DBRS Notes Canwest LP’s Missed Interest Payment

DBRS has today noted that Canwest Limited Partnership (Canwest LP or the Company) did not make its August 1, 2009, interest payment (approximately US$18.5 million) on its US$400 million 9.25% Senior Subordinated Notes due 2015 (the Notes). Canwest LP is a wholly owned subsidiary of Canwest Media Inc. By not making this payment, Canwest LP has initiated a 30-day cure period during which the Noteholders cannot demand immediate payment. The current C (low) rating on the Notes is Under Review with Negative Implications, as are the Company’s C Issuer Rating and its C (high) Secured Bank Debt rating.

DBRS believes that Canwest LP did not make this interest payment on the Notes to preserve its liquidity to allow it to continue to operate its newspaper businesses normally while it pursues a recapitalization transaction. DBRS expects Canwest LP to discuss the recapitalization with Noteholders before the cure period expires on September 1, 2009. If this interest payment is not made on or before September 1, 2009, the rating on the Notes would likely be downgraded to D.

Separately, DBRS notes that in July 2009, Canwest LP stated it was not in compliance with its financial covenants for the quarter ended May 31, 2009, and has not made interest payments on its secured credit facility. As a result, Canwest LP does not have the ability to make additional drawings under its credit facilities. The Company is currently in discussions with its senior lenders regarding a recapitalization transaction.

DBRS expects its ratings of Canwest LP’s debt will be downgraded to D (indicating a default) at the earlier of (1) the expiry of the cure period without the payment of interest, (2) a formalized recapitalization plan where principal and interest obligations are compromised and/or (3) the initiation of a formal bankruptcy proceeding.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Media and Entertainment, which can be found on our website under Methodologies.

This is a Corporate rating.