HALIFAX — Postmedia Network Inc. has won court approval for its bid to buy Atlantic Canada's largest newspaper chain, but the company says the acquisition will lead to job cuts.
The Toronto-based company's $1-million offer for insolvent SaltWire Network Inc. and the Halifax Herald Ltd. was given the green light Thursday by the Nova Scotia Supreme Court as part of an insolvency proceeding under the federal Companies' Creditors Arrangement Act.
Justice John Keith described the transaction as a "reasonable and fair" effort to keep local journalism alive.
"These companies have been fixtures in the media and in this region for some time," the judge said. "For many, it was difficult to have this insolvency. (But) this insolvency represents a turning of the tide."
Keith, however, said there will be a painful transition period.
"The unfortunate reality is that not all of the jobs will be saved," he said. "There will be some casualties."
Just how many jobs will be lost remains unclear.
It was also confirmed during the hearing that the companies' pension plan will be wound up, a move that will affect 426 members. Court heard the plan is 90 per cent funded with a $6-million unfunded liability.
The two companies have 363 employees and 800 independent contractors. About 100 of their employees are unionized.
George Benchetrit, a lawyer representing the court-appointed monitor overseeing insolvency proceedings, said the main union that represents workers at the two companies had agreed to certain conditions demanded by Postmedia last week.
Speaking outside the courtroom, Benchetrit confirmed the union had agreed to alter some contracts and exclude some workers from the union by eliminating successor rights protected by provincial labour legislation.
The independent Canadian arm of the Communications Workers of America (CWA) led the negotiations with Postmedia.
"It's a terrible situation all around, and the outcome will be terrible and tragic for many people who will lose their jobs," CWA Canada president Carmel Smyth said in an interview Thursday.
But she stressed that the union had won some protection for the pension plan.
"The money in the pension plan is absolutely protected, it's just not carrying forward as a going concern," she said. "(Postmedia) is not going to be adding to it. For someone that has their pension, there's nothing to worry about."
As for changes to collective agreements, Smyth said she was not aware of any modifications. Asked about successor rights, Smyth said Postmedia had yet to announce their plans for staffing.
"We can't control who they hire and who they don't hire," she said. "So that wasn't part of the union's discussions … the union didn't agree to drop successor rights."
At one point during the hearing, a senior member of the Halifax Typographical Union — the local at the Herald represented by the CWA — told the court that its members knew nothing about the agreement reached between CWA and Postmedia.
"We're told that's the way it has to be," said Steve Bruce, the local's treasurer and a journalist with 41 years of experience. "We're not clear on what the concessions are … I'm here to voice our concerns about the way the process is going on without any local input."
The union's lawyer, Balraj Dosanjh, told the court that the union had only 48 hours to negotiate some sort of settlement, which made it impossible to consult with the local.
It remains unclear what the union agreed to, but Postmedia had said the deal would fall apart unless editorial staff in Halifax and Cape Breton accepted changes in their collective agreements. As well, Postmedia wanted unionized staff running the Halifax Chronicle Herald's presses to give up their legal right to belong to the same union once the newspaper was sold.
The official closing date for the transaction is Aug. 24.
The Halifax Herald Ltd. owns The Chronicle Herald, an independent daily newspaper that was founded almost 200 years ago. SaltWire was created in 2017 when the owners of the Herald — Mark Lever and his wife Sarah Dennis — bought more than two dozen newspapers and web-related properties owned by Quebec-based Transcontinental Inc.
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.
But creation of the regional newspaper chain proved to be unprofitable for the two companies, which are typically referred to as one entity: SaltWire.
And in March of this year, Toronto-based Fiera Private Debt Fund initiated insolvency proceedings against SaltWire, saying it owed more than $90 million to a long list of creditors after several years of mismanagement.
At the time, the private lender said SaltWire had been in default for more than five years and was making little progress repaying debts. SaltWire was also accused of failing to top up pension funds and remit HST payments to the federal government.
As senior secured lender, Fiera has said SaltWire and The Herald together owe it $32.7 million.
As part of the deal approved Thursday, Postmedia has agreed to a debt payment plan.
Meanwhile, SaltWire will remain protected from its creditors until Dec. 13, when another court hearing will likely be held to determine how the transition is proceeding. As well, the judge approved Fiera's plan to increase interim debt financing to SaltWire to $7 million to keep the operations going.
Not included in the deal were several properties owned by SaltWire, including the printing plant in St. John's, where the Telegram is printed. That facility remains for sale.
Keith noted that the stranded printing plant raises questions about the future of print media in Newfoundland.
This report by The Canadian Press was first published Aug. 8, 2024.
Michael MacDonald, The Canadian Press
