February 2nd, 2010
The restructuring process, including finding a buyer(s), for Canwest newspapers gets more curious with every filing of new material to the court-appointed monitor’s website.
So far this week, a reading of the new documents reveals a nasty power struggle between important financial interests who are secured creditors and no-less important financial interests who are unsecured creditors — with Leonard Asper apparently on the losing side. There are also hints of soap-opera-like betrayals at the senior management level and other indications of dissent at the top.
While the court ruled today that secured creditors (primarily Canada’s big five banks) will not have a formal veto over bids and also added a week to the first round of the bidding process, the anger of unsecured creditors jumps off the pages of their submissions to the court. They did not want Canwest to enter CCAA and neither did Leonard Asper. For a taste of the comments by unsecured creditors see our story about developments yesterday. For the Asper angle download and read his Jan. 4, 2010 letter here Asper letter (86).
As for betrayal at the top, download and read former Ottawa Citizen publisher Russell Mills’ affidavit about how he and other retired Canwest executives had their pensions slashed here Mills letter (150).
Reading this and two other former senior executives’ affidavits must suggest to current senior managers just how far loyalty to the company gets them.
For me the whole CCAA process is yet another reminder of the importance of union solidarity. We need to look after each other as best we can, because the system can be pretty cruel.
Gary Engler
Posted in Blog, Canwest |
January 22nd, 2010
“What’s going to happen next?” remains the hottest topic of conversation among Canwest employees two weeks after the company’s newspaper division entered creditor protection.
Here’s what we do know:
The big Canadian banks that, in effect, are currently running the company because of the debts owed them, have made an offer of $925-$950 million for “substantially all” the newspapers, websites, printing plants, etc.
A process has begun that solicits “expressions of interest” in Canwest newspaper assets.
One expression of interest that has been reported is for the Montreal Gazette, Ottawa Citizen and National Post and no other papers. The public faces of this expression made many comments about local ownership, community connections and the problems of chains, opinions that we have expressed for many years.
Canwest spokespersons, on the other hand, have talked about the desirability of all the newspapers staying together as part of one national advertising selling organization. However, we do know that these Canwest spokespersons are unlikely to wield much influence in the ultimate decisions regarding who buys what. The bottom line will be most important to those with the real power in this process, which are the banks.
For example, it may make sense to sell off all the big city dailies to one buyer; Windsor, Victoria, Nanaimo and Alberni to others and weeklies to yet another. This or some variation may produce the biggest aggregate offer.
Debt, or more precisely the lack thereof, remains the key to the success of this process, at least from the point of view of those of us who are employed producing newspapers, large and small. It is in our self-interest that whoever buys the whole, or pieces, of Canwest’s newspaper empire owe as little as possible, so that we do not end up in the same situation a few years down the road.
We have another six weeks to go, according to the CCAA plan, before we may know all those who have expressed interest in purchasing assets.
Regardless of the outcome of this process, all the Canwest assets may not find buyers. For example, what will happen to College Printers, which prints the Globe and Mail for the B.C. market and many of the Canwest Lower Mainland community papers, but which the company has announced will close on Sept. 30, 2010? Will a buyer be found that wants to keep the plant open, at least through Sept. 30? If not, what happens to Local 2000 and Local 525 members who will be owed severance and vacation pay?
How Canwest, the banks, the court monitor and the judge treat our most vulnerable members will be an important factor in shaping our union’s strategy in this CCAA supervised sale process. Will the banks wage war on our members, forcing us to respond in kind? Or will there be room for good will, sitting down to talk and trust?
The next few weeks will be interesting.
Gary Engler
Posted in Blog, Canwest |
January 7th, 2010
However one characterizes it — criminal or just the way the capitalist system works — Hollinger’s last chapter is a fitting end for the newspaper empire once run by convicted felons Conrad Black and David Radler.
In this end to the story of what was once the dominant newspaper chain in Canada, controlled by Lord Black of Crossharbour who currently resides in a Florida prison, $43 million is “diverted” from the pockets of retired workers to shareholders and no one (so far) goes to jail.
Here’s the short version of what happened:
In July 2000, Canwest purchased most of the Canadian newspapers once owned by Hollinger, but as part of the deal Hollinger continued to pay for pensions and benefits for those former employees who had already retired and all payments for people then on long-term disability.
In January 2006 Hollinger sold the rest of its assets to the company now known as Glacier Media. Once the sale was completed Hollinger had no ongoing business activity.
However, it continued to administer post-employment, post-retirement and pension benefits for approximately 3,000 former employees of the Southam/Hollinger newspaper chain. At that time Hollinger had assets of well over $150 million to pay for its responsibilities to retirees and disabled employees.
