Canwest Global Communications Corp. (TSX: CGS), a Winnipeg media company facing growing financial pressures, says it has had its $300-million credit line permanently cut, but has won a 12-day extension for further talks to stave off a potential bankruptcy protection filing.
The company said late Friday its Canwest Media unit and senior bankers have agreed to extend the waiver on borrowing conditions on its debt until March 11 while they continue talks. The banks have also permanently cut the company's $300 million credit line by nearly two thirds to $112 million.
The moves Friday give Canwest access to only another $20 million in credit, since $92 million has already been advanced by Bank of Nova Scotia to Canwest Media, the unit which operates the company's newspapers and other assets.
The debt repayment extension gives Canwest Media another two weeks to comply with its debt covenants, but also puts more pressure on the parent company to cut costs, sell non-core assets and further streamline to get its balance sheet in order and win back the backing of its bankers.
Employees at Canwest and its flagship National Post daily in Toronto expressed private concerns that the publication could be forced to close as the parent company looks at all options to deal with its debt troubles.
But company representative Phyllise Gelfand said Friday "it's business as usual" for the daily, which has operated for more than a decade but lost millions of dollars.
"I'm in the same building and they (Post employees) look busy putting the paper together," Gelfand said in an interview.
In its statement late Friday, Canwest said it has enough cash on hand, along with current cash flow projections, to operate normally to March 11.
After that, it's anyone's guess what will happen, although the company said it will continue talks with bankers on extending the debt repayment deadline beyond that date.
"Canwest continues to take proactive steps to reduce its operating and capital costs, restructure its operations and improve efficiencies," the company said.
"It is also reviewing its strategic alternatives and continues to actively pursue opportunities to divest of non-core operations and assets, and collect other amounts that it is owed."
Canwest CEO Leonard Asper has been meeting banks and potential investors on Bay Street and elsewhere so the company can raise enough new capital to help pay off debt as the recession has dimmed the financial prospects of its newspapers and television stations.
Some reports have said the Asper family may have to surrender control of Canwest in return for new financing no fax payday loans.
Earlier Friday, Canwest stock rose 1.5 cents to close at 35.5 cents, a gain of 4.4 per cent, on the Toronto Stock Exchange in trading of more than 919,000 shares.
The company, which carries a staggering $3.9-billion debt load, has been struggling to sell several of its non-core assets in an attempt to pay off its debts, incurred from past newspaper and television acquisitions.
Earlier this month, Canwest placed its five E! network television stations on the block, though none of them have been sold yet.
On Wednesday, Canwest announced it's selling part of its 26 per cent stake in sports broadcaster the Score for $6.62 million and hired an investment bank to find a buyer for the rest.
Canwest, which owns the Global television network in Canada, a chain of big-city Canadian daily newspapers and broadcast businesses in several countries, reported last month its advertising sales have eroded badly because of the deteriorating economy.
In its last financial report, the company posted a $33-million quarterly loss, or 18 cents per share, reversing a year-earlier profit of $41 million or 23 cents per share.
The major media company recently cut 560 jobs, or about five per cent of its workforce, including 210 at Global Television and its other TV operations.
Canwest once was a high-flyer on the stock market as investors valued its prized stable of newspapers, TV stations and Internet properties. But the company controlled by Winnipeg's Asper family through a dual-share structure has been fighting financial headwinds for years after an acquisition binge fuelled by debt.
Canwest owes about $3.9 billion from the acquisition of the former Southam newspaper chain from the Hollinger group in 2000 and most recently the specialty TV stations once owned by Alliance Atlantis.
The debt has dragged down the company's finances, produced consistent losses and turned Canwest shares into penny stocks.
A company once worth more than $2 billion years ago and about $600 million in early 2008 now has a stock market value of just under $40 million and faces an uncertain future.
Apart from the recession, Canwest and other broadcasters have seen the profitability of conventional TV stations squeezed by competition for advertisers and viewers from specialty channels and the Internet.
Analysts speculate that a major restructuring of Canwest or possible bankruptcy protection filing loom, which could see the company streamlined or split up into various pieces that could be sold to reduce debt.
Reliv International Inc. reported Wednesday lower fourth-quarter earnings reflecting investment losses for which the Chesterfield-based maker of nutritional supplements does not expect to receive an income tax benefit.
