On Friday, a judge in Nova Scotia will be asked to approve a plan to change the debt of SaltWire Network Inc., a media company in Halifax that recently received protection from creditors, in order to find buyers or investors.
The largest newspaper publisher in Atlantic Canada, SaltWire, is looking to stay afloat by reorganizing its operations and finances under the Companies’ Creditors Arrangement Act (CCAA), but it will require investors to achieve this. In the meantime, the business will carry on as usual.
The potential change may involve reorganizing some or all of the companies within the SaltWire group, including The Halifax Herald Ltd., Titan Security and Investigation Inc., Brace Capital Ltd., and Brace Holdings Ltd.
Lawyers representing SaltWire’s main lender, Fiera Private Debt, have submitted a motion to the Nova Scotia Supreme Court, proposing a sale and investment solicitation process (SISP) overseen by FTI Capital Advisors Canada.
The SISP entails seeking investors willing to invest in the highly indebted companies or buy their assets from the market. If approved by the court, the deadline for formal bids will be July 31.
Court documents state that the main aim of the CCAA proceedings is to create a stable environment for the companies to secure financing to continue operating while pursuing a restructuring or sale of their businesses and assets through a court-supervised SISP.
Fiera, as the top secured creditor, is requesting Justice John Keith to extend SaltWire’s protection from its creditors until May 3, and to increase its borrowing limit from Fiera to $1.5 million from the $500,000 it borrowed last week.
Fiera's lawyers are also asking Keith to broaden the authority of the court-appointed monitor overseeing the CCAA proceedings, which was initially supposed to be a company called KSV Restructuring Inc. However, an updated notice suggests that the monitor, subject to court approval, could be another firm called Chaitons LLP from Toronto.
In addition, Fiera wants to enhance the powers of David Boyd of Resolve Advisory Services Ltd., who was appointed last week as the chief restructuring officer by the court.
Meanwhile, Fiera’s director of special situations, Russell French, has submitted a statement affirming that the expanded powers are necessary as the lenders want to ensure the fairness of the sale/investment process and have concerns about SaltWire Network president and CEO Mark Lever, who has expressed plans to resign and submit a bid of some kind.
'Given the concerns expressed by the lenders in their faith in (SaltWire) management, such powers will provide the lenders with the confidence required to continue to fund these proceedings,” French’s affidavit says.
French mentioned that, last fall, the SaltWire companies, with the assistance of FTI Capital Advisors, had tried to engage potential bidders in a recapitalization process, but it was unsuccessful.
"The lenders are still optimistic that they can find a third-party buyer for a business transaction," French said in his sworn statement.
Fiera Private Debt stated in papers submitted to the court on March 11 that SaltWire and The Halifax Herald Ltd. collectively owe them $32.7 million, in addition to nearly $600,000 in accumulated interest.
Approximately three-quarters of that debt is owed by SaltWire, which possesses daily newspapers in Nova Scotia, P.E.I., and Newfoundland and Labrador, such as Halifax’s Chronicle Herald, the Cape Breton Post in Sydney, N.S., the Telegram in St. John’s, and the Guardian in Charlottetown. It also owns 14 weekly publications.
SaltWire and its related companies employ around 390 individuals, including over 100 unionized employees and 800 independent contractors.
Fiera claims that the companies were poorly managed over the years, and the lender has also accused senior managers of neglecting to make payments on employee pensions or remit HST payments to the federal government.
The documents mention that The Herald was recently instructed to pay over $2.6 million in outstanding pension liabilities. And as of Jan. 2, Fiera states that SaltWire and The Herald collectively owed the Canada Revenue Agency over $7 million in collected and unremitted HST.
In its submissions, Fiera has stated that it lent money to SaltWire to assist in paying for its 2017 acquisition of nearly two dozen newspapers from Transcontinental Nova Scotia Media Group Inc. SaltWire was recently instructed to provide $500,000 as security for costs in litigation over its Transcontinental acquisition.
SaltWire has mentioned that the companies have struggled to handle "the pressures created by multinational social media networks."
This article by The Canadian Press was initially published on March 22, 2024.