On December 10, 2009 Hollinger (as Hollinger Canadian Publishing Holdings Co.) filed for protection from its creditors under the Companies’ Creditors Arrangement Act (CCAA) claiming liabilities of $94.4 million and assets of $32.6 million.
What caused Hollinger’s assets to shrink from over $150 million to $32.6 million in less than four years?
On Nov. 1, 2006, Hollinger loaned its parent, the Sun-Times Company, $50 million (US).
Hollinger held $48.2 million (US) in Asset Backed Commercial Paper (ABCP) when the market froze in August 2007. According to court documents $28 million (US) of these were sold for $21 million (US) and of the remaining $20.2 million (US), $7.1 million (Can.) may be recovered.
In January 2008, the Sun-Times Company was notified by the IRS (U.S. taxman) that it had reassessed the company’s tax bill in light of the fraudulent activity of Conrad Black and David Radler. The Sun-Times now owed hundreds of millions of dollars in back taxes. It was widely speculated at the time that the company would be forced into bankruptcy. (It did file for bankruptcy protection on March 31, 2009.)
Despite this, in October 2008, Hollinger made a dividend payment to its shareholders of $43 million.
“Hollinger paid out $43 million to its shareholders at a time when it should have been apparent that this would have an adverse impact on the rights and entitlements of retirees,” said Peter Murdoch, vice-president media for the Communications, Energy and Paperworkers Union of Canada CEP.
Documents filed in the Hollinger CCAA proceedings just before Christmas show that this $43 million dividend was issued on the basis that Hollinger had sufficient remaining assets to satisfy all of its obligations, including its obligations to Southam/Hollinger retirees. However, Hollinger’s single biggest “asset” was the $50 million (US) loan made to its parent company, the Sun-Times Company, which would prove worthless a few months later upon the Sun-Times bankruptcy filing in the U.S.
“The timing of these transactions raise serious questions that require investigation,” said Murdoch. “It is unconscionable that a company which should have seen the writing on the wall decided to pay off its shareholders and thereafter abandoned its pensioners. If it isn’t illegal, it should be.”
Gary Engler
Posted in Blog, Canwest |
November 30th, 2009
The suspense is killing us. When will Canwest’s publishing side enter creditor protection?
Soon seems to be the consensus. It’s not a question of if, but when — that seems certain. Still, we’re dying to know more about what’s happening behind the scenes. While we’ve learned to live with the uncertainty, we’re desperate for answers.
Who will end up owners of the Canwest newspapers? Will the dailies be sold off together or in pieces? What happens to the B.C. weeklies and small dailies? Does the announced closing of College Printers next September mean Canwest already has a plan for its papers printed there? What happens to Canwest News Service and other integrated operations if the chain is broken up? If a buyer(s) pay(s) too much and therefore takes on a pile of debt will we be back in the same spot a few years from now?
Show us the deal(s), so we can get on with our lives!
Since no one is talking, we’ve taken to looking for signs. Certainly the headlines about Canwest’s latest financial results do suggest a story.
Here’s the CBC: Canwest revenues, profit slump. Toronto Sun: Canwest revenue, profits spiral downward. Canadian Press: Canwest Global posts fourth-quarter loss on weak advertising revenues. Reuters: Canwest posts drop in revenue, operating profit.
But on the Canwest-owned Canada.com website: Canwest reports quarterly operating profit of $52 million.
Perhaps the positive spin suggests Canwest is still trying for a higher price.
And Leonard Asper’s message to employees this morning certainly strikes a “glass-half-full” outlook:
“Publishing too has made strides under difficult conditions. I know that it continues to be tough sledding but I can see signs of the economy starting to stir and I know the work that has been done to position Publishing to take advantage at the local level and nationally. Two areas that really struggled last year – the real estate sector and the auto sector – have shown some improvement from the last quarter.”
We hope the spin is just as positive come next round of bargaining.
***
What would you get if you crossed Rupert Murdoch and Conrad Black?
We may soon find out.
Lachlan Murdoch, the elder son of Rupert, is reported to be close to buying U.S. trade magazines including the music and entertainment industry bibles Billboard and the Hollywood Reporter.
His company, Illyria, is interested in the bulk of Nielsen Business Media in partnership with a newly created investment team that includes a nephew of Conrad Black, according to the Financial Times.
Pluribus Capital Management brings together James Finkelstein, the publisher of Washington insider newspaper The Hill; Matthew Doull, a former publisher of Wired and Black’s nephew; and George Green, the former publisher of Hearst International.
