Attention: John Maguire, Chief Financial Officer
EXECUTION
COPY
The
Bank of Nova Scotia
Scotia
Plaza
00
Xxxx Xxxxxx Xxxx
Xxx
0000, Station “A”
Toronto,
Ontario
Canada
MSW 2X6
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Xxxxxxx
Media Inc.
000
Xxxxxxx Xxxxxx
XxxXxxx
Global Place
31st
Floor
Winnipeg,
Manitoba
R3B
3L7
Xxxx
Xxxxxxx, Chief Financial Officer
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Re:
Lending Arrangements
We refer to the Credit Agreement dated as of 13 October 2005 between
Canwest Media Inc. as Borrower (the “Borrower”), the Guarantors
party thereto from time to time as Guarantors (collectively, the “Guarantors”), the Lenders
party thereto from time to time as Lenders (collectively, the “Lenders”) and The Bank of Nova
Scotia, in its capacity as Administrative Agent (the “Administrative Agent”), as
amended from time to time to the date hereof (the “Credit Agreement”). All
capitalized terms not defined herein shall have the meaning given to them in the
Credit Agreement.
Pursuant
to a waiver letter dated February 27, 2009 as amended by a waiver amendment
letter dated March 4, 2009 (the “Waiver Letter”), the
Administrative Agent on behalf of the Lenders (acting with the prior consent of
the Required Lenders) waived until March 11, 2009 (i) the Events of Default
arising as a result of certain breaches of the Credit Agreement, and (ii) the
requirement, if any, that the Borrower deliver written notice in the form of
Schedule A to the Credit Agreement in respect of any Advance made under the
Swingline Availability (collectively, the “Waivers”).
Annexed
hereto as Schedule “A” is a Revised Weekly Cash Flow Forecast for the period
from February 2, 2009 to July 5, 2009. The Borrower hereby represents and
warrants that the contents of the attached and of this letter have been
expressly approved by the full board of Canwest Global Communications Corp.
acting on the recommendation of the Special Committee.
The
Borrower has requested that the Lenders extend the Waivers until April 7,
2009.
1.
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The
Borrower has agreed that:
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(a)
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during
the period up to and including April 7, 2009, the Borrower (i) will make
no expenditures that vary in any material respect from the Revised Weekly
Cash Flow Forecast attached as Schedule “A” hereto, (ii) will not seek
Advances other than to fund such expenditures, and (iii) upon requesting
any Advance will be deemed to represent and warrant that such Advance will
be used solely to fund such expenditures and any breach of any of these
commitments shall entitle the Required Lenders to declare an immediate
Event of Default;
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1
(b)
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the
Borrower shall irrevocably direct any person obligated to pay any Net Cash
Proceeds referred to in Section 2.5(1) of the Credit Agreement (including
the amounts referred to in Paragraph (b) of the waiver letter dated
February 27, 2009) otherwise payable to the Borrower or to any of the
Global Group Entities to pay such Net Cash Proceeds to the Administrative
Agent on behalf of the Lenders, which Net Cash Proceeds shall (i) be
applied to repay any Loans outstanding under the Credit, and (ii)
permanently reduce the Credit by the amount of such Net Cash Proceeds. To
the extent that the Net Cash Proceeds received by the Administrative Agent
in accordance with this paragraph exceed the Loans outstanding under the
Credit, such excess shall be held by the Administrative Agent in a special
deposit account (the “Deposit Account”) to be
held pursuant to a deposit account agreement to be in form and substance
satisfactory to the Administrative Agent on behalf of the Lenders (the
“Deposit
Agreement”) and to be released to the Borrower only with the
consent of the Majority Lenders;
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(c)
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except
as provided below, the Borrower shall irrevocably direct that any amount
otherwise payable to Canwest Global Communications Corp. (“Canwest”) pursuant to
any award by the arbitrator appointed in respect of the dispute (the
“Dispute”) between
Canwest and Sun-Times Media Group, Inc. (“Xxxxxxxxx”) in relation
to the unresolved adjustments and claims associated with Canwest’s
acquisition of certain newspaper assets from Xxxxxxxxx (the “Arbitration Proceeds”)
be paid to the Administrative Agent on behalf of the Lenders.
Notwithstanding the foregoing, Canwest shall be entitled to pay to Canwest
Publishing Inc. (“Publishing”) $3,500,000
of the Arbitration Proceeds in satisfaction of Publishing’s claim against
Xxxxxxxxx as part of the Dispute. The Arbitration Proceeds (other than the
$3,500,000 that may be paid to Publishing) shall be held by the
Administrative Agent in the Deposit Account pursuant to the Deposit
Agreement and released to the Borrower only with the consent of the
Majority Lenders; and
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(d)
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the
Borrower shall pay to the Administrative Agent on behalf of the Lenders
concurrently with the execution and delivery of this letter an amendment
fee in the amount CAD$1,120,000 to be allocated among the Lenders on a
pro rata basis of
their respective Commitments.
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2.
