Working to meet a debt payment deadline, media conglomerate Canwest Global Communications Corp. has sold American political magazine The New Republic back to the editor-in-chief from whom it bought the publication two years ago.
The deal, financial terms of which were not disclosed, was made with a group of private investors including longtime editor Martin Peretz and investment banker Laurence Grafstein.
“We’ve been talking for quite some time about the fact that we’re cleaning up our balance sheet and shedding non-core assets,” said Canwest spokesman John Douglas in a phone interview.
The agreement comes as Canwest continues to search for buyers for certain company assets as it moves towards a Wednesday deadline for renegotiating the borrowing conditions of its debt.
In late February, the company received an extension for the waiver on its borrowing conditions, which allowed CEO Leonard Asper to continue shopping around for interested buyers.
The extension restricted Canwest to borrowing $112 million, down from $300 million, by its lender Scotiabank. The company has already borrowed $92 million.
Friday is the due date for subsidiary Canwest Media to pay back interest on its senior notes, which credit rating agency DBRS estimates are worth $38 million.
Canwest declined to say how much it paid for The New Republic when it bought the liberal-angled publication in early 2007 from a group of investors, including Peretz.
However, the deal was estimated to be worth about US$7 million at time, which was likely below the actual value of New Republic—partly because it was generating losses.
Nearly two weeks ago, Canwest sold part of its 26% stake in sports broadcaster The Score for $6.62 million, and hired an investment bank to find a buyer for the remaining $3.6 million in shares of Score Media Inc.
The company also put its five E! network television stations up for sale last month, but so far hasn’t been able to find a buyer.
Moody’s vice-president and senior credit officer, Bill Wolfe, questioned how effective the sale of the magazine will be in bolstering Canwest’s bottom line or in paying back the more than $30 million interest due on Friday.
“How many of those little assets do you have to sell before you make any progress?” he asked.
“This is an awful lot of singles for a company that needs some kind of a big-ticket transaction.”
The New Republic has been publishing for 95 years, and is considered one of the United States’ most prominent political magazines.