***
Despite some doomsayers, the printed newspaper seems very much alive, in London at least. According to the The Guardian, a group of unknown investors is planning to launch a new freesheet, the London Weekly. About 250,000 copies will be distributed twice weekly, on Fridays and Saturdays, outside rail and tube stations.
No launch date is confirmed, although there are rumours in the industry that it could appear in February. An online holding page states that the London Weekly website will go live on 20 December.
A press package prepared for potential advertisers says that publisher Global Publishing Group has raised more then £5.5m to launch the title, along with a website and online radio station and TV channel.
A detailed rate card says a full-page ad in the paper will be priced at £5,250 and a double-page spread at £9,291.
Gary Engler
Posted in Blog, Canwest |
October 30th, 2009
“Welcome. Make yourself at home.” While those are your words, you’re thinking: Okay they’re family, but they’re losers who act like they know it all. Have I bought enough beer? I really can’t afford this. Why does the National Post have to stay with us?
Pardon the rest of Canwest newspaper employees for feeling more than a little leery about the prospect of the National Post returning to the financial embrace of “the LP Entities” — as the lawyers and company executives currently dining at the Michelin three star establishment named CCAA refer to our employers.
Sure we’re glad that 277 Post employees will keep their jobs for at least a while longer. But how will this affect us?
In the court documents filed (http://cfcanada.fticonsulting.com/cmi/) as part of the Companies Creditors Arrangement Act proceedings, we learn that the National Post has “had an EBITA loss of $20.3 million, $16.3 million, $13.1 million and $12.7 million, respectively” from 2005-08 and is projected to have had a further loss of $9.3 in the 12 months ending August 31, 2009. In 2001 the Post lost $60 million. Over seven years NP has been bailed out to the tune of $139.1 million.
How can these sorts of losses possibly be good for the financial health of the “LP Entities” that include 12 dailies and 22 non-daily newspapers? In the past year, the 5,400 people working for these publications, including over 1,200 members of CEP Local 2000, have been asked/told to cut wages, to give up promised increases, and to make other concessions because not enough profit is currently being made. Adding in the National Post’s losses can only make matters worse.
(It is not only the operating losses that are being taken on, but also the National Post pension plan, which had a winding-up deficiency of $1.6 million as of December 2006. In addition, the “LP Entities” will take on up to $6.3 million in assumed liabilities and make a cash payment of between $2 and $2.5 million.)
Despite a management assertion, in court documents, that “closure of the National Post would increase the LP Entities’ cost burden by approximately $14 million in the fiscal year ending August 31, 2010,” the numbers just do not add up to good news for the vast majority of Canwest newspaper employees.
Instead, the real story is that creditors have been convinced they will get a bigger return on their investment in Canwest debt if the National Post is part of the package of newspapers to be sold. Their plan is to sell a “national network” of newspapers to investors who have been convinced by “convergence” logic similar to what got Canwest in trouble in the first place.
The idea that there are “synergies” in owning a chain of national newspapers anchored by a “flagship” national paper still sounds good to some, despite its actual dismal history.
In reality this form of ownership and operation is a failed experiment. It treated a chain of newspapers like a television network, where the same programs run on every station at the same time. But newspapers are not the same as television, where central buying of content made by Toronto or Montreal or Vancouver or Hollywood studios makes sense.
People buy and read local newspapers to get local news collected by journalists who are members of their community.
The truth is newspapers work best when they reflect the communities in which they operate. People want well-written, unique local news and an editorial slant that champions diverse viewpoints. Not reheated, bland “infotainment” from a “news service” with a narrow political agenda.
Victoria is not Vancouver, which is not Calgary, which is not Edmonton, which is not Regina or even Saskatoon, which are not Windsor or Ottawa, which are definitely not Montreal. Each has its unique politics, culture and sense of itself when looking into a mirror. Successful newspapers reflect that uniqueness.
The best thing that could happen as Canwest disappears through “restructuring” is local ownership. We need news outlets that communities feel belong to them. That’s what we should be fighting for. That’s what makes economic sense, especially in the age of the World Wide Web, when getting news you can’t get anywhere else is the only way to stand out.
The employees of Canwest have their jobs on the line as the corporate restructuring takes place. If the hedge funds, executives and lawyers get it wrong, it is ultimately the employees and the communities they serve who will pay the price.
We owe to ourselves to speak up.
Gary Engler
Posted in Blog, Canwest |
October 16th, 2009
Company executives, directors, lawyers, hedge funds, banks have all looked after themselves in the restructuring process currently underway at Canwest, but what about us workers? What is our self-interest and how can we best advance it?