Net income was $250,000, or 2 cents per share, for the fourth quarter ended Dec payday loans online. 31, down from $697,000, or four cents a share, a year ago. Sales were $22.1 million compared to $24.6 million.
Japan’s exports nearly halved in January from a year earlier, with record slides in shipments to the United States, Europe and the rest of Asia pointing to a deepening recession across much of the world.
Japanese car exports fell by two-thirds from a year earlier, accelerating from a 45 percent annual decline seen in December, as the value of overall exports hit a 10-year low.
“We don’t see any signs of a pick-up in the Japanese economy in the near term. The economy will gradually worsen further,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Exports to Asia, particularly to China, are tumbling at about the same pace as shipments to the United States, signaling that even China’s economy may be shrinking,” Minami said.
Many factories in China and elsewhere in Asia use Japanese components to make goods that are ultimately sold in the West.
Federal Reserve Chairman Ben Bernanke warned on Monday of a prolonged recession in the United States, one of Japan’s major markets, and President Barack Obama, while positive for the longer term, told Congress there were no quick fixes for the economy.
Asian countries rely heavily on manufactured exports and have been hit hard as the global financial crisis prompts Western consumers to curtail spending.
“In Asia, the world’s manufacturing plant, the slump in the global economy will continue to weigh on production activities and likely to lead to a further decline in exports of semiconductors,” Kyohei Morita, chief economist at Barclays Capital, said in a report small personal loans.
Japan is among the worst affected with the 45.7 percent plunge in exports in January from a year earlier, a much deeper fall than seen so far in South Korea and China.
For a graphic comparing the three countries’ exports, click: here
January figures were affected by Lunar New Year holidays that closed some key Asian export markets for several days.
Japanese exports to the rest of Asia sank 46.7 percent from a year earlier, the fourth straight month of decline, with shipments to China falling 45.1 percent, data showed on Tuesday.
The decline in Japanese exports to other emerging markets is also accelerating. Sales to Brazil fell 38 percent, more than six times the drop seen in December data.
Japan’s economy shrank last quarter at its fastest pace since the first oil crisis of the 1970s and economists said the latest figures added to concerns that the recession was worsening.
OUTLOOK BLEAK
India’s credit rating outlook was cut to negative from stable by Standard & Poor’s after the government unveiled a budget deficit almost double next year’s previously planned target.
The rating company affirmed India’s BBB- credit rating, the lowest level in the investment grade, according to an e-mailed statement today guaranteed high risk personal loans.
U.S. Secretary of State Hillary Clinton urged China to continue buying Treasury bonds to help finance President Barack Obama’s stimulus plan.
The two nations’ economies are intertwined and it wouldn’t be in China’s interest if the U.S. were unable to sell its government debt, Clinton said in an interview with Shanghai’s Dragon Television today. China knows it needs a healthy American economy as its biggest export market, she said, adding that the U.S. must take “drastic measures” to stimulate growth.
“We are truly going to rise or fall together,” Clinton said. “By continuing to support American treasury instruments, the Chinese are recognizing” that interconnection.
China, the largest holder of U.S. government debt, boosted purchases by 46 percent last year to a record $696.2 billion as the global recession spurred demand for the securities. The Chinese government said last week it plans to keep buying Treasuries, adding that future purchases will depend on the preservation of their value and the safety of the investment.
China continued to buy the U.S. debt amid a 27 percent increase in its holdings of foreign currencies in 2008. JPMorgan Chase & Co. predicted in a Feb. 6 report that China will keep buying Treasuries “not only for the near-term stability of the global financial system, but also because there is no viable and liquid alternative market in which to invest China’s massive and still growing reserves lowest fee payday loans.”
Chinese attempts to diversify from Treasuries into more risk-oriented assets have not fared well. It has lost at least half of the $10.5 billion it invested in New York-based Blackstone, Morgan Stanley and TPG Inc. since mid-2007.
China’s currency reserves of $1.95 trillion are about 29 percent of the world total.
Flying Home
Clinton also pledged that America would not practice protectionism. She said the “Buy American” provision of the stimulus package, which says U.S. goods must be used for infrastructure projects, would be carried out in compliance with existing international trade agreements.
Clinton today wrapped up a weeklong trip to Asia, her first as Obama’s top diplomat, having already stopped in Japan, Indonesia and South Korea. She attended services at a state- sanctioned church, and met with community organizers before starting the trip home. She met U.S. troops at Yokota Air Base in Japan on a refueling stop.
