Canwest shares worthless, to be avoided -analysts

(In U.S. dollars unless noted)

By Wojtek Dabrowski

TORONTO, April 13 (Reuters) - Shares of Canwest Global Communications CGS.TO are essentially worthless and should be avoided by investors as Canada's biggest media company fights to restructure its massive debt amid a severe advertising downturn, analysts said on Monday.

Canwest has another debt deadline looming on Tuesday, by which time it must pay $30.4 million in interest to holders of its 8 percent senior subordinated notes. The payment was originally due March 15, but the company missed it.

If it doesn't pay on Tuesday, the investors can demand the repayment of about $761 million of outstanding principal on the notes. This could further exacerbate the crisis facing the company.

"Given the significant liquidity challenges facing the company, we see no residual value in the shares of Canwest," BMO Capital Markets analyst Tim Casey wrote in a note to clients.

While critical, the looming 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.

The company is in talks with both the noteholders and its banks to restructure its debtload and recapitalize its balance sheet. Meanwhile, lenders have clamped down on the amount of credit they are willing to advance to the company.

"Based on these major liquidity challenges, it seems unlikely to us that Canwest can continue in its current form," Casey wrote, adding that timely and successful asset sales also seem unlikely.