An Ontario judge has approved the sale of the newspaper division of CanWest Global Communications Corp. to a group of the company's creditors.
The newspaper operation's unsecured lenders will pay $1.1-billion for the country's largest chain of papers, including titles such as the Montreal Gazette, Ottawa Citizen and Calgary Herald. The deal, announced a week ago, was approved by Madam Justice Sarah Pepall of the Ontario Superior Court Monday afternoon.
Approval of the offer, which beat out a lower bid by rival newspaper publisher Torstar Corp. last week, marks the end of the auction process for the 46 newspapers, including the National Post and 10 other major dailies, as well as 35 community papers. The process began in January, when the newspaper unit filed for court protection from its creditors.
Under the new structure, none of the newspapers is slated to close. The deal also protects many jobs, with the exception of a limited number of part-time employees.
"I'm not going to say it's going to be seamless, but it's emerging with jobs intact, and businesses intact," CanWest lawyer Lyndon Barnes said in court Monday. "…This is a very good news day for the [newspaper unit]"
Judge Pepall also approved the continuation of the floor-price bid made by the company's secured creditors - a group that includes some of the country's largest banks owed $925-million by CanWest. That bid was put forward at the beginning of the process as a minimum offer for the newspaper assets. If it was not beat in the auction, the secured creditors would hold the assets and sell the assets themselves in an initial public offering to recoup their money.
"One of the big issues here is whether the transaction will close … the senior lenders have raised some issues," Judge Pepall said earlier in the day.
The floor-price bid will remain in place as a safeguard in the event that the $1.1-billion deal fails to close.
The group buying the newspapers includes U.S. hedge fund Golden Tree Asset Management, TD Asset Management, Invesco Trimark and other financial players. Once the company emerges from creditor protection - likely this summer - it will be listed on the Toronto Stock Exchange.
National Post president Paul Godfrey will take the helm as chief executive officer of the new company.
"I propose to grant the orders you are seeking," Judge Pepall said, congratulating those involved for reaching a conclusion to the sale process. "In my view, it appears to be a fair and reasonable outcome."
With files from Grant Robertson