Postmedia plans to buy Atlantic Canada's insolvent SaltWire newspaper chain

HALIFAX — Postmedia Network Inc. has announced plans to buy "certain businesses" belonging to SaltWire Network Inc. and The Halifax Herald Ltd., the two insolvent companies behind Atlantic Canada’s largest newspaper chain.

The Toronto-based company, which owns publications including the National Post, Vancouver Sun, Calgary Herald and Ottawa Citizen, says it wants to complete the acquisition by Aug. 26. But the company issued a statement Friday saying the deal is subject to conditions, including approval from the Nova Scotia Supreme Court and "satisfactory outcomes" with unionized workers.

Postmedia CEO Andrew MacLeod said the company intends to provide the resources to ensure "reliable and high-quality local news" continues to be provided to the affected communities in the Atlantic region.

“SaltWire filed for (protection from its creditors) after years of financial difficulties, underscoring that its current operational model is unsustainable," MacLeod said in the statement.

"In order to save critical journalism jobs, we will need the support of the relevant unions to help construct a viable business model.”

No financial details were disclosed and MacLeod did not explain what he wants from the unions that represent the two media companies' workers.

“We urge all stakeholders, including employees and community leaders, to support our efforts. The future of local journalism in the Atlantic provinces depends on everyone’s co-operation in a successful restructuring,” MacLeod said.

The Halifax Herald Ltd. owns The Chronicle Herald, the independent Halifax-based daily newspaper that was founded almost 200 years ago.

SaltWire Network Inc. owns other daily newspapers in Nova Scotia, P.E.I. and Newfoundland, including the Cape Breton Post in Sydney, N.S., the Guardian in Charlottetown and the Telegram in St. John's, N.L., as well as weekly papers and several digital publications. Together, the companies employ about 800 independent contractors and 390 staff, including about 100 unionized positions, according to court documents.

The statement did not specify which businesses Postmedia plans to buy.

On March 11, Toronto-based Fiera Private Debt Fund initiated insolvency proceedings against SaltWire and The Herald under the federal Companies' Creditors Arrangement Act (CCAA), saying the companies owed more than $90 million to a long list of creditors after several years of mismanagement. At the time, Fiera alleged that senior managers had left the operations "on the verge of a liquidity crisis."

The federal act allows companies with more than $5 million in debt to avoid bankruptcy while drafting a plan that ensures creditors receive some payment for what they are owed.

As senior secured lender, Fiera has said SaltWire and The Herald together owe it $32.7 million.

Fiera had lent money to SaltWire to help the Halifax-based company pay for its 2017 acquisition of Transcontinental Nova Scotia Media, which published more than two dozen newspapers and web-related properties, and owned four printing plants. In 2019, SaltWire filed a multimillion-dollar lawsuit against Transcontinental, alleging the company overstated revenues the business would produce.

When Fiera went to court in March, the private lender said SaltWire and the Herald had been in default for more than five years and were making little progress repaying debts. The media companies were also accused of failing to top up pension funds and remit HST payments to the federal government.

On March 13, Nova Scotia Supreme Court Justice John Keith granted the companies protection from creditors, a measure that has been extended a number of times.

Rather than push the media companies into receivership, Fiera has supported a restructuring and sale process through a series of loans that have allowed SaltWire and The Herald to keep operating under CCAA.

On March 25, Keith approved a so-called sales and investment solicitation process, which involved canvassing the market for businesses willing to buy or invest in some or all of the deeply indebted companies' business operations and assets.

The two media companies are owned by Mark Lever and his wife Sarah Dennis. Earlier this year, Lever stepped down as president and CEO of SaltWire, at which point he was expected to submit a bid for the companies. It remains unclear whether that happened.

In all, four qualified bidders came forward to buy all or part of the companies' businesses and other assets. At the time, none was named.

On June 20, the court-appointed monitor overseeing the insolvency proceedings, Toronto-based KSV Restructuring Inc., confirmed the selection of an unnamed bidder.

With the help of the monitor, Keith will ultimately decide whether the deal will ensure the survival of the companies and allow creditors to receive some form of payment for amounts owing.

This report by The Canadian Press was first published July 26, 2024.

Michael MacDonald, The Canadian Press