Bank questions Canwest CEOs authority: Globe

CanWest News Service
Send to a friend

Send this article to a friend.

TORONTO - One of Canwest Global Communications Corp's (TSXV:CGS) most trusted banks has sent a letter to the insolvent media company's chief executive casting doubt on his authority concerning the future of his company.
The Bank of Nova Scotia (TSX:BNS) wrote the letter to CEO Leonard Asper in response to a missive the latter wrote trying to block creditors from putting Canwest's newspaper division up for sale, the Globe and Mail reported on its website.
"The information provided to us makes it unclear whether you have the corporate authority to make the proposals contained in your letter," Jane Rowe, Scotiabank's executive vice-president of global risk management, told Asper in her letter.
The beleaguered media company announced Friday it was seeking creditor protection for its newspaper unit and that the national chain of big-city dailies, including the National Post, would be put up for sale.
The Big Five Canadian banks agreed to make what's considered a stalking-horse" bid setting the base price for an auction that could fetch more than $1 billion, according to some estimates.
The bid price of at least $925 million is the amount of money the lenders are owed by Canwest's newspaper and publishing division.
The banks hope they'll get that money back, and more, through an auction process that starts as early as this week.
Asper wrote to the bankruptcy court last week opposing the move, saying the sale is being rushed and the newspaper chain, including 10 metropolitan dailies from Vancouver to Montreal, could fetch a better price if creditors wait until the economy improves.
But Rowe's letter made it clear to Asper that the banks want to have their loans repaid.
"We remind you of the following facts ... 1/8the newspaper division 3/8 is insolvent. It is plain and obvious that it cannot support its massive debt, and that a transaction will have to occur that fundamentally alters the balance sheet of the newspaper business," the letter said.
Scotiabank was once a key backer of Asper's father, the late Canwest founder Izzy Asper, who died in 2003.
The letter is seen as a sign of how the relationship between Canwest and its lenders has deteriorated in recent years as the company began to struggle financially, missing several opportunities to pay down its debt.

Organizations: Canwest, Scotiabank, The Bank of Nova Scotia TSX BNS Globe and Mail National Post

Geographic location: TORONTO, Vancouver, Montreal

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page