So far in the restructuring process (This is all based on documents filed as part of the Companies’ Creditors Arrangement Act [CCAA] process [http://cfcanada.fticonsulting.com/cmi/]and news reports):
- Twenty “key” executives will share almost $10 million in retention bonuses, in addition to their already substantial salaries, simply to keep working.
- Canwest directors have made sure the company will pay for any financial liability they may face up to $20 million.
- Certain “current and former management employees” who were participants in the Canwest Global Communication Corp. and Related Companies Retirement Compensation Arrangement Plan were paid out on Sept. 4, 2009 the approximately $47 million promised to them (Part of the payment will be made later, after a tax refund from Revenue Canada.)
- All the lawyers, accountants and “restructuring specialists” involved in the CCAA process receive substantial remuneration that gets top priority for payment.
- Eleven defined benefit pension plans covering conventional TV and National Post employees suffer a total $32.8 million winding-up deficiency. Under previous CCAA scenarios, companies have been allowed to escape their commitment to make up similar deficiencies.
- Canwest TV employees who were recently laid-off or are about to lose their jobs will likely lose most of their severance and holiday pay owing.
- Canwest’s list of unsecured creditors is long and ranges in amounts owing from over $8 million to a few dollars for an outstanding cab fare. The vast majority of these creditors will receive a few cents on the dollar at best.
Clearly those with the power to look after themselves have done so. Others will be a lot less fortunate.
The most important question facing Local 2000 members who work for Canwest is: What can we do to protect our self-interest in the face of a seemingly inevitable CCAA filing on the newspaper side of the company?
First, we must use the power we have, which means our union and our collective agreements. Compared to non-union employees we have tremendous advantages. We get to negotiate. They must accept.
Of course, there is a high probability that sooner or later we will face tough bargaining, which might involve sacrifices and unpleasant outcomes.
But we do have the power through solidarity to resist unilateral changes to the terms and conditions of our employment. And we may be able to do more than simply defend what we previously won. There may be opportunities in the CCAA process, as well as unpleasant outcomes.
For example, if we stick together and show solidarity in difficult times, perhaps we can explore new models of decision-making that would allow workers a say in how the company is managed. Perhaps we can negotiate for an ownership stake.
This would certainly be in our self-interest because recent events have demonstrated the competency level of current Canwest owners and executives.
I believe we could do better. I believe our newspapers would improve if those who work for them had a substantial say in how they were run. I believe productivity would improve and democracy would be better served, as well.
I believe it is in our self-interest to achieve the same sort of power that allows company executives to look after themselves. If we had that power we could look after ourselves, our families, our communities and the principles of journalism we believe in.
Perhaps this is an unrealistic dream, but some of us refuse to be beaten down by bad times. Some of us prefer to imagine a better way. Sometimes opportunity comes in the middle of a crisis.
Gary Engler
Posted in Blog, Canwest |
October 7th, 2009
Creditor protection is a nasty business as our laid off brothers and sisters on the television side of Canwest found out Tuesday. They won’t be getting their severance pay because the law allows companies to leave laid off workers high and dry. That’s right, former employees owed severance go into the long line of unsecured creditors, likely to get a few cents on the dollar if they are lucky.
But others do rather better in the process. The already wealthy make sure to look after their friends and partners in driving the company into the ground.
Documents filed in court show that Canwest plans to pay almost$10 million in bonuses to keep 20 “key” executives in their jobs as the restructuring occurs under bankruptcy protection, according to Reuters.
“And while we’re talking about who gets money at CanWest, the documents show that the company’s recently hired chief restructuring officer, Hap Stephen , has been receiving monthly cheques of $125,000 since he quietly started in July, plus a signing fee of $5,000. With his contract set, for now, to expire at the end of the year, that’s a cool $755,000,” according to the Globe and Mail.
But, that’s not all.
“According to documents filed as part of CanWest’s bankruptcy protection
proceedings in the Ontario Superior Court Tuesday, the company’s directors, including boardroom heavyweights Derek Burney and David Kerr , have unusual clout.
“The company’s directors and officers insurance, which shields boardroom bigwigs from lawsuits and other liabilities, technically expired in August and directors have put the company on notice that they will walk unless they are covered.
“Documents show the company had total D&O insurance of $40-million, but the policy expired on Aug. 31. CanWest got a bit of a reprieve when the policy was extended by two months until the end of October, but as of yesterday, company documents said: “CanWest Global has been unable to obtain additional or replacement D&O insurance coverage.”
“As a result, the directors have demanded $20-million of protection from the company, a claim that would rank ahead of almost all other creditors.
