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Call them the accidental publishers: Bank of Nova Scotia is now the largest owner of newspapers in Canada, and seems likely to hold that unintended role for some time.

Lenders took control of CanWest L.P. on Friday, a long-expected move at the debt-heavy chain, as the company filed for protection from creditors. Scotiabank is the lead player among senior lenders to this subsidiary of CanWest Global Communications, so the bank has the honour of running this process. (The parent company filed for creditor protection last year.)

Scotiabank CEO Rick Waugh will likely chuckle at the fact that he's the latest incarnation of newspaper barons Conrad Black and Randolph Hearst.

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Scotiabank and the other senior lenders are now what's known as stalking horse bidders for the chain, as their restructuring plan - already nicknamed the "AA Agreement" by the company - with CanWest LP represents a clear, viable structure for the company. The newspaper chain has total debt of $1.3-billion.

In the absence of any other offer for the chain, which includes 11 big-city papers and a host of community publications, the creditors swap their loans for equity, and run the company. Scotiabank and the other senior lenders are expected to get 100 cents on the dollar for the debts, while the outcome is far less certain for junior creditors.

However, Scotiabank and the rest of CanWest L.P.'s lenders would be thrilled to hand the entire chain over to any buyer willing to pay down their loans, strike a deal with the remaining creditors, and take a stab out of making money in newspapers.

RBC Dominion Securities was officially recognized Friday for running an auction of the newspaper that in reality has been playing out for some time.

The problem is, no one is buying the entire chain. Sources close to both CanWest and other Canadian media companies say regional players may have an interest in one or two papers in the chain - Montreal and Ottawa, for example - but there is no buyer for the whole lot.

Scotiabank and the rest of CanWest LP's lenders, and executives at the newspaper chain, see keeping the papers together as the best way to maximize value for the company.

The most likely future for CanWest LP is as an independent, pure-play newspaper company, with lenders cashing in by staging an initial public offering the moment the market seems receptive.

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