Grafstein plans bid for three Canwest newspapers

TORONTO — A group of investors has expressed interest in a portion of Canwest Global Communications Corp.’s newspaper unit, saying it was preparing a bid for three of the chain’s largest dailies.

Led by former Senator Jerry Grafstein the group plans to bid for the The Montreal Gazette, The Ottawa Citizen and The National Post, a press release said. Raymond Heard, a media consultant and longtime newspaper executive, as well as Beryl Wajsman join Mr. Grafstein in leading the consortium.

"Our partnership represents a cross spectrum of engaged Canadians committed to a vigorous, independent media voice for the communities that each newspaper serves," the group said.

Both private equity and rival media firms have been cited as candidates to acquire all or part of Canwest Ltd. Partnership (LP), which owns some of the oldest and most venerable dailies in the country.

The division filed for creditor protection on Jan. 8 after missing interest payments on about $1.5-billion of debt. At the time of the unit’s filing under the Companies’ Creditors Arrangement Act, the unit’s secured lenders, led by Scotiabank and the other four largest banks, proposed to sell the division as a whole.

The secured creditor group is collectively owed more than $1-billion. RBC Capital Markets is leading the sale, which the group hopes will attract bids exceeding $925-million.

Failing a satisfactory bid, the group would like to flip the assets – including 10 metro dailies and 26 community newspapers – into a new, independent company and exchange its debt for fresh equity.

The first phase of the sale will last seven weeks or until Feb. 26, during which bidders are asked to file indications of interest.

The Post, Gazette and Citizen together comprise the biggest portion of the chain in Eastern Canada. Mr. Grafstein and the consortium said they will prepare a formal offer "in the next few weeks" after completing due diligence on the three papers.

The release said Mr. Grafstein and the other two partners have received "strong financial commitments" from other investors, and that "additional participants in the consortium will be announced."

The newspaper division’s filing follows one by Winnipeg-based Canwest’s main holding entity, CMI, in October after that unit defaulted on interest payments on its debt. The subsidiary houses the Global TV conventional network and some specialty channels. It it attempting to recapitalize and emerge from CCAA by the spring.

A separate group of specialty channels the media conglomerate jointly owns with U.S. investment bank Goldman Sachs has not filed for creditor protection.