Money Laundering, buying a string of money losing swaps: 8% Ad Hoc committee are liable for previous noteholders pilfering Canwest Treasury

Only in 2007, did Canada's newspapers have a hedging profit of 16 million. Very little press on this Canwest failure. Where did these funds go? International audit.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Interest rate and foreign currency swap losses
(-110,860 lost 04) ( -23,015 lost in 03 )

Interest rate and foreign currency swap losses
(-138,639 lost 06 ) ( -121,064 lost in 05)

Interest rate and foreign currency swap losses
(+15,955 made 07) (-138,639 lost in 06)

Interest rate and foreigh currency swap losses
(-150 million lost in 09) (-54 million lost in 08 )


[Irregularities. Swaps only for some of debt, so a 150 million loss approachs the amount of interest that debt costs, should not be so. Canadian and Austrialian dollar rose, and some debt in these currencies, so should be good for Canwest. New rounds of Hedging contracts, so why not a better deal. Should win also. ]

Issues did CanWest buy derivatives, or issue them. Name the Canadian company on the other side of the transaction currency swap. 8% Ad hoc group the supplier of hedging products, stinks.







Accounting for derivative instruments and hedging activities. Under U.S. GAAP, entities are required to recognize all derivative instruments as either assets or liabilities in the balance sheet, and measure those instruments at fair value. The changes in fair value of the derivative are included either in the statement of earnings or other comprehensive Under Canadian GAAP hedging derivatives are eligible for hedge accounting if certain criteria are met. Non-hedging derivatives are recognized at their fair value as either assets or liabilities.





not in 02 01
Proposed accounting policies
Foreign currency translation and hedging relationships
In November 2001, the Accounting Standards Board of the CICA approved amendments to Handbook Section 1650, Foreign Currency Translation, and a new accounting Guideline, Hedging Relationships. The amendments to Section 1650, applicable for the Company in fiscal 2003 with retroactive application, eliminate the deferral and amortization method for unrealized translation gains and losses on non-current monetary assets and liabilities and require the disclosure of exchange gains and losses included in net income. The Guideline, applicable for the Company in fiscal 2004, deals with the identification, documentation and designation and effectiveness






Under its 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 ($500 million as at August 31, 2004, increased to
$600 million subsequent to year end). There are also prescribed minimum liabilities
with individual counterparties, which have two-way recouponing provisions. The
Company was required to make net recouponing payments of $28.0 million during
2004 (2003–$3.0 million).

Further strengthening of the Canadian currency and/or
declining interest rates may result in further payments to counterparties.



The Company is subject to covenants under certain of the credit facilities referred
to above, including thresholds for leverage and interest coverage, and is also subject
to certain restrictions under negative covenants.
Principal payments of long-term debt, based on terms existing at August 31, 2004
over the next five years, are:
Year ending August 31, 2005 31,712
2006 9,726
2007 10,671
2008 10,546
2009 921,583















Hedging Relationships
The Company adopted CICA Accounting
Guideline 13, “Hedging Relationships,”
effective September 1, 2003. In accordance
with the new policy, the Company’s
hedging relationships are documented
and subject to effectiveness tests on a
quarterly basis for reasonable assurance
that they are and will continue to be
effective. The adoption of this guideline
had no impact on the financial statements.




