Bill Doskoch: Media, BPS*, Film, Minutiae

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Postmedia seeks to restructure debt

Postmedia is seeking to cut about half its debt, thus slashing interest costs, in order to keep afloat.

From the Globe and Mail (“Postmedia proposes restructuring to wipe out nearly half its debt“):

Postmedia Network Canada Corp. outlined a planned recapitalization on Thursday that would eliminate more than $268-million (U.S.) in debt. In exchange, those creditors would receive 98 per cent of the company’s equity, all but eliminating the stake owned by existing shareholders.

Postmedia would pay some $50-million (Canadian) less in interest each year and raise new money from lenders. But the deal still leaves the publisher of titles such as the National Post and Vancouver Sun with a $225-million debt payment in five years, supported by a business that is in sharp decline. The company reported a loss for the 14th quarter in a row as revenue fell 12.9 per cent year-over-year, largely as a result of a 19.4-per-cent plunge in print advertising revenue. The figures exclude revenue from last year’s $316-million acquisition of newspapers and digital properties from Sun Media.

The deal, drawn up as a plan of arrangement, already has support from more than 80 per cent of Postmedia’s debt holders, three-quarters of its shareholders and the board of directors, and the company expects to complete the plan by the end of September. That would give it a badly needed lifeline as it tries to turn around its sagging fortunes, but is hardly a cure-all solution, and Postmedia chief executive officer Paul Godfrey acknowledged “there remains a lot of work to do.” …

Postmedia reported its third-quarter earnings on Thursday, posting a $23.7-million loss for the three months ended May 31. Mr. Godfrey said that revenue declines have shown no sign of letting up, but that if the company hadn’t bought the Sun assets, “I think we would have been facing a brick wall much earlier.”

Thu, July 7 2016 » Main Page, Media