Corus Entertainment said the plan will allow it to maintain its television, radio and content operations.Fred Lum/The Globe and Mail
Corus Entertainment Inc. CJR-B-T has received court approval to proceed with its recapitalization plan to reduce debt and liabilities, after a January shareholder vote to approve the plan failed to gain the necessary level of support.
Corus said in a release Tuesday evening that it had received an order from the Ontario Superior Court of Justice allowing it to proceed with the transaction, which will 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.
The company has said the plan will strengthen its financial foundation and support its long-term strategy, allowing 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.
The recapitalization plan is subject to various regulatory and stock market approvals. Corus said it is working to gain those approvals and complete the recapitalization plan “as soon as reasonably practical.”
Until then, Corus said, it will continue to operate in the normal course with no changes for its clients, supporters or employees.
While the vast majority of Class A shareholders and the company’s senior debtholders voted in favour of the arrangement in January, only 61 per cent of Class B shareholders approved, just below the two-thirds threshold that would have allowed the proposal to pass.
However, the company had been given the right to seek a court order for approval of the recapitalization plan in a December interim court order.
The recapitalization plan involves 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.