Postmedia Network Canada Corp. (“Postmedia” or the “Company”) today announced that, further to its announcement on February 17, 2022, it has obtained consents from beneficial shareholders (excluding Canso and Chatham, each as defined below) of the Company (“Shareholders”) holding, in the aggregate, shares representing more than 50% of the voting rights attached to the Company’s issued and outstanding class C voting shares (the “Voting Shares”) and class NC variable voting shares (the “Variable Voting Shares” and, together with the Voting Shares, the “Shares”), approving the extension of the maturity of the Company’s first lien notes, second lien notes and asset-based revolving credit facility, as well as the issuance of 794,630 variable voting shares of Postmedia to holders of the first lien notes in connection with the extension of such notes.
As previously announced, the Company has entered into definitive agreements, subject to customary closing conditions, providing for an extension of the maturity of its 8.25% senior secured notes due 2023 (the “First Lien Notes”) and its 10.25% second lien senior secured notes due 2024 (the “Second Lien Notes” and, together with the First Lien Notes, the “Notes”) by approximately three and a half years from July 15, 2023 to approximately February 17, 2027, in the case of the First Lien Notes, and from January 15, 2024 to August 17, 2027, in the case of the Second Lien Notes, on substantially similar terms (including interest rates) to the existing terms of the First Lien Notes and Second Lien Notes, respectively. The Company has also entered into a definitive agreement providing for the extension of the maturity of its asset-based revolving credit facility (the “ABL Facility”) by three years to October 1, 2025. In connection with the extension of the maturity of the First Lien Notes, the Company has agreed to issue approximately 794,630 Variable Voting Shares (the “Equity Fee Shares”) to the holders of the First Lien Notes at an implied price of $2.10 as a fee for the extension.
Requirement for TSX Approval
There are currently C$63,472,444 aggregate principal amount of First Lien Notes outstanding, all of which are held by Canso Investment Counsel Ltd., in its capacity as portfolio manager for and on behalf of certain accounts that it manages (collectively, “Canso”). There are currently US$158,667,005 aggregate principal amount of Second Lien Notes outstanding, a significant portion of which are held by Chatham and its affiliates (collectively, “Chatham”). There is currently no amount drawn on the ABL Facility.
Given their respective shareholdings in the Company, each of Canso and Chatham is an “insider” of the Company under the TSX Company Manual. Under Section 501(c) of the TSX Company Manual, certain transactions involving insiders of a non-exempt issuer require disinterested shareholder approval if the value of the consideration to be received by the insider exceeds 10% of the market capitalization of the issuer. The value of the interest to be received by Chatham under the extended term of the Second Lien Notes and the ABL Facility exceeds 10% of the Company’s market capitalization and, as such, shareholder approval is required. Although the value to be received by Canso in connection with the extension of the maturity of the First Lien Notes (including the Equity Fee Shares) will not exceed 10% of the Company’s market capitalization, the Company has chosen to seek the approval of the Shareholders for these transactions together with the approval of the extension of the maturity of the Second Lien Notes and the ABL Facility.
The Company has obtained the above approvals through the solicitation of written consents as permitted under section 604(d) of the TSX company manual from beneficial Shareholders (excluding Canso and Chatham and their respective affiliates and associates) owning, in the aggregate, Shares representing more than 50% of the voting rights attached to the Company’s issued and outstanding Shares. The transactions will not materially affect control of the Company.
The Company intends to provide a further update on closing of the extensions of the maturities of the First Lien Notes, the Second Lien Notes and the ABL Facility.
About Postmedia Network Canada Corp.
Postmedia Network Canada Corp. (TSX:PNC.A, PNC.B) is the holding company that owns Postmedia Network Inc., a Canadian newsmedia company representing more than 130 brands across multiple print, online, and mobile platforms. Award-winning journalists and innovative product development teams bring engaging content to millions of people every week whenever and wherever they want it. This exceptional content, reach and scope offers advertisers and marketers compelling solutions to effectively reach target audiences. For more information, visit www.postmedia.com.
Forward-Looking Information
This news release contains certain information that is “forward-looking information” concerning anticipated future events, results, circumstances, performance or expectations with respect to the Company and its operations. Forward-looking information includes statements that are predictive in nature, depend upon future events, trends, prospectus or conditions, or include words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “may,” “will,” “could,” “would,” “should” and similar expressions and derivations thereof. Forward-looking statements in this news release include, but are not limited to, statements with respect to the extension of the maturity dates of the First Lien Notes, the Second Lien Notes and the ABL Facility. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect, including, but not limited to: the satisfaction or waiver of all closing conditions and the completion of the extension of the maturity dates of the First Lien Notes, the Second Lien Notes and the ABL Facility. Forward-looking information is based on underlying assumptions and management’s beliefs, estimates and opinions, and are subject to inherent risks and uncertainties (many of which are beyond Postmedia’s control) surrounding future expectations generally that may cause actual results to vary from plans, targets and estimates. These risks and uncertainties include, among others: the possibility that the proposed extension of the Notes and the ABL Facility will not close, as well as the various risk factors described in the section entitled “Risk Factors” contained in our annual management’s discussion and analysis for the years ended August 31, 2021 and 2020. Although the Company bases such information and statements on assumptions believed to be reasonable when made, they are not guarantees of future performance and actual results of operations, financial condition and liquidity, and developments in the industry in which the Company operates, may differ materially from any such information and statements in this press release. Given these risks and uncertainties, undue reliance should not be placed on any forward-looking information or forward-looking statements, which speak only as of the date of such information or statements. Other than as required by law, the Company does not undertake, and specifically declines, any obligation to update such information or statements or to publicly announce the results of any revisions to any such information or statements.
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