Britain’s newspaper companies may be suffering from marked declines in profits but none of them are in as bad a financial situation as Canada’s largest publisher, Postmedia Network.
It has just reported a loss for the 14th successive quarter as revenue fell 12.9% in the three months up to the end on May, largely due to the flight of print advertising.
In the latest attempt to ease its financial pressures, Postmedia is planning a restructuring plan aimed at wiping out nearly half its debt and slashing its annual interest payments.
It would have the effect of eliminating more than £203m in debt. In exchange, creditors would receive 98% of the company’s equity, all but erasing the stake owned by existing shareholders.
Even so, the Globe & Mail reports that the deal “still leaves the publisher of titles such as the National Post and Vancouver Sun with a $225m (£171m) debt payment in five years, supported by a business that is in sharp decline.”
It quotes Postmedia’s chief executive, Paul Godfrey, as acknowledging that “there remains a lot of work to do.”
He pointed out that his company’s position would be even worse had it not acquired assets from a rival, Sun Media, last year. “I think we would have been facing a brick wall much earlier,” he said.
In a memo to staff, revealed by j-source, Godfrey said the proposed recapitalisation “will significantly improve Postmedia’s capital structure and the long-term outlook for our company.”
Postmedia’s largest current shareholder is the New York-based GoldenTree Asset Management, which is supporting the proposed restructuring of the debt.
The plan enables Postmedia to avoid declaring insolvency and filing for creditor protection.
Sources: TalkingNewMedia/Globe & Mail/j-source
