Chair of the Board of Torstar John Honderich speaks to shareholders at their annual general meeting in Toronto on Wednesday May 7, 2014. Torstar’s suitors said they believe the company will be able to withstand the industry’s pressures better as a private corporation.Aaron Vincent Elkaim/The Canadian Press
The publisher of the Toronto Star, long one of Canada’s largest newspapers, has agreed to be taken private by two prominent businessmen for just over $51-million, a small fraction of what the company was worth a decade ago.
NordStar Capital, owned by Jordan Bitove and Paul Rivett, is offering to buy the shares of Torstar Corp., which has struggled to cope with a dramatic drop in advertising revenue with a series of asset sales, newspaper closures and staff cuts.
The move comes as the country’s top media executives meet with the federal government in Ottawa to discuss the industry’s plight, which has worsened during the COVID-19 crisis despite massive demand for news and information related to the pandemic.
Torstar’s suitors said they believe the company will be able to withstand the industry’s pressures better as a private corporation. Ten years ago, Torstar class B non-voting stock was worth more than $10. It closed on Tuesday at 40 cents, though it had climbed sharply in recent sessions.
"While we have loved the company and are immensely proud of it, the time has come to pass the torch,” Torstar chairman and former publisher John Honderich said in a statement. “We hope the sale will benefit Torstar in the years ahead and believe that this is the beginning of an exciting new chapter for the company.”
Under the deal, NordStar will offer 63 cents per Torstar class A and class B share, a 66.7-per-cent premium to the 20-day weighted average price.
The deal has the blessing of Torstar’s board and has garnered support from a majority of the class A shareholders. It also has the backing of the company’s largest shareholder, Fairfax Financial Holdings Ltd. In total, holders of 60.8 per cent of the shares support the transaction, the companies said.
When the deal is complete, likely in the third quarter of this year, Torstar will be taken private and former Ontario premier David Peterson will be appointed vice-chairman of the Toronto Star. The transaction requires regulatory and shareholder approvals.
The buyout puts Torstar under the ownership of two wealthy Toronto business families. Mr. Bitove is a private equity fund manager. Mr. Rivett recently retired as president of Fairfax Financial.
Torstar, which owns other newspapers including the Hamilton Spectator, the Waterloo Region Record and the St. Catharines Standard, competes against Postmedia, which owns the National Post and several big-city daily newspapers, as well as The Globe and Mail, owned by the Thomson family holding company Woodbridge Co. Ltd.
Torstar’s quarterly results have laid bare how the company has struggled to adapt to the new media environment. Revenue fell 20 per cent in the first quarter, with print advertising revenue down 38 per cent. The company posted a $23.5 million net loss, driven by a writedown of the value of its assets. And while COVID-19 began to affect the results late in the quarter, the problems intensified as March turned to April, the company said.
The company has been selling off properties, like the land and building that house its Hamilton Spectator newspaper as it struggles to break even. In the past 12 months, Torstar generated just $6.1 million in cash from operations, and spent $13.2 million on capital expenditures, according to S&P Global Market Intelligence.
The company has $69-million in cash on its balance sheet – more than the $51-million acquisition price.
With files from David Milstead
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