“A CanWest court document said the charge is “necessary” so the company can “benefit from [the] directors and executives experience.” Over to you, Madam Justice Sarah Pepall .”
Workers get the shaft, executives are paid bonuses, the directors get protected and “restructuring experts” get to feast on the dripping roast.
What a system!
Gary Engler
Posted in Blog, Canwest |
September 24th, 2009
It seems to be business as usual for Glacier Media Inc., despite the recession, as the company announced Wednesday that it will continue to buy back its shares.
Vancouver-based Glacier filed a “Notice of Intention to renew its normal course issuer bid to purchase, subject to regulatory approval, up to 2,500,000 common shares (2.7% of the outstanding common shares and 4.0% of the public float) from time to time during the next 12 months.”
Glacier, which owns scores of newspapers across western Canada, two in Quebec and one daily in Ontario, has so far remained profitable despite the downturn in the economy and bad times in the North American newspaper industry.
According to a press release, “Glacier is monitoring risk levels in the context of the recession and is using free cash flow to maintain debt at manageable levels while evaluating acquisitions, share buy-backs and operating investment opportunities within the context of expected returns and related risk profiles. These investments will only be undertaken if debt and operating levels are deemed prudent within the context of the increased risks entailed in a recessionary environment.”
In the past year Glacier has purchased 413,504 common shares for cancellation at a weighted average price of $2.09 per share.
As of September 14, 2009, there were 92,874,125 common shares issued and outstanding.
Posted in Blog, Glacier |
September 18th, 2009
Blame Conrad Black. It’s all his fault. Every single media woe. Bankruptcies. Declining circulation. The public’s lack of trust. Everything.
We were reminded of this “fact” in an Associated Press story this week about the Sun-Times Media bankruptcy:
“Sun-Times Media filed for Chapter 11 bankruptcy protection in March, citing $479 million in assets and $801 million in debt.
Besides factors plaguing newspapers nationwide, the company owes as much as $608 million in back taxes and penalties related to the business practices of former owner Conrad Black, who is serving a prison sentence for siphoning millions of dollars from the company.”
And let’s not forget Conrad forced the Aspers to pay too much for his chain of Canadian newspapers, causing the current financial mess at Canwest.
Not to mention how he politicized the former Southam chain, turning mushy right-liberal papers with broad appeal into hard right, Fraser-Institute-promoting rags that preached to the converted and caused everyone else to dump their subscriptions.
No wonder readers think newspapers have an agenda other than reporting the news.
Hell, even the current defined benefit pension crisis can be traced back to certain accounting maneuvers pioneered during the biographer’s days as owner of Dominion Stores.
It’s all Conrad Black’s fault.
This would be believable, but for the fact that the madness took place everywhere, not just the places where the kid who was expelled from Upper Canada College left his fingerprints. Excess was practiced and celebrated in every corner of contemporary capitalism.
Greed was good, hundred million dollar bonuses were “earned” by purveyors of opaque financial instruments and the media marveled at $25 million apartments. Where did the money come from?
The truth is Conrad was a poster boy for an economic and political system that was not too long ago heralded for its supposed successes but is now tainted by its excesses and readily apparent failures. He relished in the limelight, but the downside of his fame and fortune is that when the system came looking for scapegoats Baron Black of Crossharbour was more than suitable.
Sure, the man who crushed the noble Calgary Herald strikers got what he deserved. But decent people should also feel a little sympathy for a guy who just did what the system encouraged any successful businessman to do: Take personal advantage, screw the workers and enjoy the party while it lasts.
Is Conrad Black to blame? Or should we blame the system?
If it’s all Conrad’s fault, then the system is left off the hook and nothing will change. Perhaps that’s the real reason for the prison cell.
Gary Engler
Posted in Blog, General |
September 11th, 2009
The saga continues as another Canwest debt deadline has been extended. This time the TV side of the company, Canwest Media Inc. (CMI), received a further two-week extension to come up with a recapitalization agreement.
According to a press release today: “the holders of the 12% senior secured notes of CMI and Canwest Television Limited Partnership as well as CIT Business Credit Canada Inc., the provider of a senior secured revolving asset-based loan facility to CMI, have agreed to extend to September 25, 2009 certain milestones that were to be have been achieved by September 11, 2009. The date by which CMI must enter into an agreement in respect of a recapitalization transaction has been extended to September 25, 2009.
“CMI and the members of the Ad Hoc Committee have also entered into a further extension agreement and forbearance to September 25, 2009.”
This follows an announcement Thursday that the newspaper side of Canwest has reached a deal to postpone some debt payments until the end of October.
Canwest has a total debt of about $4 billion.
Posted in Blog, Canwest |
