Canwest LP Sells for $1 Billion-Plus in Canada?s Largest Newspaper Deal

A group led by former Sun Media tabloid publisher and current National Post CEO Paul Godfrey won the bidding late Monday to buy Canwest Global Communications group of newspapers, including  the Montreal Gazette, Ottawa Citizen and Vancouver Sun.

Godfrey’s group is paying C$1.1 billion, or US$1.07 billion, including C$950 million in cash for Canwest Limited Partnership, the largest publisher of English-language newspapers in Canada.

Godfrey and others in the group are members of the ad hoc committee holding subordinated notes in Canwest, Canada’s largest media company that was brought down by ill-times acquisitions financed by high debt. Canwest sought bankruptcy protection in January.

"The group's involvement in this acquisition should be seen as a strong vote of confidence in the power of the major brands making up this family, and in the future potential of this business,” Godfrey wrote in a memo to Canwest staffers. “This Canadian solution has limitless potential and will prove to be most rewarding for all of our stakeholders."

The bondholders’ bid bested what was expected to be a leading offer by Torstar Corp. backed by Fairfax Financial Holdings, which holds a 20% stake in the publisher of Canada’s biggest paper, The Toronto Star.

"We took a hard long look at this opportunity. In the end, the successful price was well beyond what we were prepared to pay. We wish the new owners well," Torstar president and CEO David Holland said in a statement reported by The Canadian Press.

CP also quoted Communications Workers of America Director Arnold Amber as calling the sale a “great relief” for the 800 union-represented workers at five of Canwest’s dailies.

The Godfrey group’s bid pays nearly in full Canwest’s creditor banks, which had put a C$950 million minimum bid for the newspapers, which they also insisted be sold as a group. 

Canwest said unsecured creditors will receive about 45% of shares in the new company, which will continue to be publicly traded.

Godfrey is to become its new CEO.

The deal is expected to close by July 15.