8. INTEREST RATE AND FOREI GN CURENCY SWAP LIABILITIES
The Company has interest rate swaps and foreign currency interest rate swaps for
which it has not utilized hedge accounting or where the underlying debt has been extinguished
early. T he Company records these swaps at their fair value at each balance
sheet date. Changes in the fair value are charged or credited to earnings as interest rate
and foreign currency swap (gains) losses. T he following are the key terms and the fair
value of each swap. Certain swaps contracts with the same terms have been grouped.
For the year ended A ugust 31, 2007 the Company recorded net interest rate and
foreign currency swap gains of $16.0 million (2006 – losses of $138.6 million).
Interest 2007 Interest 2006
Rate (1) Rate (1)
Senior secured credit facility (2) – – 7.3% 422,249
Senior unsecured notes (3) – – 7.6% 277
Senior subordinated notes (4) 8.7% 829,800 8.5% 872,031
CanWest MediaWorks Limited Partnership
Secured Credit Facility (5) – – 5.3% 825,000
CanWest MediaWorks Limited Partnership
Secured Credit Facilities (6) 7.1% 841,170 – –
CanWest MediaWorks Limited Partnership
senior unsecured notes (7) 9.1% 75,000 – –
CanWest MediaWorks Limited Partnership
senior subordinated notes (8) 9.1% 422,480 – –
CW Media Holdings Inc. senior credit facility (9) 8.7% 471,518 – –
CW Media Holdings Inc. senior unsecured notes (10) 12.6% 315,429 – –
Bank loan AUS$245,000
(2006 – AUS$170,000) (11) 7.2% 211,043 6.6% 143,514
Senior unsecured notes US$125,000
(2006 – US$125,000) (12) 7.7% 132,050 7.2% 138,320
Senior notes AUS$150,000
(2006 – AUS$150,000) (13) 7.1% 129,210 6.8% 126,630
Other 3.0% 4,250 3.0% 4,250
3,431,950 2,532,271
Effect of foreign currency swap 170,757 104,937
Long-term debt 3,602,707 2,637,208
Less portion due within one year (12,760) (4,250)
Long-term portion 3,589,947 2,632,958
7. LON G-TERM DEBT
Notional Fair Notional Fair
Amount Value Amount Value
as at as at as at as at
Type of swap Maturity Aug. 31, 2007 Aug. 31, 2007 Aug. 31, 2006 Aug. 31, 2006
Floating to fixed
interest rate swaps November 2006 – – 50,000 237
Floating to fixed
interest rate swaps Various to August 2009 46,803 1,484 47,285 2,933
Floating to fixed
interest rate swaps November 2009 250,000 11,104 250,000 19,714
Floating to fixed
interest rate swaps Various to December 2014 219,657 (4,641) 219,492 (2,656)
(AUS$255,000) (AUS$5,375) (AUS$260,000) (AUS$3,147)
Floating to fixed foreign
currency swap Various to August 2009 514,828 139,348 520,135 119,288
Total net fair value 147,295 139,516
The total fair value is recorded on the
balance sheet as follows:
Total liabilities 151,936 142,172
Total assets (4,641) (2,656)
Total fair value 147,295 139,516








Interest rate and foreign currency swap losses (note 8) 15,955 (07) (138,639)




The changes in fair value of fair value
hedging derivatives will be recorded in the
income statement with a corresponding
gain or loss on the re-measurement of the
hedged item attributable to the hedge risk.
The impact of the hedging derivatives on
September 1, 2007 will be recognized in
opening deficit, and opening accumulated
other comprehensive earnings, as appropriate.
T he impact of the hedging derivatives
on the consolidated financial statements
on September 1, 2007 is estimated
to be a decrease in derivative instruments
of approximately $30.9 million, with a
corresponding decrease in opening accumulated
comprehensive earnings, net of
income taxes of approximately $10.0 million.
We have determined that there is no
material effect on retained earnings.
We are still evaluating the allowable
alternatives under the new standards on
the treatment of transactions costs directly
attributable to financial assets and
liabilities and as such we have not made a






