SaltWire Network files for creditor protection, has $94M in debt
Court documents say company, which owns 23 newspapers in Atlantic Canada, has assets of roughly $33M
A company that owns nearly two dozennewspapers in Atlantic Canada has debts of almost $100 million andis filing for creditor protection.
SaltWire Network made the application in the Supreme Court of Nova Scotia, according to court documents filed on Monday.
The court documents said SaltWire has assets of almost $33 million and more than $94 million in debt, with roughly a third of that owedto its lender, Fiera Private Debt. However,SaltWire claims its debt is closer to $64 million, according to documents submitted by its lawyers.
SaltWire also owes more than $7 million in unpaid HST to the CanadaRevenue Agency, whilethe Chronicle Herald owes $2.6 million for missed pension plan payments, the documents said.
Fiera's lawyersfiled an application in court on Monday sayingSaltWire doesn't have the assets to pay back the money it owes.
It said the companyhas only made one-third of its debt paymentsover the last five years, the court documents said. The documents said Fieragave SaltWire until the end of January to send a letter of intent illustrating how the debt will be repaid, but they did not hear back from the company.
Fiera said SaltWire has been "demonstrably mismanaged" and has withheld money from employees and pensioners.
Documents filedby Norton Rose Fulbright Canada LLP, which is representing Fiera, said itlost faith in SaltWire's management team, which had"displayed a repeated failure to properly manage" the business.
Last week, SaltWire was ordered to pay $500,000 as a security bond in connection to a separate legal matter relatingto the 2017 purchase by SaltWire of more than two-dozen Transcontinental newspapers.
SaltWire was also recently ordered to pay $70,000 for failing to stay up to date with pension plan payments.
Some of the company's daily newspapers include the Chronicle Herald and the Cape Breton Post in Nova Scotia, the Telegram in St. John's, and the Guardian in Charlottetown. It also operates weekly newspapers.
What SaltWire is saying
In a statement, the company said filing for creditor protection will help ensure the company's long-term sustainability.
"SaltWire Network is confident that the ...process will enable us to emerge as a stronger, more vibrant media company," said chief operating officer Ian Scott.
"We are dedicated to continuing our legacy of providing insightful, local journalism and contributing positively to the communities we serve."
Scott also saidthe "unprecedented challenges" Canadian media havefaced in recent years and "pressures created by multinational social media networks" have negatively impacted the company's financial health.
Union reaction
Willy Palov, president of the Halifax Typographical Union, which represents workers at the Chronicle Herald, said it was hard news to hear, but correspondence he has seen from the company leaves room for optimism.
"They acquired a lot of properties from Transcontinental and they have pension debt andtax debt sothose are outside our sphere of influence," Palov said.
"We know that those financial challenges are what's behind what's going on now andrevenues droppingdoesn't help that."
University of King's College journalism professor Stephen Kimbersaid the company bit off more than it could chew with its acquisition of regional newspapers.
He said it was bad management to buy other newspapers by borrowing money in a market that is on a downward trend.
"I don't think they would have been in great shape anyway just because of the state ofthe industry," he said.
"But they're in awful shape now, and they havemostly only themselves to blame."
According to Kimber,it may be slow and painful but ultimately the company's financial position will result in the loss of two dozen newspapers.
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