit revenue and operating profit growth, added Asper.
“Our broadcast sales teams in Ontario, Maritimes, Manitoba, Regina, Saskatoon, Edmonton, Vancouver and Calgary have surpassed revenues they brought in last year. Overall, we have outperformed the market (beat our competitors) in TV ad sales from September to December,” he continued.
“I applaud your efforts and your willingness to step up in difficult times. We’ll get through this, as we always do. I feel confident about this because I know what kind of people we have in our company – simply the best.
“Have a good weekend.”