INTEREST RATE AND FOREIGN CURRENCY SWAP LIABILITIES
The Company has entered into interest rate swaps and foreign currency interest rate swaps for
which it has not utilized hedge accounting as a result of the early extinguishments of the related
debt obligations. The Company records these swaps at their fair value at each balance sheet
date. Changes in the fair value is charged or credited to earnings as interest rate and foreign
currency swap losses. The following are the key terms and the fair value of each swap. Certain
swaps contracts with the same terms have been grouped.
Type of swap
Maturity
Notional
amount as at
Aug. 31, 2006
Fair Value
as at
Aug. 31, 2006
Notional
Amount
as at
Aug. 31, 2005
Fair value
as at
Aug. 31, 2005
Floating to fixed
interest rate
swaps
November
2006
50,000
237
150,000
2,265
Floating to fixed
interest rate
swaps
Various to
August 2009
47,285
2,933
32,764
3,494
Floating to fixed
interest rate
swaps
November
2009
250,000
19,714
250,000
32,129
Floating to fixed
interest rate
swaps
Various to
December
2014
219,492
(AUS$260,000)
(2,656)
(AUS$3,147)
254,490
(AUS$285,000)
2,264
(AUS 2,534)
Floating to fixed
foreign currency
swap
Various to
August 2009
520,135
119,288
618,559
174,923
Total net fair value 139,516 215,075
The total fair value is recorded on the balance sheet as follows:
Total liabilities 142,172 215,075
Total assets (2,656) -
Total fair value 139,516 215,075








Interest rate and foreign currency swap losses (note 8) (138,639) 06 (121,064) 05






Accounting for derivative instruments and hedging activities
Under U.S. GAAP, entities are required to recognize all derivative instruments as either
assets or liabilities in the balance sheet, and measure those instruments at fair value. The
changes in fair value of the derivatives are included in the statement of earnings. Under
Canadian GAAP hedge accounting is applied for derivatives that are eligible for hedge
accounting if certain criteria are met and non-hedging derivatives are recognized at their fair
value as either assets or liabilities. As a result of adopting FAS 133 on September 1, 2001,
the Company discontinued hedge accounting. The fair values of derivatives designated as
hedges before August 31, 2000 have been included in a transitional adjustment and are
included in income over the term of the hedged transaction. The U.S. GAAP reconciliation
reflects the recording of losses on interest rate and cross-currency swaps of: 2006 - $19,771
(2005 – gain of $3,315), with related tax recoveries of: 2006 - $7,920 (2005 – provision of
$18,624). The balance sheet effect was to increase long term swap liabilities by: 2006 -
$85,055 (2005 - $65,776), reduce future tax liabilities by: 2006 - $27,729 (2005 - $19,981)
and decrease minority interest by: 2006 - $1,525 (2005 – $1,393), and reduce shareholders’
equity by: 2006 - $55,801 (2005 - $44,402).






Proposed accounting policies
The Accounting Standards Board of the Institute of Chartered Accountants of Canada issued
CICA 3855, Financial Instruments - Recognition and Measurement, CICA 3865, Hedges, and
CICA 1530, Comprehensive Income, which will be applied by the Company for its fiscal years
beginning on September 1, 2007. CICA 3855 prescribes when a financial asset, financial
liability, or non-financial derivative is to be recognized on the balance sheet and the
measurement of such amount. It also specifies how financial instrument gains and losses are to
be presented. CICA 3865 is applicable for designated hedging relationships and builds on
existing Canadian GAAP guidance by specifying how hedge accounting is applied and what
disclosures are necessary when it is applied. CICA 1530 introduces new standards for the
presentation and disclosure of components of comprehensive income. Comprehensive income
is defined as the change in net assets of an enterprise during a reporting period from
transactions and other events and circumstances from non-owner sources. It includes all
changes in net assets during a period except those resulting from investments by owners and
distributions to owners. The Company is currently considering the impacts of the adoption of
such standards.







