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 media companies behind Atlantic Canada's largest newspaper chain.

The Toronto-based company, which owns the National Post, Vancouver Sun, Calgary Herald, Ottawa Citizen and dozens of other publications, 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.

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Postmedia CEO Andrew MacLeod said the company intends to provide the resources to ensure that "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. He also did not say what publications would be purchased.

Postmedia declined a request for an interview with MacLeod.

Patrick White, a journalism professor at Universite du Quebec a Montreal, said Postmedia's bid comes with caveats.

"We have to welcome the fact that Postmedia is trying to save this news organization," he said in an interview Friday. "But if you look at Postmedia's record … their goal is to make profit by downsizing newsrooms."

White said job losses at SaltWire seem inevitable in the months ahead as Postmedia continues to struggle with a heavy debt load.

Willy Palov, president of the Halifax Typographical Union, said he was pleased to see a potential deal in place. But he said there weren't enough details revealed to comment on how it will affect the journalists and other union members at The Chronicle Herald in Halifax.

"The members and I will have to review the proposed terms before we can say a whole lot more," Palov said in an email. "Journalists and workers at the paper are hoping the company will invest in quality news coverage."

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

In 2017, the owners of the Herald -- Mark Lever and his wife Sarah Dennis -- created SaltWire Network Inc., which bought more than two dozen newspapers and web-related properties owned by Transcontinental Nova Scotia Media. Those publications include 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, SaltWire and The Herald employ about 800 independent contractors and 390 staff, including about 100 unionized positions, according to court documents.

Brian Daly, a journalism professor at the University of King's College in Halifax, said the pending acquisition will allow Postmedia to expand its coverage across Canada, but that expansion won't guarantee success.

"This industry is in dire need of some innovative ideas and I'm not seeing anything new here in terms of how the business model is going to work," Daly said in an interview Friday.

As well, Daly said it remains unclear whether Postmedia will continue operating smaller publications based outside of Halifax, Charlottetown and St. John's, N.L.

"It's been nothing but a race to the bottom in terms of shedding properties in smaller communities," he said. "Postmedia might just buy the big names in the big cities in the region."

Lana Payne, national president of Unifor, issued a statement saying the union is reviewing how the offer will affect unionized workers at the St. John's Telegram. She did not provide details.

Unifor represents 35 people at the newspaper, and more than 10,000 media workers across the country.

On March 11, Toronto-based Fiera Private Debt Fund initiated insolvency proceedings against SaltWire and The Herald under the federal Companies' Creditors Arrangement Act, saying the companies owed more than $90 million to a long list of creditors after several years of mismanagement. At the time, Fiera alleged 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 acquisitions from Transcontinental. And in 2019, SaltWire filed a 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.

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 June 20, the court-appointed monitor overseeing the insolvency proceedings, Toronto-based KSV Restructuring Inc., confirmed the selection of an unnamed bidder, which turned out to be Postmedia.

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.