on alert
Canadian TV presenter
Corus Entertainment Inc.
is approaching a restructuring that
capital, according to people familiar with the matter.
The company is working on
debt restructuring plan, which
will result in creditors receiving a mixture
the people said, speaking on condition of anonymity because the matter is still private. They said it could be announced within the next few weeks, although the timing could still change.
The deal will give bondholders the opportunity to make further changes to the business.
Canadian television and radio networks
which have suffered for years from declining revenues and profits. There is also the potential to sell assets such as real estate, one of the people said. Corus has made significant cost cuts in recent years, including in its newsroom.
Alberta technically controls Corus through its unlisted voting shares. But for more than a year, the stock has been trading on the basis that a balance sheet restructuring is imminent. All other analysts covering the stock have price targets close to zero. Corus shares were trading at nine Canadian cents in Toronto on Wednesday afternoon.
Like many traditional broadcasters, Corus's business model is under pressure from streaming services and declining interest in traditional TV advertising.
The company's lack of financial stability has also left it vulnerable in content deals. Last year, Corus lost rights to key programming and trademark deals with Warner Bros Discovery Inc., which included HGTV and The Food Network.
Toronto-based Corus had $1.08 billion in long-term debt at the end of May, including $750 million in unsecured notes – currently trading at about one-third of their face value, according to data compiled by Bloomberg.
is the main bondholder, the people said.
Corus and Kanso declined to comment.
Corus reported revenue of $895 million for the nine-month period ended May 31, down 11% from the same period a year earlier, and a pretax loss of about $35 million.
But television networks are profitable, and a restructured Corus could potentially generate more than $500 million in equity value, the people said.
Lenders are working with Canaccord Genuity Group and Jefferies Financial Group is advising Corus.
Telecommunications and media company Quebecor Inc. last year made an offer to acquire Corus, but would require a significant discount from creditors. Nothing came of it.
Quebecor chief executive Pierre Karl Péladeau said in a recent interview that he was considering expanding beyond the French-speaking province of Quebec and that Corus would be an ideal fit.
“We continue to say that it makes a lot of sense for Corus as a company to be part of a larger asset-based company that does the same thing,” Péladeau told Bloomberg News.
“We can do a lot to help the company survive,” he added. “It's true. It's not tomorrow, it's not next month. But if they don't do anything, it's a matter of survival.”
