Torstar

On May 26, 2020, Toronto Star publisher John Honderich announced the sale of Torstar to Nordstar Capital LP, controlled by Jordan Bitove and Paul Rivett, for $52-million. The price for the class A voting shares and class B non-voting shares was set at 63 cents in the deal. At the time of the most recent quarter, Torstar had $69-million in cash on its balance sheet – more than the $52-million acquisition price from Nordstar. [13] However, Torstar’s share price had suffered from the company’s inability to generate enough revenue or cost savings to pay quarterly dividends, which were suspended late in 2019. The suspension pushed the publicly traded B shares to what was then the lowest level since at least the late 1990s — 53 cents.[14] Weeks prior to the announcement of the deal, Torstar had reported a $23.5-million loss for the first quarter of 2020.[15]

The new owners planned to make Torstar a private company with former Premier of Ontario David Peterson as chair of the board. The initial financing for the deal was reported to be provided by Canso Investment Counsel Ltd. [16] Canso is also a major debtholder of Postmedia, which owns a chain of newspapers across Canada including the National Post. [17] Canso also held just under 1% of the class B non-voting shares of Torstar. Since 2017, the largest shareholder in Torstar was Fairfax Financial, owning 40% of the company's class B shares.[18] Canso and Fairfax had a history of investing together, with the most notable example being BlackBerry. [19] Canso and PointNorth (a fund launched by Jordan Bitove [20]) also had a history of investing together, most notably the privatization of AGT Food and Ingredients. [21] Prior to the announcement of the Torstar deal, Paul Rivett had recently retired as the president of Fairfax after 17 years with the company. Rivett remains on the board of directors of certain Fairfax investees and will keep his position as chair of Recipe Unlimited. [22]

In a published statement, Paul Rivett said that Nordstar would work to ensure the "long-term viability of the business" and to continue the Torstar publications' values. "Torstar was formed around these values [the advancement of society], the Atkinson Principles, and I can assure you that if the agreement is approved, they will continue to serve as the organization’s intellectual foundation."[23]

Shareholders were to meet to vote on the NordStar offer on July 21. In the meantime, news reports on July 8, indicated that another purchaser, under the name Canadian Modern Media Holdings Inc. (CMMH), had expressed interest in making an offer, said to be worth $58-million, or 72 cents per share. [24] The group was led by Matthew Proud, CEO of legal software firm Dye & Durham Corp., his brother Tyler Proud, CEO of technology company Avesdo Inc., and Neil Selfe, financial industry veteran and founder of INFOR Financial Group. Former Ontario finance minister Greg Sorbara was also involved. [25] As of July 9, the Torstar board continued to support the NordStar bid.[26]

The CMMH proposal, included a promise of contingency payments to shareholders from future asset sales, which were potentially worth at least another 50 cents. [24] The rival bid was conditional on being deemed a 'superior proposal' by Torstar's board, and would need to gain the support of the controlling shareholders, namely Fairfax Financial and the voting trusts’ Honderich, Hindmarsh, Campbell and Thall and Atkinson families. The Torstar board stated representatives of the trust and Fairfax did not intend to support the CMMH bid. [24]

On July 11, the NordStar bid was increased to $60-million, or 74 cents per share, with the Voting Trust and Fairfax revising their soft lock-up agreements, to hard lock-ups. [27] This effectively put an end to the bidding process because the terms of the revised bid meant that "the Voting Trust and Fairfax can’t change their votes to support any other bid".[28]

In the shareholder vote held on July 21, 99.7% of the class A shareholders favoured the NordStar offer as did 98.1% class B shareholders. However, only 81.9% of minority shareholders (not including the Voting Trust or Fairfax Financial) voted to accept the NordStar offer.[29] On July 23, Blake, Cassels & Graydon LLP, an international corporate law firm representing Torstar, brought forth a motion on behalf of Torstar before Ontario Superior Court Justice Gilmore to approve Torstar’s plan of arrangement with respect to the acquisition of Torstar. [30] Grant Vingoe, chair of the Ontario Securities Commission, had previously said in a letter to Andrea Horvath that the court was the appropriate venue to challenge the proposal. [31] He further said that the test to be applied by the court was whether the process leading to the arrangement was fair and reasonable.

