http://www.cbc.ca/money/story/2009/02/27/canwest-deadline.html
Summary
The current economic recession has finally affected several broadcast stations and in this particular article, the media Canwest Global Communications Corp. Canwests' lenders have agreed to, under such circumstances, extend a debt repayment by nearly 2 weeks from this Friday and to discontinue its credit line to $112 million dollars from a previous amount of $300 million. With this surplus of time, Canwest will be able to resume work normally and is currently in the process of negotiating for a longer deadline. Not only will Canwests' bankers negiotiate with its lenders, it will begin to cut back on operating costs (also known as expenses). Although cutting back on operating costs is a step in the right direction of avoiding bankrupcy, debt left due to the purchase of Alliance Entertainment company and former Southam newspaper has begun to take a toll on their ability to meet the minimum repayment figure of $100 million. In order to ease some of the debt that has accumluated, Canwest has put five of its E! television stations for sale but none has been sold yet. The ultimate price? Bankrupcy.
Connection
The content of this article relates to the content of Chapter 15 by allowing us to see what bankers look for when the company they have lent to is in a position of not being able to repay its loans. Bankers, an outsider of companies, may then not lend money to Canwest in the future due to its inability to meet deadlines. With the closest deadline being 12 days after February 27, 2009, the decision to sell its assets to gain some profit is a smart move. Another factor Canwest and businesses in general should have kept in mind when it purchased other companies would to question its profitability and whether or not they are indeed beneficial to yourself. If the answer was 'no', then it would be somewhat a warning that it may be a burden.
Reflection
It is unfortunate to hear that Canwest may go bankrupt, but I believe that before buying other businesses, one should consider if it is worth it or not. Questions should be asked and careful examination of finanacial statements need to be taken into account. On a brighter note, it is great to see companies have the ability to purchase another for it shows that money is not an issue and management decisions made are in the right direction to continue to grow. Hopefully, Canwest will be able to pay off part of its debt and make decisions based upon its comparative financial statements.
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It is very hard to know that even the global networking boardcasters like Canwest is experiencing such encounters in their path to repay their loans, but at the same time, these news have become a daily "ritual" that we read about them in the newspapers, and on internet, hear them from radios, and see them on televisions. The power of the communication industry is enormous. Yet, due to illegal downloadings and unpredictable times, it is very unfortunate for many to be tolled in the position where unwilling things will have to be done, and even facing the facts that even those things might not be able to help you when in need. Just like how Canwest is in the attempt to sell 5 of its E! stations, but still no buyers.
I agree with you that cutting back operating expenses is the top piority of the company right now, whihch would mean that people are going to lose they jobs, which is very unfortunate also. But in times like this. Solid decisions must be made quick and fast. In order to save the overall situation, and better for all.
- Chrity Leung
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