Canwest considers divesting assets as credit line tightens

The financial screws appear to be tightening on Canwest Global Communications.

The company says its Canwest Media division may not be able to comply with debt obligations for its fiscal second quarter, which runs from December through February.

The Winnipeg-based owner of the Global television network, the National Post and an array of big-city Canadian daily newspapers says it believes it will be able to continue to operate normally through the present quarter.

In a statement, however, Canwest says it will "actively pursue opportunities to divest of non-core operations and assets."

Monday's announcement follows Canwest's mid-January disclosure that Canwest Media was in danger of violating its debt obligations.

"Since that announcement, there has been a further deterioration in the Canadian economy, including in the retail sector, which has negatively affected some of the company's business units beyond what was originally forecast," Canwest stated.

It says, however, that it's reached a deal with its lenders to waive certain borrowing conditions, but also to limit borrowing on a line of credit to $20 million until Feb. 27.