UPDATE 2-Canada's Postmedia reaches debt restructuring deal, posts loss

© Reuters. UPDATE 2-Canada's Postmedia reaches debt restructuring deal, posts loss

(Adds comments from conference call, details on deal, earnings)
By Alastair Sharp
TORONTO, July 7 (Reuters) - Postmedia Network Canada Corp
PNCa.TO , the country's biggest newspaper publisher, will give
creditors nearly all of its equity in a restructuring deal that
would almost halve its heavy debt load, the company said on
Thursday.
The deal will reduce its debt by C$307 million ($236
million) and cut around C$50 million from its annual cash
interest payments, the company said.
"The outcome we announced today represents the best way
forward for Postmedia," said company Chairman Rod Phillips, who
headed the special committee that oversaw the process.
Postmedia launched a strategic review in April, looking to
sell assets and restructure its heavy debt load as it struggles
with falling print advertising revenue.
It owns the National Post, Montreal Gazette, Calgary Herald,
Ottawa Citizen and Sun tabloids in Toronto, Calgary, Edmonton,
Ottawa and Winnipeg.
The company said it had reduced its first-lien obligations
to C$225 million and extended them by around four years to July
2021. It exchanged second-lien notes for 98 percent of existing
equity, meaning shareholders' total stake will be reduced to 2
percent.
Postmedia also secured C$110 million of new second-lien debt
priced in U.S. dollars, due in mid-2023, that offers no cash
interest for three years.
It expects to complete the transaction by September.
Phillips said the deal is supported by 80 percent of
debtholders and 75 percent of shareholders.
One notable absence from the deal was Postmedia's largest
shareholder, GoldenTree Asset Management LP, which a Wall Street
Journal report in March said was looking at selling its stake.

"They're not involved at all," Postmedia Chief Executive
Godfrey said on a call.
Postmedia signed support deals with its biggest investors,
including first-lien holder Canso Investment Counsel Inc.
Godfrey said the company would not consider selling any
media assets, and that new investments would be focused on
online publishing.
Postmedia posted a loss of C$23.7 million in the three
months to the end of May, compared with a loss of C$140.8
million a year earlier.
Revenue rose 6.4 percent to C$218.3 million, although it
would have fallen 12.9 percent without the contribution of Sun
Media assets acquired in a deal that closed earlier this year.
The company will maintain separate voting shares for
Canadian investors and non-voting ones for foreigners that allow
it to receive the favorable tax treatment afforded to Canadian
publishers.
($1 = C$1.2993)