Canada's biggest publisher files for bankruptcy

SAN FRANCISCO, Jan. 8, 2010 (RISI) - The owner of Canada's largest newspaper chain, Canwest Global Communications, has placed its newspaper and online operations under bankruptcy protection and put them up for sale.

RBC Capital Markets has been hired to seek out possible buyers for the newspaper company, and a group of senior lenders has made a bid to take over the chain if no better offer is forthcoming.

A consortium of five of Canada's largest banks placed their bid before the court to establish a floor price for the chain, which comprises ten dailies and 26 community newspapers including the Vancouver Sun, Montreal Gazette, Ottawa Citizen and Calgary Herald.

The banks are also providing C$25 million ($24 million) debtor-in-possession ( DIP) financing to carry the business through the restructuring process. The ‘pre-packaged' plan has the approval of 48% of Canwest's 8% senior noteholders.

Negotiating a restructuring plan with creditors in advance of a filing tends to shorten the length of time a company is in creditor protection and increases the likelihood of court approval.

The filing today under Canada's Companies' Creditors Arrangement Act (CCAA) covers all Canwest's newspaper and online operations, with the exception of the National Post.