Canwest gets court approval for move it says will save National Post

An Ontario judge has allowed Canwest Global Communications to shuffle the money-losing National Post into a group alongside its other daily papers, which Canwest has said is the best hope of saving the newspaper.

TORONTO — An Ontario judge has allowed Canwest Global Communications to shuffle the money-losing National Post into a group alongside its other daily papers, which Canwest has said is the best hope of saving the newspaper.

Justice Sarah Pepall, who is overseeing Canwest’s restructuring, allowed the company Friday to move the National Post into the Canwest Limited Partnership — which is not among divisions of the company currently operating under creditor protection.

A lawyer for Canwest had told court that not only would the move allow the National Post to keep operating, it was essential to a successful restructuring of the whole company.

“The business of the National Post and the LP entities (other Canwest newspapers and media outlets) are highly integrated and interdependent,” said Lyndon Barnes.

“Without these agreements, the ability to restructure either of these entities is in doubt.”

Pepall told the court that she would provide further details on her decision in writing next week.

A number of divisions of Canwest, including the National Post Co., are restructuring under court protection from creditors after it amassed $4 billion in debt.

Canwest spokesman John Douglas said the decision by the judge to shift the Post was expected.

“It demonstrates that yet again the voice of our demise has been greatly exaggerated, as it has for 11 years,” he said.

“We know that the National Post is going to be a positive contributor to the publishing group, and we know that the publishing group will be stronger with it.”

In court documents filed this week, Canwest said the Post has racked up $62.4 million in losses over the past four years before factoring in interest, taxes, depreciation and amortization. It also owes $139.1 million to Canwest Media, its holding company, because it helped the company with payroll, capital expenditures and operational losses.

Canwest outlined an intricate operating system between the Post and the other newspapers it owns in the Limited Partnership.

The Winnipeg-based company said those operations extend from content sharing agreements to integrated payroll and customer support services.

Chief financial officer John Maguire Maguire said in the filing that if the Post’s Toronto operations had shut down, the company would have lost an integral part of its news team and been forced to pay about $500,000 a year to create or license Toronto-based news content. The Post is also expected to spend $11.6 million on printing and distribution services from other units of Canwest in 2010, he added.

About 277 people work at the national daily paper founded in 1998 by a the Southam group led by disgraced businessman Conrad Black.

Canwest has amassed $4 billion in money owed after buying Black’s newspaper assets and the specialty channels owned by Alliance Atlantis.

Its expected that Canwest will explore the option of selling off its newspaper division to interested buyers, though representatives for the company have insisted the assets are not for sale.

The company is restructuring its entire operations with the hopes of completing the process by the end of January.

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