Pension liabilities - Possible solvency funding reliefGreat news if the proposal holds through the legislative process:
https://www.bloomberg.com/politics/articles/2017-05-19/ontario-said-to-prepare-overhaul-of-pension-funding-obligations
At the end of 2016 Torstar had consolidated plan assets of 909 million and a solvency deficit (preliminary management estimate - not actuarial) of 122 million. On a consolidated basis that could mean that the calculated (discounted) pension plan liabilities are 909 + 122 = 1031 million. The solvency ratio would be about 88%. If my caculation is correct that could mean that the solvency deficit could be nearly wiped out or at least strongly reduced (Torstar has 7 plans- Metroland 4, Toronto star 2, Torstar 1, not every plan has to be above 85%). Of course I don't know the details.
The pension solvency deficit is Torstar's only real liability. If this relief comes true, Torstar could have 15-20 million p.a. more cash flow capacity over the next several years than planned before. Furthermore, this could increase my sum of the parts valuation by 1$ - 1.50$ per share! Today's share price is 1.49 $ - unbelievable.
This makes the valuation of Torstar even more insane....can't belief that it stays so low! But as mediawatcher says, the day of reckoning will come for the patient investor. Excellent risk-reward ratio!