China and the U.S. will continue the bilateral strategic dialogue begun during the Bush administration, expanding it to include security and political issues, Clinton said yesterday after meeting with Chinese Foreign Minister Yang Jiechi.
Clinton will co-chair the dialogue on the U.S. side with Treasury Secretary Timothy Geithner, she said today.
World stocks and the euro fell on Monday while safer government bonds rose as dismal Japanese growth data and fresh concerns about the financial sector fanned worries about the deteriorating global economy.
Data showed Japan’s economy sank deeper into recession with its worst quarterly contraction in 35 years, weighing on risky assets and supporting safer instruments such as bonds and the yen.
Financial shares were one of the underperforming sectors in Europe after part-nationalized Lloyds Banking Group said on Friday its HBOS unit made a hefty loss last year, causing its shares to fall by a third. Lloyds erased early losses on Monday however to trade almost flat on the day.
At a weekend meeting in Rome, G7 finance ministers and central bankers said they would do all they could do to fight recession but their statement lacked specifics to tackle the worst financial crisis in 80 years.
"The Japanese economic (data) provides the backdrop today and there are persistent concerns about financials after Friday’s events (at Lloyds)," said Jonathan Lawlor, senior analyst at Fox-Pitt, Kelton.
World stocks, measured by MSCI, fell 0.7%. The FTSEurofirst 300 index of leading European shares lost 0.8%. U.S. markets are closed for a national holiday.
Legal & General fell as much as 22% to a 10-year low before trimming losses after the Financial Times reported that the life insurer was in talks with the Financial Services Authority about the amount of money it should set aside to cover defaults in its bond portfolio. L&G said it was not involved in any exceptional talk with the regulators quickpayday loan.
The euro fell a quarter percent to $1.2755.
U.S. crude oil rose half a percent to $37.68 a barrel.
Euro zone government bonds rose, helped by funds seeking less riskier investment and bids by investors betting on a euro zone interest rate cut next month.
Two-year euro zone government bond yields fell as low as 1.246%, their lowest since the euro’s 1999 launch. The March bund futures rose 48 ticks.
In a further sign of risk aversion, the cost of protecting U.S., Belgian and Slovak government debt against default rose to record highs, according to monitor CMA DataVision.
Back to square one
G7 financial chiefs made no specific reference to the yen’s strength or sterling’s weakness — two currencies which investors had speculated could be included in the statement.
The yen was down 0.1% at 91.79 per dollar. Sterling rose 0.3% to $1.4262.
The dollar hit a two-month high against a basket of major currencies, up 0.7% on the day.
"There was nothing controversial in the G7 statement, so it is very much back to square one for the currency market now," Brown Brothers Harriman said in a note to clients.
"The main themes still relate to de-leveraging and to trying to assess which country is proving more aggressive or efficient in trying to tackle the financial market crisis. Here, we believe that the greenback will remain a winner."
The days of cheap gas are retreating into the rearview mirror, as prices continue to roll uphill, flirting with the $2-per-gallon mark.
The national average price for a gallon of unleaded gasoline reached $1.952 Thursday, according to the motorist group AAA. This is bad news for the growing ranks of jobless Americans, who are pinching pennies and looking for ways to cut costs.
The current price would have been welcomed by summertime drivers, because it’s less than half the all-time high of $4.114 per gallon, achieved last July 17.
But since gas prices slumped to a low of $1.616 per gallon on Dec. 30, they’ve jumped more than 20%. At their current rate, prices could easily eclipse $2 per gallon by early next week.
This is occurring as crude oil prices head in the opposite direction, falling below $35 a barrel.
"I think what you’re seeing now is a backlash of a period, from the end of the summer until the end of the year, when refiners were selling gas into the consumer market at a discount to crude oil," said Ben Brockwell, director of data pricing for OPUS.
Brockwell said refineries lost money last year, despite the surge in gas prices. The refineries in the latter half of 2008 were paying top dollar for oil, and then producing gasoline in a low-demand economy, he said. Now, refineries are producing less, driving up prices in even this low-demand economy, while stockpiling discount oil, he said.
It’s hard to tell how this impacts Americans, who have been cutting back on driving since last year, and who have avoided the gas-guzzling larger vehicles, said Moody’s chief economist John Lonski payday loan help.
