A Nova Scotia judge will be asked today to approve a plan to restructure or seek bidders to buy or invest in SaltWire Network Inc., the insolvent Halifax-based media company recently granted protection from its creditors. THE CANADIAN PRESS/Darren Calabrese
Nova Scotia's largest media company, SaltWire Network, has been granted an extension to its court order protecting it from numerous creditors, who are owed over $90 million. This extension was approved by Nova Scotia Supreme Court Justice John Keith, allowing SaltWire to continue operating under the Companies' Creditors Arrangement Act (CCAA) until May 3. The company is likely to seek further extensions beyond this date as it works on restructuring and survival strategies.
The decision to extend the protection came after the judge's approval of a proposal by SaltWire's primary lender, Fiera Private Debt, to provide $1.5 million in operating funding. Fiera, being the senior secured creditor owed more than $32.7 million, opted to collaborate with SaltWire on restructuring rather than pushing it into receivership.
This additional funding follows an initial loan of $500,000 granted by Fiera on March 13, when SaltWire was first granted creditor protection. This funding, coupled with the oversight of a court-appointed monitor, aims to facilitate SaltWire's restructuring and recapitalization efforts while ensuring creditors receive partial payment.
The potential restructuring may involve reorganizing SaltWire's media subsidiaries, including daily newspapers in Nova Scotia, P.E.I., and Newfoundland and Labrador. Notable publications under SaltWire's umbrella include Halifax's Chronicle Herald, the Cape Breton Post, the Telegram in St. John's, and the Guardian in Charlottetown, along with 14 weekly publications. SaltWire employs around 390 individuals, including over 100 unionized staff, and engages 800 independent contractors.
Fiera's proposed plan involves implementing a sale and investment solicitation process (SISP), supervised by FTI Capital Advisors Canada, to explore potential investors interested in injecting capital or acquiring SaltWire's assets. Formal bids under this plan are expected by May 24, with transactions set to close by July 31.
During the court proceedings, Justice Keith raised several queries regarding the SISP process and promised to deliver an oral decision on the proposal shortly. Additionally, he approved a motion by Fiera granting expanded powers to the court-appointed monitor and the chief restructuring officer, aiming to bolster confidence in the restructuring process.
Fiera's concerns about SaltWire's management integrity were highlighted in an affidavit filed earlier, citing apprehensions regarding former SaltWire president and CEO Mark Lever's bid submission plans. Court documents revealed that SaltWire and its related companies are owned by Lever and his wife through separate family trusts, each holding a 50% stake.
Fiera attributed SaltWire's financial woes to mismanagement over the years, alleging failure to meet obligations such as employee pension payments and remittances to the federal government for HST. The Halifax Herald Ltd., a SaltWire entity, was recently directed to pay over $2.6 million in pension liabilities and owes the Canada Revenue Agency more than $7 million in HST as of January 2.
Outside the courtroom, SaltWire's chief restructuring officer confirmed that efforts were underway to address outstanding HST payments. Meanwhile, one of SaltWire's subsidiaries, Headline Promotional Products, is slated for closure, resulting in job losses for 10 employees. This business, which sells promotional items, incurred a $350,000 loss last year.
In summary, SaltWire's creditor protection extension and additional funding mark ongoing efforts to navigate its financial challenges and pursue restructuring avenues while ensuring continued operations.
