Newspaper publisher Postmedia Network Canada Corp. is preparing to list its shares on the Toronto Stock Exchange.
On Tuesday, Postmedia filed a preliminary non-offering prospectus with securities regulators in every province except Quebec.
The company is under a deadline to publicly list its shares this year. The former CanWest newspaper chain emerged from creditor protection in July of last year after a group of its unsecured lenders agreed to buy the publishing business. As a condition of the $1.1-billion deal, Postmedia was required to list on the TSX by July, 2011.
"We've been monitoring things all along, deciding what we're going to do, how we're going to do it. We realized that we've got to be public by end of July, and we're now into mid-March. We didn't want to wait until the last minute," Postmedia chief executive officer Paul Godfrey said in an interview on Tuesday.
Rather than attempting to raise new capital as it would in an initial public offering, Postmedia will publicly list shares that had been already issued on a private basis, under a dual-share structure. According to the prospectus, the company's principal shareholders include the U.S. hedge fund that led the unsecured creditors in the deal: GoldenTree Asset Management owns just over 24 per cent of the variable voting shares. Other major shareholders include Bank of New York Mellon; Merrill Lynch Canada Inc. - with just over 69 per cent of the voting shares, which are restricted to Canadian holders - and CanWest Publishing Inc.
Postmedia has been restructuring to cut costs and pay down debt, mostly through work-force reductions: Buyouts have been offered across its newspapers, including its flagship publication, the National Post. The Toronto-based media company, which owns 11 major daily newspapers as well as 35 community papers, has said these initiatives should save between $30-million and $35-million in salaries over a 12-month period. As of January, it had cut the equivalent of 500 full-time jobs.
In the prospectus, the company estimated that its revenue for the second quarter ended Feb. 28 has fallen 4 to 5 per cent compared with the previous year, though the data is preliminary and its financial statements are not yet completed. Postmedia also expects that the cost-cutting efforts will make up for the drop, which is largely due to falling print circulation and print advertising revenue.
Earlier this month, Standard & Poor's raised its rating on Postmedia's bonds to "single-B" from "single-B-minus," reflecting the considerable amount of debt the company has been paying down. Anything within the single-B to single-B-plus range suggests that the company is "more vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments." The rating remains below investment grade.
"These rating actions reflect what we view as the improved recovery prospects for the second-lien notes," S&P credit analyst Lori Harris said at the time.Report Typo/Error