Canadian newspaper operators Postmedia and Nordstar discuss merger

By Paul Ziobro

Postmedia Network Canada said it was discussing a merger with Nordstar Capital LP that would combine various Canadian news outlets, from the National Post to the Toronto Star, under one entity to significantly reduce debt.

As part of the transaction under discussion, the combined company would be owned jointly by Nordstar, owner of Metroland Media Group and the Toronto Star, and existing Postmedia shareholders.  The two companies would have equal voting rights, while Postmedia shareholders would collectively hold a 56% economic interest in the new company.
Further financial details were not disclosed.  The companies said there was no guarantee a transaction would go through.
Jordan Bitove, publisher of the Toronto Star and owner of Nordstar, would be chairman of the combined company, while Postmedia CEO Andrew MacLeod would serve as CEO.
The merger would aim to significantly reduce overall debt by converting some of the outstanding debt into equity, which would result in significant dilution to existing shareholders.
“The main reason for the proposed merger is to create a new company with reduced debt, national digital scale to compete with the global tech giants, and economies of scale in the business model,” MacLeod said.
“By pooling resources and working together, we can ensure that more Canadians have access to trustworthy journalism and quality reporting,” Bitove said.
Postmedia said it issued the statement in response to unusual trading activity on Tuesday, when shares rose 45.8% to $1.91.
Write to Paul Ziobro at paul.ziobro@wsj.com