Canwest Capitalization: Too Little, Too Late?

A recapitalization plan for Canwest Global Communications has been "around the corner" for months now, as the beleaguered Canadian media giant continues to struggle under its crippling debt load. But by the time a deal is finally announced, the brand will have already passed the point of no return.

The once-proud owner of major newspapers and the Global Television network suffered irreparable damage earlier this year when it defaulted on two corporate bond offerings, effectively putting bondholders at the company's helm.

The company's monthly announcements that it won’t be making its scheduled interest payments on the bonds, have soured the public's mood. What kind of special treatment can the company be receiving, they wonder? They know full well that if they stopped making payments on their own mortgages or car loans, they wouldn’t be given such extensive wiggle room.

Investors' mood is no better. The owner of flagship dailies like the Vancouver Sun, Calgary Herald, Montreal Gazette and Edmonton Journal has seen its stock values plummet from over $28 in 2000 to just a couple of nickels today. The company has undoubtedly been hurt by the ad recession. But by driving its share price into the penny stock category, investors are also showing their lack of faith in the Asper family, which controls the majority of the company and whose members head up the executive team.

Industry insiders speculate that new capital to keep the company running will come from outside Winnipeg, which Canwest has proudly called home since its mid-’70s inception, prompting a selloff of local assets and the relocation of whatever remains to Toronto.

But by then, it won’t matter anymore. The brand, which once stood for industry-leading convergence, technology and cross promotion, is already dead.