The Asper family is attempting to regain control of the newspaper assets that slipped from their grasp when their media empire crumbled last year under $4-billion in debt.
The Aspers have emerged as one of about six finalists chosen for the short list of bidders for CanWest LP, the newspaper division of CanWest Global Communications Corp. The newspaper chain, which is made up of 46 publications across Canada and includes names such as the Ottawa Citizen, The Vancouver Sun and National Post, was put up for sale by its creditors this year.
The short list also includes bids from B.C. newspaper magnate David Black, Vancouver-based community newspaper publisher Glacier Media Inc. and a proposed buyout led by National Post executive Paul Godfrey. The identities of at least two other bidders are unknown but they are believed to be private equity investors.
The Asper bid, which comes only weeks after they backed a bid for CanWest's broadcast operations, is the latest attempt by the Winnipeg family to rebuild at least part the media company they once controlled.
The broadcasting operations, CanWest Media Inc., filed for creditor protection in October, followed by the newspaper unit in January.
Last month, Leonard Asper, the son of the company's founder, the late Izzy Asper, partnered with Goldman Sachs Group Inc. and private equity player Catalyst Capital Group on a bid to buy the broadcast operations, which include Global Television. But a court has already approved the sale of controlling stake in those assets to Shaw Communications Inc.
Bids for the newspapers were due last Friday and creditors spent the past few days sorting through the offers.
The creditors, which include Canada's largest banks, were looking for offers that exceeded $950-million. Several of the offers tendered are said to be above $1-billion.
There were about a dozen bids for the newspapers in all, but the creditors wanted to sell the 46 publications, which includes 11 large city dailies and 35 community papers, as a whole. All bids that sought to buy pieces of the assets, including one led by former Liberal Senator Jerry Grafstein, have been ruled out, leaving a final pool of roughly half a dozen bids.
Officials in charge of CanWest's restructuring will now evaluate each of those bids in closer detail, meaning the banks will likely not end up as the owner of the newspapers. If the group of creditors, led by Bank of Nova Scotia, could not recoup the $950-million they are owed, they planned to hold on to the assets and sell them in a future initial public offering.
It is now possible that a winner from the short list will be chosen in the next month or two and the CanWest newspapers could emerge from creditor protection by the summer.
The newspaper bid follows on the Aspers' efforts to hold onto a stake in the TV business. The Asper bid to invest in the TV operations was a last-minute attempt to prevent cable giant Shaw Communications Inc. from buying 20 per cent of the equity in the broadcast assets and an 80-per-cent voting interest in a restructured CanWest, in exchange for investing $95-million. However, the Shaw bid was supported by an Ontario court. Goldman Sachs filed an appeal of that decision Wednesday afternoon.
If the appeal succeeds, the group will bring forward the bid again. Catalyst came out in support of Goldman's appeal, and in a statement said that "Catalyst and Goldman Sachs remain committed to our proposal - and we're confident in both its fairness and its value." Asked whether the Aspers and others were still involved in the bid, a spokesman for Catalyst said "the proposal remains unchanged in that respect."
Officials from Shaw and Goldman Sachs met in New York Wednesday to begin talks on the matter.
Goldman still controls 65 per cent of a stable of specialty channels CanWest acquired from Alliance Atlantis in 2007. The firm has complained about being left out of the bidding, and in court documents on Wednesday called it "a remarkable abuse" of the restructuring process.
Madam Justice Sarah Pepall, who approved the Shaw deal in Ontario's Superior Court, struck back against this complaint last week when she released the reasons for her decision.
"There was nothing stopping [Catalyst or Goldman]from challenging the process at an earlier stage or alternatively, participating in it," she wrote. At an earlier stage, Catalyst had prepared a bid but refused to sign a non-disclosure agreement required to participate in the process.
The judge wrote that negotiating the three-year deal with Goldman is the next step in the process for Shaw.
Goldman's filing on Wednesday argued that the court "has fundamentally failed in its duty to ensure that CanWest and … its board of directors seek out and consider all reasonable alternatives for the restructuring of CanWest." It will now ask the court to reconsider its approval of the Shaw deal and consider other bids.