"You’d rather see energy prices lower, but it doesn’t serve right now as one of the primary worries that affects consumer spending," said Lonski. "I would think that of the list of things to worry about, it does not yet rank as high as it did this spring or early summer, when gas prices were at stratospheric levels."
Robert Sinclair, spokesman for AAA in New York, where the price of unleaded averaged $2.09 a gallon, said, "Driving levels are already pretty low, with the downturn on the economy and people holding onto their pennies and worrying about the future."
But gas prices will probably keep going up, as they often do in late winter and early spring, when refineries traditionally conduct annual maintenance on their facilities, said Peter Beutel of energy risk firm Cameron Hanover.
The silver lining for consumers is that, because of lower demand, prices are unlikely to return to their sky-high levels from last year, according to Beutel.
"I think this market is going to have a very tough time getting over $2.35 [per gallon of unleaded by Memorial Day] just because there are so many people out of work and the economy is having such as difficult time going forward," he said.
Wells Fargo & Co, the fourth-largest U.S. bank, on Thursday increased the size of its previously reported fourth-quarter loss by 7 percent because of a new investment losses.
The San Francisco-based bank recorded a $328.4 million pretax charge for losses on perpetual preferred securities, citing unspecified “credit events” that took place after it announced year-end results on January 28.
Wells Fargo said the charge boosted its quarterly after-tax loss to $2.73 billion, or 84 cents per share, from a previously reported $2.55 billion, or 79 cents.
Full-year profit was reduced to $2.66 billion, or 70 cents per share, from $2.84 billion, or 75 cents.
Wells Fargo said it carried the securities at fair value as of December 31 and had classified losses on the securities as unrealized losses on securities available for sale.
The announcement means Wells Fargo will not record the charge in the first quarter, the first full three-month period since it acquired troubled rival Wachovia Corp on December 31.
Wells Fargo received $25 billion of taxpayer funds as one of the original recipients under the Treasury Department’s $700 billion Troubled Asset Relief Program direct lender payday loans.
It disclosed the loss one day after Chief Executive John Stumpf was one of eight bank chief executives to testify before a critical Congress about lending and compensation practices and how they are using taxpayer infusions.
Julia Tunis Bernard, a bank spokeswoman, declined to elaborate on Thursday’s announcement or its timing.
As of September 30, Wells Fargo had perpetual preferred securities available for sale and carried at fair value that cost $2.53 billion, and had a fair value of $1.65 billion, according to a U.S. Securities and Exchange Commission filing.
The bank is set to file its annual report on February 27.
Wells Fargo shares fell 52 cents to $16.28 in after-hours trading following the announcement. The shares had fallen 70 cents to $16.80 during regular trading. They ended 2008 at$29.48.
(Reporting by Phil Wahba and Jonathan Stempel; Editing by Andre Grenon)
The recession-bound U.S. economy is still expected to resume growing in the second half of this year, but at an even slower pace than previously thought as consumers spend cautiously, the Blue Chip survey of 52 economists said on Tuesday.
A poll on February 4-5 for the monthly Blue Chip Economic Indicators February newsletter scaled back forecasts for second-half growth from those made in January but continued to predict the United States will come out of recession in 2009.
The Blue Chip economists now forecast a 0.8 percent gain in third-quarter U.S. gross domestic product, down from the 1.2 percent gain they estimated in January. Fourth-quarter growth is seen at 2.0 percent rather than 2.2 percent.
The economy officially slipped into recession in December 2007. Many economists expect the combination of a sinking labor market, falling stock prices and a severe housing downturn will make it the most severe recession in decades.
“The year-over-year contraction in real GDP this year now is expected to equal the decline registered in 1982 that was the largest in the post-World War Two era,” the Blue Chip economists said.
The Commerce Department said last month that U.S. GDP, the measure of total goods and services output within U.S. borders, contracted at a 3.8 percent annual rate in the fourth quarter of 2008, its weakest performance in 27 years.
A buildup in inventories late last year is expected to be a significant factor restraining GDP performance during the first half this year.
The Blue Chip economists said the United States’ real net export deficit should narrow this year and said that will contribute to a resumption of GDP growth no telecheck payday loans. They warn the deficit may resume widening by year-end as domestic demand pushes imports up, but the full-year trade deficit still should show improvement.
The trade deficit shrank nearly 29 percent in November, the largest decline in 12 years, Commerce Department data showed in a January report.
