Canada's largest media firm seeks protection from creditors

Canadian media giant Canwest Global Communications Corp. will seek protection from its creditors under the Companies' Creditors Arrangement Act.

Canwest Global is Canada’s largest media company.

It's the country's biggest publisher of English-language paid daily newspapers, and owns the Global Television Network and 23 specialty channels.

The following is an abridged news release issued by the company this morning:

************************* Canwest reaches agreement with members of the ad hoc committee of eight percent noteholders with respect to a recapitalization

WINNIPEG – (October 6) - Canwest Global Communications Corp. (“Canwest” or the “company”) announced today that it has entered into an agreement with members of the ad hoc committee of 8 percent senior subordinated noteholders (the “ad hoc committee”) of Canwest Media Inc. (“CMI”) pursuant to which it intends to pursue a recapitalization transaction.

The proposed recapitalization transaction is supported by members of the ad hoc committee representing over 70 percent of the eight percent senior subordinated notes issued by CMI and represents the culmination of arm’s length discussions between the CMI Entities and the ad hoc committee.

A support agreement and recapitalization term sheet, which contains the summary terms and conditions of the proposed recapitalization of the CMI Entities, has been executed by CMI Entities and the ad hoc committee (the “recapitalization agreement”).

The recapitalization transaction will ensure that a recapitalized CMI will be a stronger industry competitor with a renewed financial outlook.

The company believes that entering into this agreement and implementing a court-supervised and consensual recapitalization plan represents the best alternative for the long-term interests of the CMI Entities, its approximately 1,700 employees, suppliers, customers and other stakeholders.

To advance the recapitalization transaction and in accordance with the recapitalization agreement, the Canwest board has authorized certain Canwest business units including Canwest, CMI, Canwest Television Limited Partnership (including Global Television, MovieTime, DejaView and Fox Sports World) as well as The National Post Company (the “CMI Entities”) to voluntarily file for creditor protection under the Companies’ Creditors Arrangement Act (“CCAA”) in order to implement the recapitalization plan.

The CMI Entities’ operations will continue uninterrupted during the recapitalization process.

The CMI Entities have approximately $65 million of cash (following the recent sale of the shares of Ten Network Holdings Limited) and have arranged debtor-in-possession (“DIP”) financing of up to $100 million to enable its business units to meet their obligations to employees and suppliers of goods and services provided after the filing date.

“This pre-packaged financial restructuring is intended to minimize business disruption and preserve the value of these business operations,’’ Canwest President and CEO Leonard Asper said. “Because it has the support of the ad hoc committee, we believe that we can use the stability offered by the CCAA to implement this plan in four to six months, which will renew the financial prospects of our operations and put Canwest on a stronger footing for the future.”

Under the proposed recapitalization, creditors of the CMI Entities whose claims are compromised under the plan of arrangement, including the holders of the CMI 8% Notes, will receive common shares of a restructured Canwest.

Existing shareholders of the company will receive 2.3 percent of the shares of a restructured Canwest.

It will be necessary for the company to obtain new equity financing in the amount of at least $65 million.

The percentage of the equity of a restructured Canwest to be received by affected creditors will be dependent on the percentage of equity sold to new investors.

Leonard Asper and members of his family have reached an agreement with the ad hoc committee on terms which the ad hoc committee would support for the investment by the Asper family of up to $15 million in connection with the recapitalization.

The Asper family’s commitment would be subject to a number of conditions, including securing a co-investment from one or more Canadians, acceptable to all parties. Canwest has not made any determination with respect to the terms of any proposed equity investment by the Aspers or any other parties but welcomes the commitment of the Asper family to assist Canwest in achieving a successful recapitalization.

The support agreement contemplates that the CMI Entities will work with the members of the ad hoc committee to pursue a plan of arrangement in order to implement the proposed recapitalization, which will be subject to the approval of the creditors of the CMI Entities at a meeting of creditors to be held this year as well as various regulatory approvals, including the approval of the Canadian Radio-television and Telecommunications Commission and the Toronto Stock Exchange, and the approval of the court.

The support of the proposed recapitalization by the ad hoc committee is subject to the satisfaction of a number of conditions and the support agreement may be terminated in certain events.

Protection under the CCAA will provide the CMI Entities with the time and stability to implement an orderly consensual recapitalization transaction while continuing their day-to-day operations.

This CCAA filing only applies to the CMI Entities whose businesses account for approximately 30 percent of the company’s revenues.

The filing does not include CW Media’s stable of specialty channels acquired from Alliance Atlantis in 2007, TVtropolis, Mystery TV or Men TV.

Canwest Limited Partnership – the company’s Canadian publishing and associated online and mobile operations – has also been excluded from the filing.

As previously announced, Canwest Limited Partnership has entered into a forbearance agreement with its senior lenders to October 31, 2009.

During this period, the senior lenders of the limited partnership have agreed, subject to certain conditions, not to exercise their legal right on debts owed by the limited partnership.

“Throughout this process, all our operations will continue uninterrupted including a strong programming lineup on Global and our specialty channels,’’ Mr. Asper said. “Our business operations remain strong and our stable of media brands continue to lead their markets.”

He added: “As always, our priority remains serving our customers – the 20 million Canadians who turn to us every week as their source of news, information and entertainment as well as the advertisers who rely on Canwest brands to deliver the audiences that they want to reach.“

The company will continue its discussions with a number of its key stakeholders and third parties together with representatives of the ad hoc committee as it pursues the proposed recapitalization.

About Canwest Global Communications Corp.

Canwest Global Communications Corp. (www.canwest.com), (TSX: CGS and CGS.A,) is Canada’s largest media company.

In addition to owning the Global Television Network and 23 industry-leading specialty channels, Canwest is Canada’s largest publisher of English language paid daily newspapers and owns and operates more than 80 online properties.

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