Bid to sell bankrupt newspaper chain in Atlantic Canada reaches critical stage

HALIFAX – The private lender that pushed Atlantic Canada’s largest newspaper chain into bankruptcy in March says negotiations are focused on the sale of SaltWire Network Inc. and The Halifax Herald Ltd. have reached a crucial stage.

Jennifer Stam, a lawyer for the Toronto-based Fiera Private Debt Fund, made the statement Friday in Nova Scotia Supreme Court, where Justice John Keith later granted a motion to extend the media companies’ protection from creditors until Aug. 8.

“The parties are at a critical moment in the negotiations,” Stam told the court, adding that Fiera did not oppose the extension or other measures aimed at keeping the companies running.

Last week, the court-appointed regulator overseeing the potential sale of the heavily debt-laden companies confirmed the selection of an anonymous bidder that plans to operate the companies as viable businesses. At the time, KSV Restructuring Inc. said. from Toronto that negotiations with the bidder were progressing towards a transaction that could be completed on August 9.

On Friday, George Benchetrit, an attorney representing KSV, said an approved transaction could come sooner than that date. He did not elaborate.

Ultimately, it is up to Keith to approve any transactions, the purpose of which is to keep the companies alive.

“I’m glad we’re still moving toward a desired outcome,” Keith told the Halifax courtroom.

The Halifax Herald Ltd. owns The Chronicle Herald, the independent daily newspaper in Halifax that was founded nearly 200 years ago. SaltWire Network Inc. owns other daily newspapers in Nova Scotia, PEI 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 weeklies and several digital publications. Together, the companies employ about 800 independent contractors and 390 staff members, including about 100 union positions, according to court documents.

Keith approved a $135,000 retention plan to secure the services of key personnel needed to complete the sale. He also approved an additional $1.1 million in interim financing, bringing the total expected borrowings during the insolvency proceedings to $4.1 million.

Keith also agreed to reschedule the next court hearing for August 8 to accommodate the schedules of some of the attorneys and financial experts involved, more than a dozen of whom joined Friday’s hearing via a Zoom call.

On March 11, Fiera initiated insolvency proceedings under the 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 claimed that senior managers had left operations “on the brink of a liquidity crisis.”

As a senior secured lender, Fiera has said SaltWire and The Herald are owed a combined $32.7 million.

Fiera had lent SaltWire money to help the Halifax-based company’s 2017 acquisition of Transcontinental Nova Scotia Media, which published more than two dozen newspapers and web-related properties and owned four printing plants.

The private lender said SaltWire and the Herald had been in default for more than five years and had made little progress in repaying their debts. The companies were also accused of failing to replenish pension funds and failing to remit HST payments to the federal government.

On March 13, Keith granted the companies protection from creditors, a measure that has been extended a number of times.

Rather than placing the media companies into receivership, Fiera supported a restructuring process through a series of loans, allowing SaltWire and The Herald to continue operating under the CCAA.

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

A total of four qualified bidders applied to purchase all or part of the companies and other assets of the companies. No one was mentioned.

This report by The Canadian Press was first published June 28, 2024.

Michael MacDonald, The Canadian Press