VANCOUVER (Reuters) - The Canadian Press news agency, which has come under increasing financial pressure since the departure of key members, has reached a tentative deal to become a for-profit company after 93 years as a co-operative, a source involved in the talks said on Monday.
CP’s biggest members under the current, non-profit structure -- CTVglobemedia, Torstar Corp and Gesca Ltee, a subsidiary of Power Corp of Canada -- will become its three biggest shareholders.
The trio will pump money into CP -- in the “single millions” -- to help it plug a hole in its pension fund caused by plunging stock markets in 2008 and subsequent low interest rates.
“The problem of being a not-for-profit co-operative is that it doesn’t allow you to pay down your pension deficit,” the source said.
Officials at CTVglobemedia, parent of CTV Television and publisher of the Globe and Mail national daily; Torstar, owner of Canada’s biggest newspaper, the Toronto Star; and Gesca, publisher of the French-language newspaper LaPresse, declined to comment.
The transaction still needs approval from CP’s union as well as the Office of the Superintendent of Financial Institutions, the federal regulator that keeps an eye on the health of pension plans.
“The other CP members are aware of this (deal) and have given conditional approval,” the source said.
CP, along with its French-language counterpart, La Presse Canadienne, has been looking at restructuring options for the past 18 months.
The agency took a heavy financial hit in recent years when Canwest Global Communications Corp dropped its subscription and Quebecor Inc’s Sun Media unit also said it was pulling out.
The restructuring transaction should be finalized by October, the source said.
Reporting by Nicole Mordant; editing by Rob Wilson