DBRS Downgrades Canwest LP to C, Ratings Remain Under Review-Negative
Telecom/Media/TechnologyDBRS has today downgraded the Issuer Rating of Canwest Limited Partnership (Canwest LP) to C from C (high) and the Secured Bank Debt rating to C (high) from CC (low). The Senior Subordinated Notes remain at C (low). All ratings remain Under Review with Negative Implications. The ratings were originally placed Under Review with Negative Implications following DBRS’s downgrade of Canwest LP and Canwest Media Inc. (Canwest Media) on February 23, 2009. (See the DBRS press release dated February 23, 2009, for more information.) The ratings were subsequently placed Under Review with Negative Implications following the downgrade of March 12, 2009. The Canwest Media ratings remain Under Review with Negative Implications.
The rating actions follow Canwest LP’s announced plans to not make payments totaling approximately $10 million due under its senior secured credit facility on May 29, 2009, and therefore expects to be in breach of these financial covenants on May 31, 2009. This decision is intended to facilitate a planned recapitalization of Canwest LP. The covenant breaches will constitute events of default under Canwest LP’s senior credit agreement and senior subordinated credit facility, which, in turn, would permit the lenders under each facility to demand immediate payment of those debts. A demand for payment would also permit Canwest Media's 8% noteholders to demand immediate payment, although it is not expected the noteholders will demand immediate payment while Canwest Media continues to discuss the terms of a recapitalization with its representatives.
The recovery rating for Canwest LP’s Secured Bank Debt remains unchanged at RR3, indicating anticipated recovery prospects of between 50% and 70%. As a result, the Secured Bank Debt rating has been downgraded to C (high), which remains one notch above Canwest LP’s C Issuer Rating. Furthermore, the recovery rating on Canwest LP’s Senior Subordinated Notes remains unchanged at RR6, indicating anticipated recovery prospects of between 0% and 10%. As a result, the Senior Subordinated Notes rating of Canwest LP remains at C (low).
DBRS expects its ratings of Canwest LP will be downgraded to D (indicating a default) at the earlier of (1) a default either during or following the expiry of any cure period, (2) a formalized recapitalization plan where principal and interest obligations are compromised or (3) the initiation of a formal bankruptcy proceeding.
Notes:
All figures are in Canadian dollars unless otherwise noted.
The Issuer Ratings reflect the probability of default.
The applicable methodology is Rating Media and Entertainment, which can be found on our website under Methodologies.
This is a Corporate rating.
Ratings
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