TORONTO (AP) — Canada’s insolvent media giant, Canwest Global Communications Corp., said Friday after putting its newspaper division under bankruptcy protection that it has received an offer to buy the unit and will seek others.
Canada’s biggest media company said its cross-country newspaper chain, Canwest LP, is being acquired by a group of lenders, representing Canada’s five biggest banks, for 925 million Canadian dollars ($898 million).
Canwest, which has been struggling to repay its debts, filed for creditor protection Friday for its newspapers and their associated digital-media, online and mobile operations.
The bid by the Top Five banks, which include the Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, the Canadian Imperial Bank of Commerce and the Bank of Montreal, is meant to spark higher rival offers for Canwest that will help the banks get their loans to the media company repaid when the dust settles on the financial restructuring.
The deal keeps the newspaper assets in the hands of Canwest until other offers are evaluated.
Canwest spokesman John Douglas declined to comment on the financial terms of the prospective sale.
However, if a superior offer does not emerge within the next seven or eight weeks, then the banks will take control of the newspapers, said John Clifford, a business law partner at the McMillan law firm in Toronto, which is acting as counsel to Canwest LP’s lenders.
Clifford said that in that instance, the banks will set up a new, publicly traded company to operate the newspapers, entirely separate from the banks and Canwest.
The bankruptcy filing Friday includes major dailies such as the Montreal Gazette, Ottawa Citizen, Calgary Herald, Edmonton Journal, Victoria Times-Colonist and two Vancouver dailies, the Sun and Province. Also included are various community newspapers and several online news Web sites such as Canada.com.
Canwest’s Global Television network and National Post newspaper were put under bankruptcy court protection several months ago.
The company’s newspaper division had been operating outside of creditor protection while Canwest worked on a deal with creditors to cope with billions of dollars of debt.
Canwest said putting the newspaper business under court protection is in the best interests of the company and the 5,300 employees at its publishing operations.
Like many North American media companies, Canwest was forced to seek protection from creditors last fall when the recession hit advertising revenues at its newspapers and TV stations. As well, 4 billion Canadian dollars ($3 billion) in debts piled up from earlier acquisitions caused mounting losses and made it impossible for Canwest to stay out of the red.
Canwest has been selling pieces of its business to show lenders it’s making progress on reworking its operations. Last year, it sold its majority stake in Australian broadcaster Ten Network Holdings after earlier selling its E!-branded TV stations and the U.S. political magazine The New Republic.
Canwest said Friday that it has also arranged up to 25 million Canadian dollars ($24 million) in financing from its senior lenders.