September 7, 2016 Last Updated 5:10 pm

Canadian newspaper publisher Postmedia Network wins investor approval for recapitalization transaction

The Canadian newspaper chain Postmedia Network is in bad shape, but today it won approval from debt and equity investors for its restructuring plan that gives the company’s creditors nearly all of its equity. The plan will cut the newspaper publisher’s debt obligations, and maybe give it some breathing room.

Postmedia publishes the National Post, Montreal Gazette, Calgary Herald, Ottawa Citizen, as well as the Sun tabloids.

Postmedia reported last quarter that its revenue for the quarter was $218.3 million as compared to $205.1 million a year ago. But the company had acquired the Sun newspapers from Quebecor Media a little over a year ago, and when those properties revenue fell just slightly less than 13 percent. The operating loss reported in the quarter was $18.3 million.

Here is the company’s announcement:


TORONTO, Ontario – September 7, 2016 — Postmedia Network Canada Corp. is pleased to announce that, at shareholders’ and noteholders’ meetings held today in Toronto, the shareholders of the Company and the noteholders of Postmedia Network Inc. voted overwhelmingly in support of the previously announced proposed recapitalization transaction (the “Recapitalization Transaction”) to be implemented by way of a corporate plan of arrangement under the Canada Business Corporations Act.

Approval of the Plan of Arrangement

At the Meetings, 99.9% of the votes cast by shareholders (representing approximately 93% of the outstanding shares), 100% of the votes cast by first lien noteholders (representing approximately 95% of the first lien notes) and 100% of the votes cast by second lien noteholders (representing approximately 80% of the second lien notes) were voted in favour of the Plan of Arrangement.

Approval of the Rights Plan Amendments

As previously announced by the Company, pursuant to requirements under the rules of the Toronto Stock Exchange (the “TSX”), shareholders and second lien noteholders were also asked to vote on a resolution (the “Rights Plan Amendments Resolution”) to approve certain amendments (the “Rights Plan Amendments”) to the Company’s shareholder rights plan dated as of November 8, 2010 between the Company and Computershare Trust Company of Canada, as rights agent. The Rights Plan Amendments, which are described in detail in the management information circular prepared for the Meetings and available on the Company’s website and on its SEDAR profile, will become effective only upon completion of the Recapitalization Transaction.

Pursuant to and in satisfaction of the requirements of the TSX, the Rights Plan Amendments Resolution received approval of (i) a simple majority of the number of aggregate votes cast at the shareholders’ and second lien noteholders’ meetings on a combined basis (based on the number of shares of PNCC to be held by shareholders and second lien noteholders on a post-consolidation basis following completion of the Recapitalization Transaction), and (ii) a simple majority of the aggregate number of votes cast at the shareholders’ and second lien noteholders’ meetings on a combined basis (based on the number of shares of PNCC to be held by shareholders and second lien noteholders on a post-consolidation basis following completion of the Recapitalization Transaction), without giving effect to votes cast by any person that will hold more than 20% of the total number of outstanding shares of the Company upon completion of the Recapitalization Transaction. At the applicable meetings, 99.79% of the aggregate votes cast by shareholders and the second lien noteholders on a combined basis were voted in favour of the Rights Plan Amendments Resolution, and excluding votes cast by any person that will hold more than 20% of the total number of outstanding shares of the Company upon completion of the Recapitalization Transaction, 98.92% of the aggregate votes cast by shareholders and the second lien noteholders on a combined basis were voted in favour of the Rights Plan Amendments Resolution.

Court Approval and Implementation

The Company, PNI and PNI’s subsidiary, 9854711 Canada Limited, will attend a hearing before the Ontario Superior Court of Justice (Commercial List) (the “Court”) currently scheduled for September 12, 2016 to seek a final order of the Court approving the Plan of Arrangement. If the approval of the Court is obtained, and the other conditions to completion of the Recapitalization Transaction are satisfied or waived, it is expected that the Recapitalization Transaction will be completed on or about September 30, 2016.

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