Investment bankers hired by CanWest Global Communications Corp. tried to sell its flagship newspaper, the National Post, this year but received no offers, according to new details emerging as part of the company's financial restructuring.
David Byers, a lawyer for FTI Consulting Inc., the independent monitor overseeing the reorganization of CanWest under the Companies' Creditors Arrangement Act, said the company retained RBC Dominion Securities to sell the paper. According to court documents, the paper has lost money since its launch in 1998.
Without a buyer, however, the company had limited options. FTI then studied the numbers on closing the National Post as part of the restructuring, but determined that the costs associated with breaking various contractual agreements in place at the business would outstrip the financial gains made from liquidating the asset.
Mr. Byers' comments came as CanWest appeared in a Toronto court yesterday, and received judicial permission to move the Post out of its holding company, CanWest Media Inc., and into the newspaper subsidiary it operates.
The subsidiary, called CanWest LP, owns about a dozen papers across the country, including the Vancouver Sun, the Montreal Gazette and Ottawa Citizen.
The company asked an Ontario judge to allow the transfer, saying the newspaper would have to be shut down if the shift wasn't allowed.
Creditors at the holding company, which owns Global Television, were no longer willing to cover further financial losses at the paper, which employs 277 people.
The National Post lost $9.3-million last year, court documents said. It is now indebted to the holding company CanWest Media for $139-million.
"If the bondholders on the [parent company]side thought they could squeeze one more nickel out of it, they would have," CanWest lawyer Lyndon Barnes said. "There is just no money to continue beyond today."
However, Mr. Barnes said the Post does have value to the other papers in the CanWest chain if grouped with those print assets.
The newspapers have numerous shared-services contracts between them, which result in cost savings for the print subsidiary. The main creditor for the newspaper group, Bank of Nova Scotia, backed the transfer, Mr. Barnes said.
After hearing the arguments, Madam Justice Sarah Pepall agreed to allow the move.
The grouping of CanWest's newspaper and broadcast assets into two separate operations will likely result in the print and TV company eventually being broken up along those lines, potentially with separate owners.
CanWest Media Inc. filed for court protection from creditors three weeks ago, and it is expected the newspaper subsidiary will separately file for protection under the CCAA process in the coming weeks.
The media conglomerate is trying to restructure a debt that was approaching $4-billion earlier this year. The debt became unmanageable amid a recession that has sapped print and broadcasting companies of their advertising revenue.
CanWest is hoping to complete the restructuring by the end of January.