Canada’s largest media company dodged the bullet with its lenders again yesterday, but the mounting pressure to restructure debt of nearly $4B, and missed deadlines to make interest payments is making as many waves in the banking community as it is in Tory blue Ottawa. Yesterday, Canwest Global Communications Corp. announced that its subsidiary, Canwest Media Inc. has received a further debt repayment extension  with the members of an ad hoc committee of 8% noteholders ” who hold approximately 70% of the outstanding debt.

CMI failed to make its March 15, 09 interest payment of approximately US$30.4M relating to its outstanding 8% senior subordinated notes. Under the terms of the notes, failure to make this interest payment on or before April 14, would permit the 8% noteholders to demand payment of the approximately US$761M principal amount outstanding as well as the unpaid interest payment and associated default interest. Under the terms of today’s extension agreement, noteholders have agreed not to demand payment of their notes until April 21, to coincide with the expiry date of CMI’s waiver agreement with its senior lenders.

While critical, the interest payment is only the tip of the iceberg for Winnipeg, Manitoba-based Canwest, which has a debtload of about C$3.7 billion ($3.03 billion), some of it dating back to its 2000 acquisition of newspaper assets from Hollinger International.

CMI continues discussions with its senior lenders and noteholders to develop a framework for a potential recapitalization transaction and to secure the necessary extensions to allow the recapitalization process to proceed.

Canwest also announced that Canwest Limited Partnership has initiated discussions with its senior lenders with respect to an amendment of the financial covenants under its senior credit facility to enable Canwest Limited Partnership to maintain compliance with these financial covenants through the remainder of fiscal year.

While critical, the interest payment is only the tip of the iceberg for Winnipeg, Manitoba-based Canwest, which has a debtload of about C$3.7 billion ($3.03 billion), some of it dating back to its 2000 acquisition of newspaper assets from Hollinger International. Earlier this month, the company took a $1.2B  writedown on its newspaper assets that have been hard hit by a slump in advertising largely caused by the current economic conditions. It is the second time CanWest has taken a writedown at a time when many media companies are lowering the book value on assets due to reduced predictions of future revenue. CanWest wrote down the value of its TV assets a few months ago, while rival CTV also booked a $1.7B  writedown on its broadcast operations.