Canwest Global Communications Corp. has agreed to sell its publishing
division to a group of creditors led by Canwest president and CEO Paul
Godfrey for $1.1 billion, The National Post reports.
In a press release Canwest said the new ownership plans to “maintain all existing newspaper operations” across the chain, which includes the National Post, The Gazette in Montreal, The Edmonton Journal, The Province in Vancouver and the Ottawa Citizen, along with several community papers.
The newspapers will be operated under a new company that is publicly
traded, headed by Godfrey as president and CEO.
The company “will provide continuing employment to all existing full time employees and substantially all part time employees” of the newspaper division, the release said. “In addition the new company will maintain all employee pension and benefit plans.”
The $1.1-billion buyout, made by a group of unsecured creditors, was largely backed by New York hedge fund Gold Tree Asset Management (which owns 30% of the division’s unsecured debt). The bid beat out a competing offer from Torstar Corp.
The Globe and Mail reports:
“The offer includes $950-million in cash funding, and was determined to be the winning bid because it included more cash than the other potential suitors were willing to offer.”
“A bid backed by Torstar and insurance company Fairfax Financial was the favourite heading into the final week of bidding, but the unsecured creditors knocked out that bid by offering up considerably more cash.
“We took a hard, long look at this opportunity,” Torstar chief executive officer David Holland said in a statement. “In the end, the successful price was well beyond what we were prepared to pay. We wish the new owners well.”
“Mr. Godfrey, a former executive at Sun Media who in recent years had helped run CanWest’s National Post newspaper, had been part of a failed bid to buy the papers two months ago. That bid never made it to the final round of bidding because it didn’t have the cash to meet a minimum $300-million the banks selling the papers were seeking.
“In the memo on Monday, Mr. Godfrey referred to the global economic downturn and the shrinkage in advertising revenues that have posed serious challenges to newspapers everywhere.
“Times such as this inevitably mean change, of course,” he wrote. “We must continue to innovate and to work to transform what was a traditional newspaper company to a culture embracing the opportunity of a digital world.”
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