Canwest may have buyers for three bankrupt newspapers

Posted by Savita Sauvin on January 19, 2010 at 2:02 PM

Core newspapers in Canwest Global Communications Corp.'s bankrupt newspaper unit have piqued the interest of bidders, the Financial Post reported yesterday. Following the newspaper chain's bankruptcy filing, secured lenders are selling off the newspapers or, if that should fail, may spin the division out into an independent public company, according to FP.

Expected to bid on the Montreal Gazette, the National Post and the Ottawa Citizen is a group headed up by Jerry Grafstein, a former Canadian senator. The group also includes Ray Heard, a former media executive, and Beryl Wajsman, owner of community newspapers, The Globe and Mail reported.

Grafstein told Bloomberg his group is working on an application that would allow them to review the company's finances, a move toward making a bid. He would not name investors.

Canwest, Canada's largest media group, on Jan. 8 put its newspaper division under bankruptcy protection while searching for a buyer. The division includes 10 dailies and 26 community papers, including the Vancouver Sun and Calgary Herald.

John Douglas, vice president of public affairs at Canwest, told the FP that there is "more value in their collective grouping as opposed to individual properties." However, Douglas did not disclose how much Canwest is asking, but said a base price has been set.

"The sale process shows a clear preference is being given to bids for the combined entity," Douglas told The Globe and Mail. "Now if you had a bunch of piecemeal bidders that came together and wanted to build a consortium, you could do that."

Other possible buyers include Torstar Corp, which publishes the Toronto Star, media company Quebecor Inc., Transcontinental Inc., and Glacier Media, FP reported.

According to a statement by Canwest, it would be impossible for a "single small bidder" to overpower Scotiabank's offer, but it is possible for smaller bidders to "team up in a consortium that could make an offer in tandem and come up with the [CA]$1 billion" needed to buy the papers, The Globe and Mail reported.

If buyers are allowed to "cherry-pick" the unit's top papers, the less profitable ones could be left "stranded and difficult to sell," according to statement, FP reported.