TORONTO (Reuters) - The National Post, the flagship daily newspaper of Canada’s beleaguered Canwest Global Communications, will likely be forced to close after Friday if it isn’t transferred to a new holding company, Canwest said in a court filing.
Creditors of the company have indicated they are no longer prepared to fund continuing losses at the Post, which employs 277 people, Canwest said.
The creditor group “will not continue to support funding the National Post Company in the long or short term past October 30, 2009,” Canwest said in a court report released on Thursday.
Canwest said the Post has no other sources of funding its “ongoing losses.” A failure to transfer the newspaper into a different holding company by October 30 “would likely result in the forced cessation of its operations and commencement of liquidation proceedings in respect of the National Post Company.”
Canwest said earlier this week it has reached a deal to move the Post into a new subsidiary of Canwest Publishing Inc, but the move needs court approval. A hearing is set for Friday.
“The National Post Company has been unprofitable since its inception, recording annual losses as high as approximately C$60 million in 2001,” Canwest said.
For the year ended August 31, the newspaper is projected to have suffered a net loss of C$9.3 million ($8.7 million).
For the past seven years, the losses at the paper have been funded by a Canwest subsidiary called Canwest Media Inc.
“As a result, the National Post Company is currently indebted to CMI in the amount of C$139.1 million,” the court filing states.
Parts of Canwest, including the Post, filed for creditor protection earlier this month in a bid to restructure the parent company’s C$4 billion ($3.74 billion) debt.
Some of Canwest’s debt dates back to its 2000 acquisition of newspapers from former press baron Conrad Black’s Hollinger International in a deal worth C$3.2 billion.
The acquisition made 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.
Like other media companies, Canwest has been hit 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 Peter Galloway