SaltWire Network formed in 2017 when The Chronicle Herald’s owners acquired 28 Atlantic Canada-based publications from the media and printing company Transcontinental.Andrew Vaughan/The Canadian Press
SaltWire Network, the largest newspaper business in Atlantic Canada, has filed for creditor protection.
Documents filed in the Supreme Court of Nova Scotia on Monday say the company, which runs 23 titles including its 150-year-old flagship newspaper, the Halifax Chronicle Herald, is more than $94-million in debt.
Private debt firm Fiera, SaltWire’s largest creditor, also filed an application in court Monday, saying the media company owes it more than $32-million. That filing says SaltWire also owes more than $2.6-million for missed special payments into its defined-benefit pension plan and $7-million in outstanding HST.
SaltWire formed in 2017 when The Chronicle Herald’s owners acquired 28 Atlantic Canada-based publications from the media and printing company Transcontinental. SaltWire still owes the Montreal-based company $9.8-million related to that purchase, in the form of an unsecured vendor takeback promissory note, according to Fiera’s filing.
Ian Scott, SaltWire’s chief operating officer, said in a statement that his company’s decision to file for creditor protection under the Companies’ Creditors Arrangement Act is a strategic move to address financial challenges and ensure SaltWire’s long-term sustainability.
“Operations will continue as usual,” Mr. Scott said. “The filing for creditor protection is a proactive step towards restructuring our finances and operations to build a more resilient and sustainable future.”
Mr. Scott noted in his statement that the media industry in Canada has faced unprecedented challenges in recent years. He said this has significantly affected SaltWire’s operations and finances. He also referred to a lawsuit SaltWire launched against Transcontinental in 2019, in which it alleged Transcontinental had concealed details about the financial state of the businesses SaltWire bought.
“Despite rigorous efforts to adapt and overcome these obstacles, debts to support the acquisition of Transcontinental’s media assets – now subject of a multimillion-dollar lawsuit – the pressures created by multinational social media networks, and a recent court decision requiring SaltWire to contribute $2.6 million into a pension fund that already exceeds regulatory requirements have placed an unsupportable strain on the business,” Mr. Scott added.
SaltWire was recently ordered to pay $500,000 as security for costs in connection with the litigation against Transcontinental, Fiera’s court documents say.
In its filing, Fiera alleges SaltWire has been “demonstrably mismanaged.” The court documents say the company has defaulted on its obligations under credit agreements for more than five years, made little progress on the repayment of principal, and has no timeline for repayment.
“The applicants have lost faith in senior management,” Fiera’s filing says.
Fiera also alleges in its filing that SaltWire has failed to make HST payments, withheld money from its employees to use for operational purposes, and failed to provide information on a timely basis.
In addition to The Chronicle Herald, SaltWire’s publications include The Cape Breton Post, The Telegram in St. John’s, and The Guardian in Charlottetown. It has about 385 employees, according to Fiera’s filing.
SaltWire, the Herald and several other companies named in the application are owned indirectly by Mark Lever and Sarah Dennis, through their respective family trusts, the court documents say. Ms. Dennis is publisher and chairman at The Chronicle Herald. Her husband, Mr. Lever, is the chief executive officer of SaltWire.
SaltWire is applying to the Supreme Court of Nova Scotia to appoint Grant Thornton Limited as monitor. Fiera is asking the court to appoint KSV Advisory as monitor. Justice John Keith will hear the matter on Wednesday.