TORONTO: Canada’s Corus Entertainment Inc warns that it may soon breach its debt covenants and is planning more restructuring as advertising revenue spirals downward.

Its shares plunged to a record low.

Analysts advised shareholders to get out before the company is recapitalised.

Adam Shine, an analyst at National Bank Financial, cut his price target to one Canadian cent.

“It’s hard for us to ascribe any remaining value for equity holders,” he wrote. TD Cowen chopped its target to five Canadian cents.

Corus fell 23% to close at 15.5 Canadian cents in Toronto on Monday.

The television broadcaster issued a so-called “going concern” warning in quarterly financial results that disappointed analysts.

Toronto-based Corus reported revenue of C$332mil in the financial quarter ended May 31, a 16% drop from a year earlier.

The decline in advertising revenue and profitability and the possibility that it will be offside on covenants by September “cast significant doubt about the company’s ability to continue as a going concern, and therefore the company may be unable to realise its assets and discharge its liabilities in the normal course of business”, Corus said in a filing.

The company, which has about C$1bil in long-term debt, is about to lose the rights to key programming and trademark deals with Warner Bros Discovery Inc.

The channels, which include HGTV and The Food Network, are highly profitable, but rival Rogers Communications Inc will have the Canadian rights as of January.

Corus will carry on with new programming under different brands.

Corus, which has cut hundreds of jobs recently, needs “a much more aggressive cost-cutting drive”, Scotiabank analyst Maher Yaghi wrote in a note to investors on Monday.

Executives told analysts that they’re in the process of eliminating 800 jobs, with 500 completed and 300 more to come.

“The loss of high-margin advertising revenues remains very difficult to offset,” Yaghi wrote.

 - Bloomberg