Leonard Asper's memo to staff Oct. 6
Good morning:
By working with our major debt holders, we have developed a pre-packaged financial restructuring plan that is intended to minimize business disruption and preserve the value of our operations. In order to implement this strategy, we took action today to strengthen certain business units by voluntarily filing for creditor protection under the Companies' Creditors Arrangement Act (CCAA).
This controlled and orderly financial restructuring plan will provide a renewed financial outlook for these business units and put them on a stronger footing for the future. This is called a strategic filing because it has the support of our major debt holders and it means that we can quickly implement our restructuring plan with the goal of completing this work in four to six months.
Most importantly in all of this is that for you, your salary, benefits and pension remain the same, your reporting and the management of your operation also remains the same. We have worked to ensure that our financial restructuring plan minimizes - to the extent possible - the disruption to you and the operations.
But we have also had to make some difficult decisions that impact some suppliers and past employees. We have done this after careful consideration and consultation with our legal and financial advisors, and have determined that this path best protects and strengthens Canwest's long-term value. We regret the impact today's filing will have on them.
Let me stress that this is not a bankruptcy. CCAA is creditor protection that will provide the time and stability to complete a financial restructuring which will make our business units stronger industry competitors with a renewed financial outlook. It is a process that companies such as Cadillac Fairview, Air Canada, and Stelco have successfully used to financially restructure their businesses. In each case, these companies continued to operate - aircraft continued to fly and steel continued to be produced - through the restructuring process and the companies emerged stronger and more stable.
I know that this may create some personal anxiety but we are confident that these businesses will emerge more stable, competitive and ready to take advantage of the Canadian economy as it begins to improve.
Only certain Canwest business units are impacted, including: Canwest Global Communications Corp., Canwest Media Inc., Canwest Television Limited Partnership including Global Television, MovieTime, DejaView and Fox Sports World as well as The National Post Company.
It does not include: CW Media's stable of specialty channels that we purchased from Alliance Atlantis, TVtropolis, Mystery TV or Men TV. Nor does it include Canwest Limited Partnership (the LP) - our Canadian publishing and associated online and mobile operations - as it continues to work with its creditors.
We've created a number of tools and FAQs to help you better understand this process and its impacts on you, our customers, advertisers and our suppliers. These documents, along with a complete listing of properties covered by and outside the filing can be found in the Business Update section on CanwestConnects and at www.canwest.com.
Let me quickly say that this process is not going to lead to significant job losses. We've all worked hard over the last year to help align our operating costs with our revenues and I believe we have done the bulk of that work already. We will continue to make business decisions where they make sense for the long term health of the Company but this financial restructuring does not contemplate any interruption of our business operations. In fact, maintaining customer relationships through your service and by meeting their needs, as you always have is crucial to a successful financial restructuring.
Employee wages and benefits will continue to be paid and reporting relationships will remain the same as the Company continues to be operated by senior management with the oversight of the Board of Directors. We have requested and are waiting for Court approval on up to $100-million debtor in possession (DIP) financing that carry these business units through our restructuring process. The day to day operations of the Publishing Group (Canwest Limited Partnership) and our specialty channel operations that make up CW Media will continue as usual. In all cases, the current economic climate continues to require ongoing operating discipline.
Like all media companies, Canwest's financial performance has been adversely affected by current economic and financial market conditions, including a precipitous and unprecedented decline in advertising revenues. There is no doubt that in this environment, Canwest had too much debt.
However, you should not confuse operational excellence with our balances sheet issues. Our underlying operations are strong and our brands continue to dominate in their markets. The innovation and creativity that each of you brings to Canwest has made us a recognized industry leader.
For months we have been working to develop a longer-term restructuring plan. This filing presents an opportunity to renew our financial outlook and to put us on a stronger financial footing. This plan will make us a stronger competitor. We will move as quickly as possible through this process but in an orderly and controlled way so as to minimize any disruption to our business relationships and protect the markets and customers that we have worked so hard to earn.
Each of you can play an important part in our success by staying focused on the job at hand, whether it is producing compelling content, selling advertising or finding innovative ways to reach new audiences. The more we are supported by our suppliers and customers during the restructuring period, the sooner and the stronger we can emerge from the process. This will set the stage for our opportunity to grow together as the economy improves.
Thank you again for your great work. I know that this may feel scary but it needn't be. We have done everything possible to minimize the disruption to you, our customers and suppliers. It is a plan that will build on our strengths and ensure that we continue to meet the needs of the 20 million Canadians who count on Canwest for their news, information and entertainment.
We do good work and we also continue to push the boundaries through our innovation, creativity and excellence. This plan will put us on a stronger footing for the future with a renewed financial outlook. We've made the investments to prepare Canwest for the future, and I know that Canwest has the tools, the talent and the resolve to set the pace for all media companies. I also look forward to responding to more of your questions and comments at our town hall next week.
Leonard