Bid to sell insolvent newspaper chain in Atlantic Canada reaches critical phase

The private lending firm that pushed Atlantic Canada's largest newspaper chain into insolvency in March says negotiations aimed at selling SaltWire Network Inc. and the Halifax Herald Ltd. have reached a crucial phase.

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 approved a motion to extend the media companies' protection from creditors until Aug. 8.

"The parties are at a critical time in the negotiations," Stam told the court, adding that Fiera did not oppose the extension or other measures intended to keep the companies operating.

Last week, the court-appointed monitor overseeing the potential sale of the deeply indebted companies confirmed the selection of an unnamed bidder who has plans to operate the companies as viable businesses. At the time, Toronto-based KSV Restructuring Inc. said negotiations with the bidder were advancing toward a transaction that could be completed by Aug. 9.

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

Ultimately, it will be up to Keith to approve any transaction, the goal of which will be keeping the companies alive.

"I'm happy that we're still moving forward to a preferred outcome," Keith told the Halifax courtroom.

The Halifax Herald Ltd. owns the Chronicle Herald, the independent Halifax-based daily newspaper that was founded almost 200 years ago. SaltWire Network Inc. owns other 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. Together, the companies employ about 800 independent contractors and 390 staff, including about 100 unionized positions, according to court documents.

Keith approved a $135,000 retention plan to ensure the assistance of key employees needed to complete the sale. He also approved an additional $1.1 million in interim financing, which will bring total projected borrowing during the insolvency proceedings to $4.1 million.

As well, Keith agreed to reschedule the next court date to Aug. 8 to accommodate the schedules of some of the lawyers and financial experts involved, more than a dozen of which took part in 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 alleged that senior managers had left the operations "on the verge of a liquidity crisis."

As senior secured lender, Fiera has said SaltWire and the Herald together owe it $32.7 million.

Protection from creditors

Fiera had lent money to SaltWire to help the Halifax-based company pay for its 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 were making little progress in repaying their debts. The companies were also accused of failing to top up pension funds and 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 push the media companies into receivership, Fiera has supported a restructuring process through a series of loans that have allowed SaltWire and the Herald to keep operating under theCCAA.

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, at which point he was expected to submit a bid for the media companies. It remains unclear whether that happened.

In all, four qualified bidders came forward to buy all or part of the companies' businesses and other assets. None was named.