Two shareholders appeared before justice Gilmore and expressed concern that the process was deeply flawed and that as a result they did not receive fair value for the shares. [32] One of those shareholders was a former Torstar EVP and former publisher of the Hamilton Spectator, who owned over 1-million class B shares. The other shareholder was the second largest shareholder of Torstar class B shares, outside of Fairfax Financial and the members of the Voting Trust. After the one hour online hearing, Justice Cory Gilmore delayed the Ontario court's decision on whether to approve the takeover of Torstar. The decision on the $60-million bid was put off after Justice Gilmore said she needed more time to examine written submissions by NordStar, Torstar, rival bidder Canadian Modern Media Holdings, and the minority shareholders. [33]

On July 25, the Globe and Mail published an interview with Butch Folland, a significant member of Torstar’s voting trust and the great grandson of the founder of Torstar, Joseph E. Atkinson, Torstar’s original publisher and the author of the Atkinson Principles. Mr. Folland is also the grandson of Harry Hindmarsh, who was President of the Star following Mr. Atkinson’s death in 1948. His personal ties to the Toronto Star date back to age 13 when he took a job as an office boy. In that article. Mr. Folland is quoted as saying “I was really disappointed in the outcome. I felt that the process wasn’t really fair in the way it affected me.” [34]

Late in the evening on July 27, an Ontario court approved the $60-million takeover of Torstar Corp. by private equity firm NordStar Capital LP over the objections of the rival bidding group, which immediately said it planned to appeal the judge’s decision. [35] Ontario Superior Court Justice Cory Gilmore ruled NordStar, controlled by entrepreneurs Jordan Bitove and Paul Rivett, could close their purchase of Torstar, setting aside requests from competing bidder Canadian Modern Media Holdings Inc. to re-open an auction of the company. CMMH had formalized its rumoured bid the previous Monday, having submitted a formal offer for 80 cents per share for Torstar on July 20, more than a week after the families and Fairfax pledged their support to NordStar.

Canadian Modern Media Holdings Inc. had complained that shareholders were not given the opportunity to assess that bid, and that the nondisclosure agreements (NDA) they were subject to prevented the details from being made public. After the ruling, CMMH said it would seek leave to appeal the decision, saying it still believes that the NordStar deal is "neither fair nor reasonable." As such, CMMH stated it expects to "immediately commence an appeal of today’s decision and will seek a stay of Justice Gilmore’s decision, preventing the closing of the plan, pending the determination of the appeal."

On July 31, 2020, the Ontario Superior Court of Justice rejected the appeal. [36]The judgement by Justice Michael Penny included this comment: "Having carefully read the material filed and considered the submissions of the parties, I have concluded that the motion for a stay of the order ... must be dismissed."[37] The deal closed on August 5.[2]

The Daily News Brands division primarily comprises the Toronto Star and its associated properties, including Torstar Syndication Services. The division also owns another six Ontario regional daily newspapers and a stake in the Canadian edition of the Chinese-language Sing Tao Daily.[41]

The StarMetro chain of free daily newspapers serving Calgary, Edmonton, Halifax, Toronto, and Vancouver was also part of this division until publication of those titles ceased in 2019.

The Community Brands division, Metroland Media Group, owns more than 70 weekly community papers as of late May 2020, the free magazine Canadian Immigrant, and other community-oriented properties.[42]

On July 29, 2015, Torstar announced its acquisition of a 56% majority stake in VerticalScope, a Toronto-based operator of online communities, for $200 million. The company operates websites and message boards that focus on niche categories, particularly within the automotive industry. Torstar CEO David Holland explained that the purchase was designed to bolster the company's presence in digital media.[43]

Launched in 2015, Toronto Star Touch was the company's app designed specifically for tablet computers. It was discontinued in late July 2017 after an investment totaling $20 million because of an inadequate volume of readers and advertisers and was replaced by ePaper.[44] The latter is "a new universal app" (a digital copy of the print version of the Star) available for both Android and iOS smartphones and tablets.[45][46]

Torstar launched a weekly celebrity-based magazine called Scoop in 2005, which folded one year later.

Between late 2005 and early 2011, Torstar also held a 20 per cent stake in CTVglobemedia, a Canadian media company which broke up when BCE Inc., the parent company of Bell Canada, purchased the company's media assets.[49] This caused some controversy because CTVgm owned The Globe and Mail, a competing newspaper to Torstar's own Toronto Star. There were no editorial hurdles between the two newspapers however. Torstar sold its shares in 2011.

On May 2, 2014, Torstar announced the sale of Harlequin Enterprises, a publisher of romance novels, to HarperCollins for $415 million.[50][51]