Godfrey, Bondholders Surpass Torstar With $1.1 Billion Offer for Canwest
Canadian media executive Paul Godfrey and a group of bondholders agreed to buy Canwest Global Communications Corp.’s newspaper chain for C$1.1 billion ($1.1 billion), beating an offer from rival Torstar Corp.
Godfrey, former chief executive officer of the National Post newspaper, and a group of creditors topped a C$925 million minimum bid from lenders including Bank of Nova Scotia, and an offer from Torstar, owner of the Toronto Star, in a court- monitored a auction.
“The successful price was well beyond what we were prepared to pay,” Torstar President David Holland said in a statement late yesterday. “We wish the new owners well.”
Canwest, based in Winnipeg, Manitoba, was forced to sell assets after filing for bankruptcy protection in January. The company is getting about a third of the C$3.2 billion it paid for Conrad Black’s Hollinger International Inc.’s newspapers in 2000. Canwest agreed to sell its television assets on May 3 to Shaw Communications Inc. for C$2 billion.
Canwest operates Canada’s biggest newspaper chain with 12 dailies including the Vancouver Sun, Montreal Gazette and Ottawa Citizen. The company also publishes 45 community and free newspapers as well as the Post.
“You see a group that has come in and offered a substantial amount of money for the assets,” John Douglas, a Canwest spokesman, said in a telephone interview. The new company “will continue to have the biggest, boldest, reach” in the country.
Godfrey, who couldn’t be reached for comment, will become chief executive and president of a new company that will take over the publishing of the newspapers. The group expects the company will be publicly traded and will “maintain” all existing newspapers, including the National Post, Canwest said in a statement.
The sale, led by RBC Capital Markets, must be approved by an Ontario judge overseeing Canwest’s bankruptcy. If approved, the sale will likely close by July 15, Canwest said.
The 9.25 percent noteholders was the only group to oppose the granting of Canwest’s request for bankruptcy protection in January. The group had been in a position to demand payments owed to them by Canwest since August 2009, and hadn’t done so, Ontario Superior Court Judge Sarah Pepall said in her reasons for granting bankruptcy protection.
Godfrey led a C$411 million management buyout of Toronto Sun Publishing Corp. in 1996. Sun Media Corp., the publisher of the Toronto Sun, Toronto’s tabloid newspaper, was sold to Quebecor Inc. in 1999 for C$1.1 billion.
Godfrey in February was named chairman of the Ontario Lottery Corp., the provincial government agency that oversees lotteries and casinos in Ontario.
Godfrey began his career as a municipal politician, having first been elected to public office in 1964. He was chairman of Metropolitan Toronto from 1973 to 1984, leading the city’s effort to win a major league baseball team. From 2000 to 2008 he was president and chief executive of the Toronto Blue Jays baseball team.
The bid by the Godfrey-led group includes C$950 million in cash, which will allow for full repayment of C$925 million of debt to the banks, Canwest said. Unsecured creditors will get cash or shares in the new company up to a maximum of 45 percent of the equity, Canwest said.
“These newspapers served some of these communities for centuries,” Douglas said. “The communities will continue to be well-served.”
The case is In the Matter of a Plan of Compromise or Arrangement of Canwest Publishing Inc., CV-10-8533, Ontario Superior Court of Justice (Toronto).