This month’s consensus forecast predicts less deterioration in the deficit over 2010 than was expected a month ago. The consensus put this year’s real net export deficit at -$339.4 billion and next year’s at -$353.7 billion.
Of the economists polled, 32.6 percent believe the unemployment rate will peak in the fourth quarter, up from 31.4 percent polled for the January survey.
After the survey was taken, Labor Department data showed employers slashed 598,000 jobs in January, the biggest monthly loss in 34 years, and the jobless rate soared to 7.6 percent, its highest level since September 1992.
The February prediction for economic growth in 2009 slipped to -1.9 percent from -1.6 percent in January, while the forecast for 2010 fell to 2.1 percent from 2.4 percent estimated in January.
Panelists said the bulk of the deterioration in first-half 2009 growth stems from expectations of a sharp correction in business inventories that could subtract as much as 2.0 percentage points from GDP in the first quarter.
(Reporting by Nancy Waitz; Editing by Jonathan Oatis)
North American stock markets surged to a sharply higher close yesterday as investors looked past dismal employment news from Canada and the U.S. to economic stimulus programs in both countries and an announcement of aid for the financial sector.
Toronto’s S&P/TSX composite index closed up 147.04 points, or 1.66 per cent, to 9,008.02 – its first close above 9,000 since Jan. 9 – leaving the main index in positive territory for the year to date.
The TSX gained 3.6 per cent on the week.
"The main driver is the (Obama administration’s) fiscal stimulus package and the announcement about the financial system and positive data we’re seeing from China," said Jennifer Dowty, portfolio manager at MFC Global Investment Management.
"You have some data from China that is starting to indicate we might be seeing some sort of pickup in demand," said Dowty.
"The Baltic Dry Index, a measure of shipping costs in commodities, gained on demand for raw materials. What we’re seeing is that China is coming back slowly into the market and buying and that gives investors optimism that things are slowly turning around."
Statistics Canada said Canada lost a record 129,000 jobs last month, far more than the consensus expectation of 40,000, and the unemployment rate surged more than half a point to 7.2 per cent, the highest level since November 2004.
The drop in jobs was bigger than in any single month during the recessions of the early 1980s and 1990s.
Still, the Canadian dollar closed up 0.37 of a cent (U.S.) to 81.6 cents.
And the Dow Jones industrial average rose 217.52 points to 8,280.59, netting a 3.5 per cent gain on the week after the U.S. labour department reported the U.S. economy lost 598,000 jobs during January, worse than the 524,000 expected.
The U.S. jobless rate rose to 7.6 per cent from 7.2 per cent.
On the TSX, the base-metals sector racked up solid gains for a second day, up 6 per cent, as the March copper contract in New York rose 13 cents to $1 ace cash advance.63 a pound.
The TSX Venture Exchange added 11.12 points to 909.34. New York’s Nasdaq composite index moved up 45.47 points to 1,591.71 and the S&P 500 gained 22.75 to 868.6.
The TSX financial sector rose 1.8 per cent ahead of an announcement from American Treasury Secretary Timothy Geithner on how the U.S. government will deploy the second half of a $700 billion bank bailout as well as other help for financial players. CIBC advanced $1.56 (Canadian) to $48.45 and National Bank improved $1.31 to $36.44.
TD Bank Financial Group confirmed it is raising its ownership of U.S. brokerage TD Ameritrade to 45 per cent from 39.9 per cent, at a cost of $515 million. TD shares were up 63 cents to $39.80.
The energy sector was ahead 1.6 per cent even as the huge job losses sent the March crude contract on the New York Mercantile Exchange down $1 (U.S.) to $40.17 a barrel.
Suncor Inc. was 83 cents (Canadian) higher at $25.49 and EnCana Corp. gained 61 cents to $56.31.
The Ontario Teachers’ Pension Plan has confirmed talks with Petro-Canada about creating more value for shareholders.
Petro-Canada shares were 21 cents better at $29.54.
The April bullion contract on the Nymex inched up a dime to $914.30 (U.S.) an ounce.
Research In Motion Ltd. added $2.16 (Canadian) to $72.10, while Potash Corp. rose $4.70 to $110.80.
Shares in Canwest Global Communications Corp. were up seven cents yesterday to 49 cents on news it is seeking to sell five TV stations. Analysts say it’s unlikely the company will find a buyer and it is more likely the stations will close.
The Canadian Press
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