NordStar Capital Inc. co-owner Paul Rivett is seeking a court order to wind up the company after a breakdown in his relationship with business partner Jordan Bitove, raising uncertainty about the control of Torstar Corp. and the Toronto Star newspaper.
Mr. Rivett detailed the significant rift in an application filed with the Ontario Superior Court of Justice on Sept. 1, alleging Mr. Bitove thwarted business plans they had agreed to, ignored proper corporate governance and attempted to sideline him. “There is complete deadlock between Rivett and Bitove,” the application states. “They can no longer work together.”
The claims in Mr. Rivett’s application, which was filed by companies he operates, have not been tested in court.
The two men are 50-50 partners in NordStar and the companies it controls, which, in addition to the Toronto Star, include the Hamilton Spectator, Metroland Media Group, a delivery service, news site iPolitics, online casino and sportsbook NorthStar Gaming Inc., and an investment in Blue Ant Media Inc. As of April, NordStar was also the largest shareholder in VerticalScope Inc.
Mr. Rivett asked the court to appoint PricewaterhouseCoopers to manage an asset sale, and included a draft order outlining a process for which of the two partners will acquire each of NordStar’s companies. He also asked for an interim order preventing the Torstar board from adding or replacing directors of its subsidiaries, and preventing the company from terminating the employment of certain individuals, including his own.
“Torstar’s news readers all stand to suffer irreparable harm if interim relief is not granted,” the application states.
Mr. Rivett did not reply to a request for comment, nor did his lawyer.
Mr. Bitove issued a statement through communications firm Navigator Ltd. “The preferred playbook of some investors is to cut costs to the bone, strip the product bare, and shrink newsrooms to extract short-term benefit for shareholders,” Mr. Bitove said. “The approach favoured by those of us who believe in the vital role of the media in a strong and vibrant society is to build a product centred on the trusted journalism that readers demand. And to use that demand to build a sustainable business.”
Mr. Bitove added that he has worked to make Torstar more accountable and competitive. “I make no apologies for doing so,” he said.
Before NordStar, Mr. Rivett was the long-time president at Fairfax Financial Holdings Ltd., working alongside Fairfax chairman and CEO Prem Watsa. Mr. Bitove, meanwhile, is a wealthy businessman who helped his brother, John Bitove, launch the Toronto Raptors.
In 2020, Mr. Rivett and Mr. Bitove joined forces to purchase Torstar in a deal valued at approximately $60-million, and Mr. Bitove assumed the role of publisher of the Toronto Star, in addition to other responsibilities. Mr. Rivett became chair of Torstar, while also being responsible for the management of NordStar and various other assets.
A Toronto Star article at the time described them as “perfect people for the job.”
Their relationship is now in tatters. Efforts to resolve the deadlock, even with a third-party mediator, have failed. According to the court application, Mr. Bitove rebuffed the proposals of his partner to allocate NordStar’s assets between themselves at fair value and sell those neither one wants.
Problems between the two allegedly started in March of this year. The pair agreed to streamline operations and cut costs at the Toronto Star and community newspaper publisher Metroland in order to ensure Torstar’s long-term viability, according to the court filing. But Mr. Rivett claimed his partner later refused to carry out the cost-cutting measures and “started to deny the changes were ever agreed to.”
The application claims Mr. Bitove, as publisher of the Toronto Star, failed or refused to provide a budget for over a year, despite repeated requests from management and Mr. Rivett, and ignored NordStar’s “prime objective … to profit.”
The pair apparently couldn’t agree on how to address NordStar’s debt. The application says the company is in breach of a credit facility, and the two allegedly agreed to sell surplus real estate assets to pay down debt. The application claims Mr. Bitove later demanded that no real estate be sold.
Mr. Bitove resigned as a director of NordStar on Aug. 13, according to the court filing, and appointed Bill Aziz as a nominee director. The application claims that despite resigning, Mr. Bitove still attended a board meeting two days later over the objections of Mr. Rivett.
At the meeting, Mr. Aziz tabled resolutions to unwind many previously agreed upon changes at Torstar, but as Mr. Rivett disagreed and is the only other member of the NordStar board, the two were deadlocked. Mr. Aziz did not reply to a request for comment.
Mr. Bitove then allegedly sought to implement the resolutions at the level of the Torstar board. Aside from the two business partners, the only other director at Torstar is Frank Penny, who the court filing describes as a financial adviser to Mr. Bitove’s family. Mr. Penny declined to comment.
According to the application, Mr. Bitove proposed to change control at various Torstar subsidiaries by appointing himself and vice-chair David Peterson to the boards, including at the Toronto Star and Metroland, “effectively causing them to take over those companies.” He also proposed a resolution to halt all decisions related to corporate restructuring, which would effectively give Mr. Bitove “control over all personnel decisions.” Mr. Peterson did not reply to a request for comment.
If the resolutions pass, according to the application, “Bitove will act on his earlier-stated intentions of terminating senior and indispensable employees.” Mr. Rivett’s request to the court to restrain Torstar from terminating the employment of certain individuals specifically mentions Metroland president Neil Oliver, Toronto Star president Marina Glogovac, editor-in-chief Anne Marie Owens and Ian Oliver, who was appointed CEO of Metroland’s delivery service last year.
Mr. Bitove called another board meeting for Sept. 1, the same day Mr. Rivett filed the court application. It is unclear whether the meeting took place.
Joe Castaldo