The Seven Network says the Seven Network and  its Pacific Magazines (Seven Media Group) are worthless, an obvious accounting lie; PBL Media’s Nine Network and ACP are worthless, which is not so obvious a fib, but pretty close to it. Over the weekend there’s a chance that our third TV network, Ten, might find its value close to that of Seven because its Canadian parent, Canwest, has to resolve a $C100 million debt repayment with the Bank of Nova Scotia; last week’s $75 million capital raising by Ten was a sneaky way of getting most of that money, with Canwest now flogging off assets at fire sale prices to try and raise the dosh.
In an announcement overnight, Canwest said it had raised $C6.62 million by selling its $16.6 million stake in the sports broadcaster, the Score, back to its parent, Score Media. It has another nine million shares to sell. The sale price tells us the level of desperation at Canwest: the sale was 25% below the market price for Score on the Toronto Stock Exchange. Canwest has a $C3.9-billion debt load and needs to resolve the $100 debt issue by the deadline of Friday night, Canadian time, otherwise it will be in default. That could see the company’s other debts become due if there are default clauses in the other loan agreements. Earlier in the week the Canadian debt rating agency DBRS downgraded Canwest Media Inc. and Canwest LP and placed them under further review on concern it is not currently in compliance with bank covenants regarding a $300-million credit facility. The two ratings were downgraded to C, which is below investment grade and effectively junk. Moody’s has also cut Canwest Media Inc.’s corporate rating and probability of default rating to Caa3 from B3. Canwest owns 56.6% of Ten. If it goes into default on Friday night, nothing much will happen for a while, but it could result in Ten’s shares falling further and ownership of the network becoming an issue, as well as the value. Meanwhile, I might send Kerry Stokes an offer for Seven: $10, a short black and a food parcel. The poor dear needs every penny he can get and a food parcel is a nice touch. The bloke’s biggest asset is now worthless and he’s down to his last couple of billion, China is slowing, the West Australian mining boom has gone.  Little Kezza’s outlook is starting to resemble that of James Packer: gloomy, with worse to come.

Peter Fray

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