CanWest shareholders question the Senior Lender's associated hedging agreements

Subjecting Canada's newspapers to an era of high borrowing interest rates, and questionable hedging agreements, has underminded the Canadian economy and political process. If CanWest borrowing interest rates were normal, like 6%, Canada's newspapers would not be in financial peril.

This shaddy deal is an attack on Canadian Soverienty. Therefore when GOOGLE and Yahoo cite the senior lender, it is inappropriate to refer to them as the 8% Ad Hoc Committee, when in fact they are the bondholders getting 12.125%. It is only recorded at 8%, because CanWest paid 200 million to make the notes 8%. Censoring this fact.




Can the Senior Lenders be forced to refund the costs of CanWest's hedging program to CanWest shareholders?
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Hollinger's sale of Canada's newspapers to CanWest, passing control of Canada's headlines, and news reporting-security, political infrastructure to CanWest, is the orgin of this senior debt; hard to believe, that a sale condition to CanWest of Canada's Communication Hub, was to put the Canadian dollar. Canadian dollars then around 65 cents US.

The hedging program was a transfer/theft from CanWest Shareholders of hundreds of millions, as these puts would be worthless, as the Canadian dollar would rise. The recent shareholder quarterly report, had interest rate and foreign currency swap losses of $182.5 million. This amount of hedging changed the business of CanWest in that a good percentage of its profits/losses then were dettermined from the hedging business, not the newspaper business. Unfair to Canada.


News Release Quote from forbearance agreement with Senior Lenders
"Under the terms of the forbearance agreement, the senior lenders have agreed not to enforce their rights under the senior credit facility arising from the Limited Partnership’s previously announced defaults prior to October 31, 2009. The Limited Partnership has agreed to pay all outstanding interest and fees due under the senior credit facility and the associated hedging agreements and to resume paying interest and fees due and payable under such agreements during the forbearance period."





CANWEST GLOBAL COMMUNICATIONS CORP.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2009 AND 2008
(UNAUDITED)

"Hedging Derivative InstrumentsIn March 2009, Canwest Media Inc. agreed with its swap counterparties to settle the fair value hedging derivative instrument related to its senior subordinated notes and received cash proceedsof $105 million."

"On May 29, 2009, as a result of the failure to pay amounts due under the hedging derivativeinstruments, the Canwest Limited Partnership was in default of the terms of the hedging derivative instruments and the counterparties terminated the hedging arrangements and demanded paymentof the Canwest Limited Partnership’s net obligations under those arrangements in the aggregateamount of $68.9 million. The Limited Partnership has not satisfied the demand for payment andhas recorded this obligation at its amortized cost in accounts payable and accrued liabilitiesaccruing interest at the counterparty’s cost of funds plus a margin. The liability is secured bysubstantially all the assets of the Canwest Limited Partnership."

"As a result of the termination of the hedging derivative instruments the Company recorded interestrate and foreign currency swap losses of $182.5 million and a foreign exchange gain on the relatedlong term-debt of $296.2 in the three and nine months ended May 31, 2009."





Canada deserves the acknowledgement that the Ad Hoc 8% bond committee, are really 12.125% bonds.

Google and Yahoo readers of CanWest news releases, deserve the truth that the Ad Hoc committee 8% noteholders, are really 12.125% bonds.

Belittles Canada and CGS shareholders, to report that the debt they've been servicing is only 8%. Imagine if the interest rate was a fair interest rate, the debt would mostly be retired! CanWest paid nearly 200 million to turn it's 12.125% bonds into 8% bonds.




CANWEST CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2004 and 2003
(UNAUDITED)

http://www.canwestmediaworks.com/investors/investor_documents/F05/CMIQ1financialstatementswit.pdf

5. LONG TERM DEBT (page.12)
On November 18, 2004, the Company completed an exchange offer to exchange a new series of 8% Senior Subordinated notes due 2012 for the outstanding 12 1/8% Senior notes due 2010 issued by the Hollinger Participation Trust. In the exchange offer, the holders of the trust notes received US$1,240 principal amount of new notes in exchange for each US$1,000 of trustnotes. In addition, the Company completed a concurrent offer of notes, proceeds of which wereused to retire the 12 1/8% junior subordinated notes held by Hollinger, which had not been participated to the Hollinger Participation Trust. The effect of these transactions replaced the Company’s existing $903.6 million 12 1/8% junior subordinated notes (including accrued interest to November 18, 2004) with new $908.1 million (US$761.1 million) 8% senior subordinated notes.

The issuance of the new notes was recorded at their fair value at November 18, 2004 of $944 million. The difference between the fair value of the new notes and the book value of the junior subordinated notes together with certain other costs of settling the debt totaling $44 million, was charged to earnings as a loss on debt extinguishment.

The Company has entered into a US$761.1 million cross-currency interest rate swap resulting in floating interest rates on its senior subordinated notes at interest rates based on CDOR plus a margin and a fixed currency exchange rate of US$1:$1.1932 until September 2012. Under it senior Secured Credit facility the Company is required to maintain a fair value of its interest rate swaps and foreign currency and interest rate swaps above a prescribed minimum liability.

[Hedging program with individual counter parties. Inotherwords swaps not independent and bought on open market. Swaps individual agreements between seller and buyer. Transfer. Lacks arms length transaction.]
two way recouponing payments!?


There are also prescribed minimum liabilities with individual counterparties, which have two-way recouponing provisions. The Company was required to make recouponing payments of $137.0 million in the three months ended November 30, 2004 (2003 – $11.2 million), $44.1 million of this recouponing payment related to overhanging swaps and accordingly was reflected in cash flows from operating activities. Further strengthening of the Canadian currency and/or declining interest rates may result in further payments to counterparties.


Question: If the Canadian dollar tanks, does the bondholders forgo interest payments, to settle the put?