- Canadian publisher pushes out first-lien debt due date to 2021
- Swaps second-lien notes for equity and issues new 2023 debt
Canada’s biggest newspaper chain proposed a debt restructuring plan aimed at buying it more time to turn its business around amid the global plunge in print advertising revenue.
Postmedia Network Canada Corp. is pushing out the maturity dates for some of its debt, while swapping out the rest of its debt for equity in a proposed restructuring plan that would reduce the amount it owes by around C$307 million ($236 million).
Toronto-based Postmedia has struggled to recover from the plunge in print advertising revenue that has shaken the global publishing industry. Chief Executive Officer Paul Godfrey has fired staff and merged some papers in a race to cut costs, calling the U.S. dollar debt a “noose” around the company’s neck.
The newspaper owner is extending the maturity on its first-lien notes due in August 2017 to July 2021 and has reduced the amount outstanding to C$225 million by repaying C$78 million, the company said in a statement. It’s also swapping $268.6 million of second-lien notes due in July 2018, owned by investors such as Allianz SE and RiverPark Advisors LLC, for 98 percent of the shares in the company. Postmedia is also issuing C$110 million in new U.S. dollar-denominated second lien secured notes due July 2023. Existing equity shareholders, which include Goldentree Asset Management LP according to data compiled by Bloomberg, will hold 2 percent of the shares after the deal.
“The company recognizes the dilution of the existing shareholders but believes the overall transaction is in the best interests of the company,” Godfrey said on a conference call.
Chatham, New Jersey-based Chatham Asset Management was one of the second-lien noteholders that participated in the deal, Godfrey said, but he declined to say who else did. Goldentree was “not involved at all,” he said. Goldentree had previously initiated a sales process for the equity stake, according to a person familiar.
A spokesman for Chatham Asset Management declined to comment on the transaction.
Shares of Postmedia’s more-liquid class B variable voting shares jumped as much as 133 percent and were up 100 percent to 3 Canadian cents a share at 4 p.m. in Toronto trading. The stock is down 85 percent in the past year.
Postmedia also announced it has entered into support agreements with Canso Investment Counsel Ltd., which owns 82 percent of the outstanding first-lien notes, certain holders of 80 percent of the outstanding second-lien notes, and certain holders of 75 percent of the outstanding shares of the company. Existing shareholders will own 2 percent of stock after recapitalization.
The company reported third-quarter earnings Thursday, with a net loss of C$23.7 million, compared to a loss of C$140.8 million in the same period last year.