Postmedia Network Canada (TSX: PNC.A) is no longer going through with a proposed merger with Toronto Star owner Nordstar Capital.
The company on Monday confirmed the previously-announced non-binding discussions with Nordstar have ceased, after the two entities failed to make concessions on terms of the merger. “By leveling the playing field with the tech giants and creating a healthy ecosystem, we can ensure that the media industry and journalism remain vibrant, diverse, and resilient in Canada,” commented Postmedia CEO Andrew McLeod.
The sudden reversal comes after Postmedia last month announced it was considering a merger with Nordstar to create a new entity and ultimately slash the debt burden by converting it into equity.
“This will result in an overall reduction in debt of the merged entity, providing it with stability to preserve and grow a strong national editorial infrastructure and maintain important brands,” Postmedia said on June 28.
The proposed merger was to see Nordstar own a 50% voting interest and 44% economic interest in the resulting entity. Current Nordstar owner Jordan Bitove was to become chairman of the firm, while Postmedia CEO Andrew MacLeod was to assume the CEO role.
The deal however was believed by many to be more of a restructuring for Postmedia than anything else. Significant economic dilution was to hit Postmedia shareholders, with a “significant reduction in overall debt” to occur as part of the transaction, with that debt to be converted to equity.
Postmedia, in a bid to cut costs, has cut its workforce in half since 2015, to just 2,098 employees as of August last year. It’s unclear if cuts will continue now that the proposed merger is off the table.
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