By: Mark Fitzgerald
Osprey Media Income Fund, the publisher of 21 dailies and 33 non-dailies in Ontario, is undertaking a review of “strategic alternatives” including selling itself, the company said.
Osprey, which began in 2001 with the C$220 million purchase papers from Hollinger International, said it is looking for ways to boost share value that has been hammered by the government announcement that new federal taxes will be imposed on existing income trusts in 2010.
In addition to an outright sale, the alternatives include find new investors or converting back to a corporate structure.
Income trusts were hugely popular among Canadian businesses for a time in the early 2000s. Under the trust arrangement, companies pay out a large percentage of cash flow — sometimes as high as 80% — as dividends, which under Canadian tax law were taxed at 15%. The rage for income trusts pushed some initial public offerings (IPOs) sky-high, including Osprey’s .
Shares in Osprey traded at C$10 at the time of its 2004 IPO. Wednesday afternoon they were trading at C$5.85.
Osprey has been the subject of sales rumors for more than a year. Investors noted that some quarters, the chain was paying out more cash flow in dividends than it was earning.
Osprey’s principal owner is the Ontario Teachers’ Pension Plan.