NordStar takeover of Star publisher gets go-ahead

Court rejects request for stay while board OKs closing deal next week

An appeals court has cleared the way for a $60-million takeover of the Star’s publisher by entrepreneurs Jordan Bitove and Paul Rivett.

Lawyers for a competing bid from Canadian Modern Media Holdings had asked the Ontario Divisional Court to issue a stay of Monday night’s ruling approving the takeover by Bitove and Rivett’s company NordStar.

But Divisional Court Justice Michael Penny rejected the request Friday afternoon, issuing his decision via email after a morning hearing. “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.”

Torstar chair John Honderich said he was gratified by Penny’s decision.

“This is a victory, and a vindication of the fact we proceeded in a responsible and fair manner,” Honderich said after the decision.

“Despite the costly, obstructionist efforts of the Proud and Selfe group, we have thankfully been cleared to close the purchase of Torstar and begin the task at hand,” Bitove said. CMMH bid team member and finance industry veteran Neil Selfe declined to comment on Friday’s decision.

After the court released its decision, the Torstar board of directors gave their approval for the deal to be closed “as soon as is practicable.”

The deal had been expected to close this past Tuesday, then was twice delayed when CMMH and bid team member Matthew Proud appealed Monday’s decision by Superior Court Justice Cory Gilmore. The deal is now likely to close early next week.

Bitove and Rivett have said they plan to take Torstar private after the deal closes.

It wasn’t immediately clear whether an appeal hearing scheduled for next Friday will still go ahead, but CMMH had previously suggested an appeal after the deal closed would be moot.

On Friday morning, Torstar’s legal team argued that the request for a stay should be rejected because CMMH had missed a filing deadline for the “fairness hearing” with Gilmore, and doesn’t hold any Torstar shares, so Gilmore shouldn’t have even heard their arguments.

“These are the efforts of a failed bidder to get another kick at the can,” said Torstar lawyer Ryan Morris. “They are trying to use the court process to preserve Torstar and NordStar in limbo.”

NordStar lawyer Orestes Pasparakis said a stay wouldn’t be fair to shareholders, NordStar or Torstar. “There is no reason to wait, and any delay creates uncertainty in extraordinary times,” Pasparakis said.

CMMH lawyer Alistair Crawley argued the stay should be granted to keep the deal from closing before next Friday’s appeal. Once the deal is closed, it would become virtually impossible to unwind it because the money would have already been dispersed to shareholders, Crawley said.

“It’s not clear to us it would be possible to unscramble the egg,” Crawley said.

In written submissions, Crawley said Gilmore made several mistakes in her ruling.

“The artificially rushed nature of the hearing resulted in the application judge making a number of palpable and overriding errors of fact,” CMMH’s lawyers argued in documents submitted to the divisional court. Among their arguments was that a vote last Tuesday, where 98.7 per cent of shareholders approved of the deal, shouldn’t count.

Gilmore had rejected arguments from CMMH that Torstar’s board had stopped negotiating with CMMH after receiving its first 72-cents-per-share bid, which was subsequently topped by NordStar’s final offer of 74 cents per share.

A day before shareholders approved the takeover, CMMH raised its offer to 80 cents per share, but hard lock-ups signed by Torstar’s biggest shareholders had already guaranteed their support for NordStar.