Second bidder makes firm 80-cent offer for Torstar

Chair calls offer ‘disingenuous,’ says it’s an attempt to confuse shareholders ahead of vote

Less than 24 hours before shareholders were set to vote on the NordStar offer to buy the Toronto Star’s publisher, a second bidding group has submitted an official offer for 80 cents per share.

The new bid for Torstar, from Canadian Modern Media Holdings (CMMH), is higher than the 74-cents-per-share bid from NordStar Capital endorsed by Torstar’s board, but it does not include any contingent value rights, unlike the earlier offer from the upstart bidder. The CMMH offer was immediately blasted as “disingenuous” by Torstar chair John Honderich, who suggested it will not affect the upcoming vote, which is still scheduled to take place at 10 a.m. Tuesday. That’s because many shareholders have already voted via proxy and Torstar’s biggest shareholders have signed “hard lock-ups” guaranteeing their support for NordStar’s bid.

“We believe that CMMH’s submission of a revised proposal today is disingenuous and made for the sole purpose of confusing shareholders and obfuscating its own missteps,” Honderich said in a press release. “The terms of the voting support agreements entered into with the Torstar Voting Trust and Fairfax have been publicly disclosed and make it impossible for their proposal to be considered a superior proposal. These facts are all well known to CMMH.”

The press release also said the CMMH bid did not include details on its proposed financing or a financing commitment letter. Several sources have previously told the Star that the CMMH bid was being financed by Canadian Western Bank. NordStar is controlled by entrepreneurs Jordan Bitove and Paul

Rivett. CMMH’s team includes technology executive brothers Matthew and Tyler Proud, and finance industry veteran Neil Selfe. Selfe declined to comment because of a non-disclosure agreement he has with Torstar. CMMH’s interest in Torstar was made public two weeks ago. At the time, their then-unofficial offer had been for 72 cents per share in cash, as well as contingent value rights, which could potentially be worth up to 50 cents per share if certain milestones were met in the future.

On July 11, NordStar raised its offer to 74 cents per share from its original offer of 63 cents, which was made public in late May. The voting trust of five families who control Torstar’s A-class shares, and Fairfax Financial, which controls 40 per cent of Torstar’s B-class shares, signed hard lock-up agreements supporting the NordStar bid.

After news of the improved NordStar bid and hard lock-ups was announced, CMMH bid team member Selfe said he had been prepared to raise the cash portion of the bid to 80 cents per share.

On Tuesday, shareholders are set to vote on the NordStar bid. The bid needs a majority of A-class shareholders and B-class shareholders, as well as twothirds of all shareholders, to succeed. Because of the lock-ups, the first two conditions have already been met and 60.8 per cent of all shareholders are locked into the NordStar bid.

In a press release, Torstar said preliminary vote-counting shows that 98 per cent of votes cast by proxy were in favour of the NordStar deal. When the proxy votes cast by the voting trust and Fairfax are excluded from the preliminary total, about 80 per cent are in favour of the deal.

The takeover still needs court approval. A hearing is scheduled to take place in the Ontario Superior Court on Thursday.