TORONTO (Reuters) - An Ontario judge on Friday approved the transfer of Canwest Global’s flagship National Post newspaper into a new holding company, a move that will allow the money-losing daily to keep operating.
Canwest had said the move was necessary to keep the Post alive, since the company’s creditors are no longer willing to keep funding its losses.
The deal to shift the Post into the same group as the rest of Canwest’s newspaper chain is one piece of the company’s creditor protection restructuring, which it entered after buckling under a C$4 billion ($3.7 billion) debt load.
The move will fully separate Canwest’s struggling newspaper operations from the rest of the company, making its assets more attractive to prospective buyers.
It was critical to the Post and the paper’s 277 employees that the Ontario Superior Court judge approve Friday’s order.
“There’s just no money to continue beyond today,” Lyndon Barnes, a lawyer representing Canwest, said during the court hearing.
Since Canwest creditors decided they would not support the paper beyond Friday, it has no other sources of funding and without being shifted into the same holding firm as Canwest’s other dailies, it would likely die.
A failure to transfer the newspaper “would likely result in the forced cessation of its operations and commencement of liquidation proceedings in respect of the National Post Company,” Canwest said in a court filing earlier this week.
Some of Canwest’s debt dates back to its 2000 acquisition of newspapers from Conrad Black’s Hollinger International in a deal worth C$3.2 billion.
The acquisition made Winnipeg, Manitoba-based Canwest Canada’s biggest publisher of daily newspapers. The deal included 13 big-city dailies as well as 126 community newspapers, Internet assets and a 50 percent stake in the Post. Canwest later bought full control of the flagship.
Aside from the newspapers, Canwest also owns the Global television network in Canada, as well as a stable of specialty TV channels.
Like other media companies, Canwest has suffered as the recession choked off advertising revenues. It has already slashed costs, with 560 layoffs announced in November 2008.
Reporting by Wojtek Dabrowski; Editing by Frank McGurty