Postmedia completes recapitalization

On October 5, 2016, Postmedia Network Canada Corp. (PNCC) (TSX:PNC.A, PNC.B) and Postmedia Network Inc.’s (“PNI” and together with PNCC, the “Company” or “Postmedia”) completed a recapitalization transaction.
The recapitalization transaction was completed pursuant to a court-approved plan of arrangement (the “Plan”) under the Canada Business Corporations Act.

The recapitalization involved the restructuring of over $600 million of PNI’s existing debt obligations, which included the following principal terms: (i) the 8.25 per cent senior secured notes issued by PNI due August 2017 (the “First Lien Notes”) were extended by approximately four years to July 2021 and reduced to $225 million as a result of an immediate cash pay down of approximately $78 million; (ii) the 12.50 per cent senior secured notes issued by PNI due July 2018 (the “Second Lien Notes”) in the aggregate amount of approximately US$268.6 million were exchanged for approximately 98 per cent of the total number of shares of PNCC; (iii) approximately US$84.4 million of new capital was invested in the form of new US dollar denominated second-lien secured notes due July 2023 with no cash interest for the first three years, subject to certain conditions; and (iv) obligations to employees, customers and suppliers were not affected.

The Company’s total debt was reduced by approximately $307 million and its annual cash interest expense was reduced by approximately $50 million.

On announcement of the recapitalization transaction, the Company had the support of holders of approximately 82 per cent of the outstanding First Lien Notes, approximately 80 per cent of the outstanding Second Lien Notes and approximately 75 per cent of the outstanding shares pursuant to support agreements entered into with the Company.

At meetings held on the Plan on September 7, 2016, 100 per cent of the votes cast by the holders of First Lien Notes, 100 per cent of the votes cast by the holders of Second Lien Notes, and approximately 99.9 per cent of the votes cast by the shareholders were voted in favour of the Plan.

The Plan was approved by the Ontario Superior Court of Justice (Commercial List) on September 12, 2016.

PNCC is the holding company that owns PNI, a Canadian newsmedia company representing more than 200 brands across multiple print, online and mobile platforms.

The company is headquartered in Toronto and employs journalists and product development teams who bring engaging content to millions of people every week.

Goodmans LLP represented Postmedia with a team that included Robert Chadwick, Caroline Descours, Ryan Baulke and Charlie Pettypiece (restructuring), Celia Rhea, Michael Bertrand and Dan Dedic (banking), Dale Lastman, Mark Spiro, Michael Partridge, Geoff Cowper-Smith and Matthew Segal (corporate), Carrie Smit (tax) and Joe Conforti (employment). Paul, Weiss, Rifkind, Wharton & Garrison LLP represented Postmedia in the US with a team that included Christopher Cummings and Ronnie Ollo (corporate), Alice Eaton and Claudia Tobler (restructuring) and David Mayo and Lucas Deppermann (tax).

Bennett Jones LLP represented Canso Investment Counsel Ltd., the majority holder of First Lien Notes, with a team that included Mark Rasile, David Rotchtin and Daniel Cipollone (financial services/corporate finance), Richard Orzy and Sean Zweig (restructuring), Jeffrey Kerbel and Kristopher Hanc (securities/corporate finance) and John van Gent (real estate).

Osler, Hoskin & Harcourt LLP represented the Ad Hoc Committee of Second Lien Noteholders with a team that included Marc Wasserman and Martino Calvaruso (restructuring), Kevin Morley and Joshua Lam (banking), Don Gilchrist and Rob Lando (corporate), Firoz Ahmed and Greg Wylie (tax), Michelle Lally (competition) and Jeremy Dacks (litigation).

Dickinson Wright LLP represented Computershare Trust Company of Canada in its capacity as trustee and collateral agent with a team that included Mike Weinczok (restructuring & corporate), Mark Redinger and Robert Farmer (corporate).





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