Shares of Canwest Global Communications 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 Monday.

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

If it doesn't pay 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 $3.7 billion (Canadian), 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.

The recession continues to severely depress the advertising market, which is the lifeblood of Canwest's stable of newspapers and television stations. It has also dampened the appetites of potential buyers of Canwest's assets.

Canwest owns a chain of Canadian daily newspapers, including the flagship National Post, as well as Canada's Global TV network. It also has television operations in Australia, through its stake in Network Ten.

Last week, Canwest posted a net loss of $1.44 billion for the three months ended Feb. 28. This included a $1.19 billion writedown related mostly to its publishing operations.

"We see no compelling reason to own, let alone buy Canwest shares, which we would continue to avoid," National Bank Financial analyst Adam Shine wrote in a note.

Analysts have previously said that Canwest could file for bankruptcy protection, but the company thus far has continued to negotiate with its creditors rather than involve the courts.

"We continue to believe there is significant risk Canwest is forced into bankruptcy protection or to sell assets at unfavourable prices or a massive debt restructuring," GMP Securities analyst Jason Jacobson wrote to clients.

"Either way, we believe Canwest equity value is very limited." His target price on the shares is zero.

A Canwest spokesman had no comment on the status of the creditor talks Monday.

A HISTORY OF DEBT

Canwest is considering selling five conventional TV stations and has agreed to sell its stake in sports broadcaster Score Media. It has already sold the New Republic magazine in the United States to a group of private investors.

However, no large-scale asset sale that would make a significant dent in Canwest's debtload has materialized so far.

A big part of its debt dates back to the $3.2 billion newspaper acquisition from Hollinger International in 2000.

The deal made Canwest the country's biggest publisher of daily newspapers. It included 13 big-city dailies as well as 126 community newspapers, Internet assets and a 50 per cent stake in the National Post. The company later bought full control of the Post.

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In 2007, Canwest expanded its television holdings by partnering with an affiliate of U.S. investment bank Goldman Sachs to buy specialty-TV group Alliance Atlantis Communications for $2.3 billion.

Canwest is controlled by the Asper family of Winnipeg. In November, it cut 560 jobs at its newspapers and television stations to slash costs and cope with the advertising slowdown.

Canwest shares were down 1.5 cents at 30.5 cents on the Toronto Stock Exchange Monday.