TORONTO (Reuters) - Postmedia Network Canada Corp (PNCa.TO), the country’s biggest newspaper publisher, said on Thursday it had initiated a review to consider asset sales and debt and equity restructuring as its losses widened.
The publisher said it lost C$225.1 million ($170.96 million) in the three months to the end of February, including a C$187 million impairment charge, in what Chief Executive Officer Paul Godfrey called “an unrelentingly challenging environment.”
That compared with a loss of C$58.2 million a year earlier.
Canadian newsrooms are shrinking in increasing numbers as an oil shock rocks the economy and curtails the appetite of advertisers already distracted by digital outlets. The media retreat is touching small-city newspapers thousands of kilometers apart.
Godfrey and Chief Financial Officer Doug Lamb said on a conference call that a decline in automotive advertising was a particular weight as carmakers move more of their ad spend online to digital outlets such as Google search and Facebook.
Postmedia said it had formed a special committee to consider non-core asset sales, cost reductions, initiatives to boost sales, and refinancing or repayment of debt and the issuance of new debt or equity. The executives declined to offer further details.
Postmedia said it has just under C$650 million of debt outstanding.
The value of Postmedia’s bonds has plummeted as investors brace for a restructuring. Its shares have fallen to around 6 Canadian cents a share from about C$2 a share in 2014. Volume of shares trading are typically thin, although there has been a spike in activity this month.
The company also said that Ted Lodge, a partner at its largest shareholder, hedge fund manager GoldenTree Asset Management LP, had resigned from its board to “focus on GoldenTree’s investment in Postmedia.”
GoldenTree is looking to sell its stake in the company, the Wall Street Journal reported in March, citing unnamed sources.
Postmedia’s stable of newspapers includes the National Post, Montreal Gazette, Calgary Herald, Ottawa Citizen and Sun tabloids in Toronto, Calgary, Edmonton, Ottawa and Winnipeg.
The company said revenue, excluding the contribution of the Sun newspaper chain acquired in April 2015, fell 13.1 percent to C$126.4 million. Including the Sun titles, revenue was C$209.1 million.
The company said in January it planned to cut C$80 million in operating costs by the end of fiscal 2017, up from a C$50 million target in July last year.
Reporting by Alastair Sharp; Editing by Bernadette Baum and Alan Crosby