2,561,795 Canwest debt as nov 29


Hedging Derivative Instruments
During 2009, Canwest Media settled hedging derivative instrument related to its senior subordinated notes and received
cash proceeds of $104.8 million.
As a result of the failure to pay amounts due under the hedging derivative instruments, Canwest Limited Partnership was in
default of the terms of the hedging derivative instruments and the counterparties terminated the hedging arrangements
and demanded payment of Canwest Limited Partnership’s net obligations under those arrangements in the aggregate
amount of $68.9 million. Canwest Limited Partnership has not satisfied the demand for payment and has recorded this obligation
at its amortized cost in accounts payable and accrued liabilities accruing interest at the counterparty’s cost of funds
plus a margin. The liability is secured by substantially all the assets of Canwest Limited Partnership.




p32 annual report09
Revenue 2,867,459 3,126,582
Operating expenses 2,405,452 2,554,622
Restructuring expenses (note 8) 72,158 20,715
Broadcast rights write-downs 48,756 -
Retirement plan curtailment expense (note 24) 31,327 -
309,766 551,245
Amortization of intangible assets 7,978 9,040
Amortization of property and equipment 104,590 113,539
Other amortization 412 379


As at August 31, 2009, including the impact of the hedging derivative instruments, the Company holds $1,329.4 million
(2008 - $1,613.9 million) of debt subject to cash flow interest rate risk and $2,200.6 million (2008 - $1,861.1 million) of debt
subject to fair value interest rate risk.
Cash Flow Interest Rate Risk
As at August 31, 2009, if interest rates on long-term debt had been 10 basis points higher or lower with all other variables
held constant, after tax net earnings (loss) for the year would have been $0.8 million (2008 - $1.3 million) higher or lower,
respectively, as a result of higher or lower interest expense on long-term debt, including the effect of the foreign currency
and interest rate swap.
Fair Value Interest Rate Risk
As at August 31, 2009, assuming all other variables are held constant, a 25 basis point parallel shift in the Canadian and US
fixed yield curve would have resulted in a $6.7 million (2008 - $9.3 million) change in the fair value of the swap and no
change in the fair value of the long-term debt.






he Company has entered into an interest rate swap in the notional amount of $250 million to fix the interest payments on this revolving facility and subsequent
revolving facilities until November 2009, resulting in an effective interest rate of 6.7% plus a margin. As a result of debt repayments, a notional amount of $250
million (2003– nil) was overhanging as at August 31, 2004 (2003–nil) and its fair value was recognized in earnings. The Company has entered into an interest rate
swap to fix the interest payments on its Canadian dollar term loans, until maturity, with a notional value of $278.3 million (2003–$338.8 million), resulting in
an effective interest rate of 6.3% plus a margin. As a result of debt repayments, a notional amount of $256.5 million was overhanging as at August 31, 2004
(2003–$174.9 million) and its fair value was recognized in earnings. The Company has also entered into a cross-currency interest rate swap to fix its payments on
its U.S. dollar term loans, until maturity, with a notional value of $1,061.5 million (2003–$1,072.5 million), resulting in an effective interest rate of 6.4% plus a
margin and a fixed currency exchange rate of US$1:$1.5485. As a result of debt repayments, a notional amount of $305.0 million was overhanging as at August
31, 2004 (2003–$67.9 million) and its fair value was recognized in earnings. For the year ended August 31, 2004, total overhanging swap losses of $110.9 million
(2003–$23.0 million) were charged to earnings. The resulting overhanging swap liability as at August 31, 2004 was $120.3 million (2003–$24.6 million).
3 The US$200.0 million senior unsecured notes mature on April 3, 2013 and bear interest at 7.625%. The notes are redeemable at the Company’s option, in whole at
any time or in part from time to time, on or after April 15, 2008. The Company has entered into a US$200 million cross-currency interest rate swap resulting in floating
interest rates on its senior unsecured notes at interest rates based on CDOR plus a margin and a fixed currency exchange rate of US$1:$1.4735 until May 2013.
4 The senior subordinated notes include loans of US$425.0 million and loans held by the majority shareholder of the Company in the amount of US$41.9 million
(2003–US$41.9 million) which mature on May 15, 2011 and bear interest at 10.625%. The notes rank junior to the Company’s senior credit facility and are
guaranteed by certain subsidiaries of the Company. The notes are redeemable at the Company’s option, in whole at any time or in part from time to time,
on or after May 15, 2006. The Company has entered into a US$425 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:$1.5505.