Cash-strapped CanWest Global Communications Corp. is seeking to open its chequebook to make millions of dollars in lump-sum payments to managers following the departure of a top newspaper executive.
The company, which has placed its newspaper and broadcasting divisions under creditor protection, has asked the court to approve a beefed-up management retention plan that could see more than $5-million doled out to several dozen managers who are considered key to operating the company.
The request comes after the Dennis Skulsky resigned as chief executive officer of CanWest Publishing on March 12. He is remaining on as a consultant until the end of April, the company said.
However, in court documents filed this week, CanWest says the departure of Mr. Skulsky may lead to further managers leaving the company. Should the company's executive base erode, it would cause significant problems operating the company, and potentially impede the process to find a new buyer for the newspapers, CanWest said.
As such, CanWest is seeking to make up to $4.3-million worth of payments to keep as many as several dozen managers inside the company as it restructures the newspaper division. That is an increase from a previously announced management retention program, which was worth less than half that amount.
In addition, the company is seeking up to $1-million to make retention payments to senior staff operating in critical functions in the restructuring, including senior accountants. The court had approved $400,000, but the company wants that amount expanded.
"It would be difficult to hire and train replacement employees to perform these jobs within the time frame required to prevent serious disruptions to the businesses of the LP entities," the documents say.
The developments come as CanWest prepares to go before the court today to ask to speed up an appeal of its deal made with Shaw Communications Inc. to invest in the company's broadcast assets. The appeal was filed by Goldman Sachs and Catalyst Capital Group Inc., which in February put forward a competing bid for those assets. Goldman and Catalyst want the court to reconsider the Shaw deal.
In documents filed last week, CanWest argued that a faster process is necessary because the Shaw recapitalization deal has a deadline of Aug. 11. Before then, the company must finalize the plan and get approval from creditors and the CRTC, among other measures. If the appeal is still ongoing by that time, and Shaw does not agree to extend the deadline, "the CMI Entities would effectively be 'back to square one.' "
However, in an affidavit to be filed today, Goldman says the urgency cited by CanWest is the result of a timetable created by the company and Shaw. The affidavit supports CanWest's request to expedite the appeals process, but it also repeats a frequent argument that the bidding process for CanWest's broadcast assets was not fair.
An affidavit filed by New York investment bank Goldman Sachs in the Court of Appeal for Ontario, in connection with its appeal of the deal that could see Shaw Communications Inc. invest in the broadcast assets of a restructured CanWest Communications Corp., repeats a frequent argument that the bidding process for CanWest's broadcast assets was not fair. Incorrect information was published March 24.