Tijana Martin/The Canadian Press
Corus Entertainment Inc. CJR-B-T will appear in court this week with hopes of having its recapitalization plan approved after it failed to gain shareholder support in January.
Corus has also secured a temporary standstill from lenders, who have had agreed until May 30 not to enforce certain penalties if Corus breaches parts of its credit agreement.
Last November, the broadcasting company announced a proposed recapitalization plan that would allow it to maintain its television, radio and content operations. It’s the company’s latest effort to find a reprieve from its heavy debt load and the decline of its legacy advertising businesses.
Despite efforts to cut costs, the company has continued to see its overall revenue and profit decline in recent quarters, a challenge facing the broadcast industry as a whole.
That proposed recapitalization would reduce the beleaguered media company’s total debt and liabilities by more than $500-million, and decrease its interest payments by up to $40-million.
Corus posts $11.1-million net loss in first quarter
If passed it will involve exchanging senior unsecured notes for equity in a new parent company, NewCo, that will own Corus. The note holders will own 99 per cent of the new company’s shares. The recapitalization is being done through a plan of arrangement under the Canada Business Corporations Act.
In December, Corus obtained an interim court order allowing it to put the proposal to shareholders, and that vote took place Jan. 30 – but it failed to reach the necessary support levels.
While the vast majority of Class A shareholders and the senior debtholders voted in favour of the arrangement, only 61 per cent of Class B shareholders approved, just below the two-third threshold that would have allowed the proposal to pass.
But the company has a second chance: As part of the December interim court decision, granted by Ontario Superior Court of Justice, Corus was given the option to seek a court order for approval of the recapitalization plan, despite the rebuff from shareholders.
That hearing will take place on Thursday, March 12. When asked what it would do should the court not grant it approval, Corus said in an e-mailed statement that it would provide updates as developments warrant.
Corus proposes to reduce debt, interest costs through major recapitalization
In a release issued on Jan. 30 after the unsuccessful vote, Mark Hollinger, independent lead director of the Corus board, said it continues to believe that the recapitalization plan is fair, reasonable and in the best interest of Corus and its stakeholders.
“It represents the best viable option to secure Corus’ future while preserving the most shareholder value,” Mr. Hollinger said. “In other restructuring scenarios, it is unlikely that shareholders will recover any amounts.”
The company added that Corus continues to operate in the normal course of business, with “no changes to any obligations to its employees, audiences, partners and stakeholders.”
The company recently secured a bit more time to get its affairs in order. On March 2, the company’s lenders agreed to temporarily wave some rules under the existing credit agreement and not enforce penalties should Corus violate certain covenants of that deal. Corus confirmed in financial documents that it is not currently in default of its debts.
Corus currently has two outstanding corporate bond issues, with $500-million due in 2028 and $250-million due in 2030. Both are trading at around 35 cents on the dollar. The company currently has a market capitalization of about $6-million, and its shares are worth three cents on the Toronto Stock Exchange, down 70 per cent from last year and more than 99 per cent from five years ago.
Corus lenders revisit a well-worn restructuring path
The company released its management information circular last week, showing that its chief executive officer chose not to accept certain bonuses but still earned a sizable cash incentive after meeting financial targets.
Last June, Corus eliminated its co-CEO structure when one of its two heads, Troy Reeb, stepped down. The other CEO, John Gossling, remains as sole top executive and continues, on an interim basis, to serve as chief financial officer.
Despite the increase to the size and scope of his role, the board decided not to adjust Mr. Gossling’s base salary for the 2026 fiscal year “as part of the continued focus on cost management” and existing compensation. Mr. Gossling also voluntarily declined to receive long-term incentive awards in each of 2024 and 2025.
However, he did receive an annual non-equity incentive of $1.4-million in 2025, based on a number of metrics including free cash flow, revenue and profit goals. Including his base salary of $900,000, pension and other items, Mr. Gossling’s total compensation for the year was $3.1-million.
Meanwhile, Mr. Reeb earned total compensation of $5.1-million, which included his salary, incentive-plan compensation and $3.8-million in termination payments and benefits.