The Nova Scotia Supreme Court has approved Postmedia’s $1-million bid to acquire Atlantic Canada’s largest newspaper chain.
Justice John Keith ruled Thursday afternoon that the proposal is “reasonable and fair,” clearing the way for the Toronto-based media company to buy the insolvent SaltWire Network Inc. and the Halifax Herald Ltd.
Earlier in the day, a lawyer representing the court-appointed monitor overseeing insolvency proceedings for SaltWire and the Herald confirmed that the Canadian arm of the Communications Workers of America has agreed to certain conditions demanded last week by Postmedia.
Speaking outside a courtroom, George Benchetrit confirmed the union has agreed to alter some union contracts and exclude some workers from the union by eliminating successor rights protected by provincial labour legislation.
During the hearing in Halifax, Keith was also told that the companies’ pension plan would be wound up, a move that will affect 426 people.
SaltWire and the Herald publish newspapers and online content in Nova Scotia, P.E.I. and Newfoundland and Labrador.
Postmedia’s demands were included in a report released last week by Toronto-based KSV Restructuring Inc., which in March was appointed as the monitor of the proceedings under the federal Companies’ Creditors Arrangement Act.
KSV’s report says employees who are not kept on by Postmedia upon the deal’s closing will either be terminated or offered interim employment, though no numbers were disclosed. As for severance, the report says those who lose their jobs will get some or all of what they are owed through the federal Wage Earner Protection Program, which covers insolvent companies.
Many other details about the pending deal were not in the report because it does not include the actual transaction documents.
Postmedia asks to seal documents for month after deal closes
On Thursday, Postmedia asked Keith to seal those documents for at least 30 days after the deal closes, arguing that an earlier release could “negatively impact recoveries.”
The insolvency process is being driven by the Toronto-based Fiera Private Debt Fund, which pushed the two media companies into insolvency in March, saying they owed a long list of creditors more than $90 million.
That amount includes $32 million owed to Fiera — the senior secured lender — which in 2017 lent that money to the newly created SaltWire Network Inc. as it set about buying more than two dozen print and online publications from Quebec-based Transcontinental.
In its report, KSV said Postmedia’s bid for SaltWire and the Herald, one of four submitted earlier this year, was the best one for Fiera.
“It provides Fiera an opportunity to generate significant recoveries on its loans to the media companies over several years,” KSV says. “No other available third-party transactions provided the same opportunity or for a better recovery for Fiera or other stakeholders.”
KSV says if Postmedia’s bid fails, the newspaper chain will die. “This would result in job losses, and Atlantic Canada’s largest media business would come to an end,” the report says.
Meanwhile, Fiera has agreed to provide up to $7 million in interim financing to keep the companies operating as the transaction is processed. As well, KSV is recommending the media companies retain court-ordered protection from their creditors until Dec. 13.
The proposed closing date for the transaction is Aug. 24.
Postmedia CEO Andrew MacLeod has said the company wants to ensure “reliable and high-quality local news” continues to be provided to the region, but he stressed that SaltWire’s business model was unsustainable.
In recent weeks, media critics and academics have come forward to criticize Postmedia for generating profits by downsizing newsrooms. The head of CWA Canada, Carmel Smyth, has also taken aim at Postmedia.
“Postmedia has a track record of cutting newsrooms to the bone and jeopardizing local news coverage with short-sighted decisions,” Smyth said in a previous statement. “Our job will be to hold the company to account for its commitment to investing in local news and jobs.”
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