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The
Borrower, the Guarantors and the Administrative Agent on behalf of the
Lenders (acting with the prior consent of the Required Lenders) have
agreed that Section 9.3 of the Credit Agreement is hereby amended by
adding the following Subsection
9.3(5):
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“(5)
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Each
Lender acknowledges and confirms that the Administrative Agent is entitled
to rely on the deemed representations and warranties of the Borrower given
from time to time, including without limitation the deemed representations
and warranties referred to in Section l(a) of the waiver amendment letter
in respect of the Credit Agreement dated March 11, 2009, and the
Administrative Agent will be under no obligation to make any further
inquiry with respect to such representations and
warranties.”
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3.
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The
Administrative Agent on behalf of the Lenders (acting with the prior
consent of the Required Lenders)
hereby:
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(a)
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waives
until April 7, 2009 (i) the Events of Default that arise as a result of
the breaches of Sections 7.1(1), 7.1(2) and 7.1(3) of the Credit Agreement
(as described in the Waiver Letter), (ii) any Event of Default that arises
as a result of the non-payment by the Borrower of interest payable on
March 15, 2009 pursuant to the 8% Senior Subordinated Notes due 2012 (the
“March 15 Bond Interest
Payment”), and (iii) the requirement, if any, that the Borrower
deliver written notice in the form of Schedule A to the
Credit
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2
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Agreement
in respect of any Advance made under the Swingline Availability, and
agrees that the Borrower shall not be deemed to have delivered any such
written notice in respect of any Advance under the Swingline Availability;
and
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(b)
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agrees
that notwithstanding any other provision of this letter or the Credit
Agreement, at the option of the Borrower, the Swingline Availability may
be utilized by the Borrower by requesting that L/Cs in Canadian Dollars
only be issued by the Issuing Bank, provided that the aggregate face
amount of L/Cs issued on and after the date hereof and outstanding under
the Credit at any time shall not exceed $200,000. All other terms and
conditions of the Credit Agreement with respect to L/Cs shall continue to
apply to such L/Cs issued on or after the date hereof, including, without
limitation, the participation of each Lender in each
L/C.
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4.
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The
Borrower and Guarantors acknowledge and agree
that:
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(a)
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Unless
a further written waiver is provided by the Majority Lenders in accordance
with the terms of the Credit Agreement, the above waiver will terminate on
April 7, 2009 and therefore on April 8, 2009 (i) there will be a breach of
the financial covenants set forth in Sections 7.1(1), 7.1(2) and 7.1(3) of
the Credit Agreement, (ii) the Borrower and the Guarantors will not be in
a position to cure such breach, and (iii) there will occur an immediate
Event of Default, all without any requirement for further action on the
part of the Administrative Agent or the
Lenders.
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(b)
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The
above waiver is given solely for the purpose of waiving the Events of
Default that result from the breaches of the provisions of Sections
7.1(1), 7.1(2) and 7.1(3) of the Credit Agreement on or before April 7,
2009 and any Event of Default that arises as a result of the non-payment
by the Borrower of the March 15 Bond Interest Payment and shall not
constitute a waiver of (i) any other term or provision of the Credit
Agreement or the Waiver Letter, or (ii) any other Default or Event of
Default (whether known or unknown). The Lenders reserve all of their
rights and remedies at any time and from time to time in connection with
any other Defaults or Events of Default now existing or hereafter arising,
and whether known or unknown. Without limiting the foregoing, this letter
is not Majority Lender consent to any use of the Credit in addition to the
Swingline or any use of any restricted deposits (that are subject to the
Deposit Agreement or the deposit agreement referred to in the Waiver
Letter) that may be contemplated by the Revised Weekly Cash Flow Forecast
attached as Schedule “A”.
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(c)
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The
Credit Agreement and the Waiver Letter have not been amended or modified
except as contemplated herein, and the Credit Agreement, the Waiver Letter
and the other Loan Documents remain in full force and effect and continue
to be enforceable against the Borrower and each of the
Guarantors.
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[Continued
on Next Page]
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The above
waiver is subject to the condition precedent that a fully executed copy of this
letter signed by the Borrower and all of the Guarantors (other than the
Guarantors listed on Schedule “B” hereto) shall he provided to the
Administrative Agent by not later than 5:00 p.m. (Toronto Time) on March 11
2009). The Borrower agrees that it shall cause the Guarantors listed on Schedule
“B” to deliver a fully executed copy to the Administrative Agent by not later
than 5:00 p.m. (Toronto Time) on March 13, 2009, failing which an immediate
Event of Default will occur without any requirement for further action on the
part of the Administrative Agent or the Lenders.
Yours
truly,
THE
BANK OF NOVA SCOTIA, as Administrative Agent on behalf of the
Lenders
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Per:
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/s/
Xxxxx Xxxxxxx
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Name:
Xxxxx Xxxxxxx
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Title:
Associate Director
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Per:
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Name:
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Title:
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[Additional
Signature Pages to Follow]
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SCHEDULE
“A”
REVISED
WEEKLY CASH FLOW FORECAST
See
attached.
Canwest
has redacted the weekly cash flow forecast, which, if disclosed, would be
seriously prejudicial to its
interests.
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SCHEDULE
“B”
GUARANTORS
None