The Bank of Nova Scotia Scotia Plaza 40 King Street West Box 4085, Station “A” Toronto, Ontario Canada M5W 2X6
EXECUTION
COPY
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The
Bank of Nova Scotia
Scotia
Plaza
00
Xxxx Xxxxxx Xxxx
Xxx
0000, Station “A”
Xxxxxxx,
Xxxxxxx
Xxxxxx X0X
0X0
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000
Xxxxxxx Xxxxxx
XxxXxxx
Global Place
31st
Floor
Winnipeg,
Manitoba
R3B 3L7
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Attention:
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Xxxx
Xxxxxxx, Chief Financial Officer
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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.
Section
7.1(1) of the Credit Agreement provides, among other things, that the Borrower
shall at all times during the period from 1 March 2009 to 31 May 2009 maintain a
Total Leverage Ratio of not greater than 6.50 to 1.00.
Section
7.1(2) of the Credit Agreement provides, among other things, that the Borrower
shall at all times during the time period 31 August 2008 and thereafter maintain
a Senior Secured Leverage Ratio of not greater than 2.00 to 1.00.
Section
7.1(3) of the Credit Agreement provides, among other things, that the Borrower
shall at all times during the time period 1 March 2009 to 27 February 2010
maintain an Interest Coverage Ratio of not less than 1.50 to 1.00.
The
Borrower has advised the Administrative Agent that (i) the Total Leverage Ratio
and the Senior Secured Leverage Ratio exceed the applicable maximum ratios set
forth above, and (ii) the Interest Coverage Ratio is less than the minimum ratio
set forth above.
The
Borrower has requested that the Lenders provide a temporary waiver until March
11, 2009 of (i) the Events of Default that arise as a result of the breaches
described above, 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 and agree that the Borrower
shall not be deemed to have delivered any such written notice in respect of any
Advance under the Swingline Availability. The Borrower, on behalf of itself and
the Guarantors, has consented to the retention by legal counsel to the
Administrative Agent of Ernst & Young Inc. as a financial
advisor.
1
This is
to confirm that the Borrower, the Guarantors and the Administrative Agent on
behalf of the Lenders (acting with the prior consent of the Required Lenders)
have agreed as follows:
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(a)
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Section
2.1(1) of the Credit Agreement is hereby amended as of the date hereof by
replacing $300,000,000 with
$112,000,000.
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(b)
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Section
2.5(1) of the Credit Agreement is hereby amended as of the date hereof by
deleting Subsections 2.5(1)(b) and 2.5(1)(d), provided however that any
amounts that would have otherwise permanently reduced the Credit pursuant
to Subsections 2.5(1)(b) and 2.5(1)(d) but for the amendments in the above
paragraph (a) and this paragraph (b) will be applied to the Advances
outstanding under the Credit and will temporarily reduce the amount of the
Credit by such amounts unless otherwise agreed by the Administrative Agent
with the consent of the Required
Lenders.
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(c)
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The
Borrower has committed that during the period up to and including March
11, 2009 the Borrower (i) will make no expenditures that vary in any
material respect from the Weekly Cash Flow Forecast attached as Schedule
“A” hereto, and (ii) will not seek Advances other than to fund such
expenditures, and any breach of this commitment shall entitle the Required
Lenders to declare an immediate Event of
Default.
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(d)
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The
Borrower has committed that during the period up to and including March
11, 2009 in the event that any existing Swap Transaction to which the
Borrower is a party is terminated, any payments received by the Borrower
on account of or in connection with such termination shall be applied to
repay any Loans outstanding under the
Credit.
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(e)
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Section
2.6(1) of the Credit Agreement is hereby amended as of the date hereof so
as to provide that if the Total Leverage Ratio is greater than 6.50 to 1,
interest rates, Banker’s Acceptance Fees and Standby Fees are as
follows:
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Applicable
Margin for
Prime
Rate Advances and Base Rate Advances
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BA
Fees, L/C Commissions and Applicable Margin for LIBOR
Advances
(%
per annum)
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Standby
Fee
(%
per annum)
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6.75%
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7.75%
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2.00%
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(f)
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For
the purposes of Section 2.6(2) of the Credit Agreement only, the Borrower
is deemed to have delivered a Compliance Certificate as of February 28,
2009 to the effect that the Total Leverage Ratio is greater than 6.50 to 1
and the interest rates, Banker’s Acceptance Fees and Standby Fees shall be
adjusted accordingly as of March 1,
2009.
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(g)
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Section
10.10(1) of the Credit Agreement is hereby amended as of the date hereof
by replacing 2.0% and 2% with
8.75%.
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The
Administrative Agent on behalf of the Lenders (acting with the prior consent of
the Required Lenders) hereby waives until March 11, 2009 (i) the Events of
Default that arise as a result of the breaches described above, 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 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.
2
The
Borrower and Guarantors acknowledge and agree that:
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(a)
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Unless
a further written waiver is provided in accordance with the terms of the
Credit Agreement, the above waiver will terminate on March 11, 2009 and
therefore on March 12, 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 will 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 March 11,
2009 and shall not constitute a waiver of (i) any other term or provision
of the Credit Agreement, 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.
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(c)
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The
Credit Agreement has not been amended or modified except as contemplated
herein, and the Credit Agreement 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]
3
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 be provided to the
Administrative Agent by not later than 5:00 p.m. (Toronto Time) on February 27,
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 3, 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,
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THE
BANK OF NOVA SCOTIA, as Administrative Agent on behalf of the
Lenders
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Per:
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/s/
X. X. Xxxxx
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Name:
X. X. Xxxxx
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Title:
Managing Director
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Per:
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/s/
Xxxxxxx Xxxxxx
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Name:
Xxxxxxx Xxxxxx
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Title:
Associate Director
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[Additional
Signature Pages Follow]
4
SCHEDULE
“A”
WEEKLY
CASH FLOW FORECAST
See
attached.
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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
Canwest
International Communications Inc.
Canwest
Irish Holdings (Barbados) Inc.
Canwest
International Management Inc.
