Postmedia Completes Recapitalization
|Areas||Banking and Finance Law, Corporate and Commercial, Corporate Finance and Securities, Corporate Restructuring, Employment and Labour, Tax|
Goodmans represented Postmedia Network Canada Corp. (PNCC) (TSX:PNC.A, PNC.B) and Postmedia Network Inc.’s (“PNI” and together with PNCC, the “Company” or “Postmedia”) in connection with the completion of a recapitalization transaction pursuant to a court-approved plan of arrangement (the “Plan”) under the Canada Business Corporations Act on October 5, 2016. The recapitalization involved the restructuring of over $600 million of PNI’s existing debt obligations, which included the following principal terms:
- the 8.25% senior secured notes issued by PNI due August 2017 (the “First Lien Notes”) were extended by approximately four years to July 2021 and reduced to C$225 million as a result of an immediate cash pay down of approximately C$78 million;
- the 12.50% senior secured notes issued by PNI due July 2018 (the “Second Lien Notes”) in the aggregate amount of approximately US$268.6 million were exchanged for approximately 98% of the total number of shares of PNCC;
- approximately US$84.4 million of new capital was invested in the form of new U.S. dollar denominated second lien secured notes due July 2023 with no cash interest for the first three years, subject to certain conditions; and
- obligations to employees, customers and suppliers were not affected.
The Company’s total debt was reduced by approximately C$307 million and its annual cash interest expense was reduced by approximately C$50 million.
On announcement of the recapitalization transaction, the Company had the support of holders of approximately 82% of the outstanding First Lien Notes, approximately 80% of the outstanding Second Lien Notes and approximately 75% of the outstanding shares pursuant to support agreements entered into with the Company. At meetings held in respect of the Plan on September 7, 2016, 100% of the votes cast by the holders of First Lien Notes, 100% of the votes cast by the holders of Second Lien Notes, and approximately 99.9% of the votes cast by the shareholders were voted in favour of the Plan, and the Plan was approved by the Ontario Superior Court of Justice (Commercial List) on September 12, 2016.
PNCC is the holding company that owns PNI, a Canadian news media company representing more than 200 brands across multiple print, online, and mobile platforms.