The sale of Canwest’s newspapers, approved in principle last week by a bankruptcy judge in Toronto, to an ad hoc committee of bondholders, mostly based in the USA, does little to reassure 1,700 members of Canada’s largest media union who work for the chain.
“In fact this proposed sale under the creditor protection process may be no solution at all to the debt woes that got Canwest into bankruptcy protection in the first place,” says Peter Murdoch, Vice-President, Media, of the Communications, Energy and Paperworkers Union of Canada.
Under the deal, the new company will be saddled with $700 million in loans from US banks. Plus there are other credit arrangements with US hedge funds that will raise the debt load higher.
Murdoch points to media reports that a $400 million loan being used to partially finance the purchase will pay extremely high interest rates, in effect replacing debt that got Canwest into trouble with another mess of junk bonds.
“It doesn’t add up,” he says. “Torstar, with over a hundred years in this business, thought Canwest papers were worth $800 million, but financiers with no newspaper experience will pay $1.1 billion. We fear our members, other employees and the Canadians who rely on these newspapers to keep them informed will ultimately pay the price of yet more financial risk taking.
“And we have laws in place to protect Canadian ownership of critical cultural industries, including newspapers. Can the laws simply be ignored because the current government doesn’t believe in them?
“This proposed sale seems to satisfy the self-interest of banks, Wall Street hedge funds and other creditors, but what about the journalists, sales staff, press operators and others who will be left working for a company that still has very high debt levels and is controlled by Wall Street hedge funds?”
CEP National Office press release