Bidders are lining up to buy parts of the newspaper chain owned by CanWest Global Communications Corp., but the piecemeal offers are being dismissed as the company holds out for a single buyer.
A buyout group led by former Canadian senator Jerry Grafstein went public with its intentions to bid on three of CanWest's biggest newspapers yesterday. The group, which includes former media executive Ray Heard and community newspaper owner Beryl Wasjman, intends to bid for the Ottawa Citizen, the Montreal Gazette and the National Post.
However, CanWest officials said the company and its creditors have little interest in pursuing such partial bids for the newspaper assets, which include 10 large city newspapers and 35 community and weekly publications across Canada.
The company was forced to put its newspaper arm up for sale last week as the division filed for protection under the Companies' Creditors Arrangement Act. Bank of Nova Scotia, which is leading a group of banks owed about $935-million, has said it will take ownership of the assets if a sale to a sole buyer does not recoup that amount. The newspapers would then be sold on the stock market in an initial public offering.
"We do have a concrete bid for the entire entity," CanWest spokesman John Douglas said, referring to the $935-million the banks would acquire the papers for. Any bid would not be accepted unless it trumps that number, and small bidders are likely to make it worth the creditors' while to break up the assets.
Splintering up the newspaper empire would allow buyers to cherry-pick the best publications, while leaving less-profitable ones stranded and difficult to sell.
Mr. Grafstein, who retired from the Senate three weeks ago at the age of 75, has coveted the National Post for several years. Sources indicated he has inquired about buying the newspaper three times over the past few years as CanWest became strapped for cash.
"I'm a believer in the future of newspapers. I'm a contrarian, and I have been most of my business career," said Mr. Grafstein, who co-founded CITY-TV when it began as a local television news outlet in Toronto that grew into a broadcasting powerhouse.
"There's nothing new or magical about this. It starts with a belief in strong local ownership and strong local control ... We decided we would embark on the process, we would do it publicly and transparently and we will follow through [on]it. We have strong financial support to do this, and off we go."
The group is not disclosing its financial backers. However, the bid is one of about a half-dozen partial bids for CanWest newspapers that are being worked on, according to sources. In addition to that offer, National Post CEO Paul Godfrey and a group of investors are also formulating a bid for those three papers.
In B.C., where CanWest owns the Vancouver Sun and Province newspapers, along with the Victoria Times Columnist, billionaire Jim Pattison is said to be looking at a possible bid for local papers, while a group in Alberta is believed to be considering an offer for the Calgary Herald and Edmonton Journal.
Meanwhile, Glacier Media Inc., a publisher of community newspapers, is eyeing a possible bid for 35 community newspapers owned by CanWest in the West.
While CanWest said it is impossible for any single small bidder to trump the Scotiabank offer with a partial bid, it is possible for several bidders to team up in a consortium that could make an offer in tandem and come up with the $1-billion necessary to win the newspapers.
"The sale process shows a clear preference is being given to bids for the combined entity," Mr. Douglas said. "Now if you had a bunch of piecemeal bidders that came together and wanted to build a consortium, you could do that."
However, the Grafstein camp said it is working solo on its bid.
Mr. Heard, 73, was an executive at the Montreal Star and Global Television, while Mr. Wasjman, 55, runs the largest English-language weekly in Quebec, the Suburban.
Mr. Wasjman said he believes the group has not been turned away because of their partial bid. "We've been told that the preference is for an omnibus bid, but we've been very well received," he said.
It is still not clear, though, whether CanWest will find a bidder for all the assets. Several sources in the media industry suggest a single buyer is too difficult to come by in Canada, given media ownership rules and debt levels at some companies.