TORONTO — The owner of the Global broadcast TV network, cable networks distributed across Canada, and radio stations including Toronto’s “Q107” and “The Edge” and Calgary’s “QR” has moved forward with a “recapitalization transaction” that effectively concludes any involvement with the Shaw family — putting the fiscally challenged company in lenders’ hands.
The proposed deal, announced Monday by Corus Entertainment Inc., “is expected to strengthen its financial foundation, support its business strategy, and enable the continuity of business and operations.”
Investors don’t necessarily agree, as Corus shares were priced at $0.07 CDN minutes before Monday’s closing bell on the TSX.
Core to the proposed transaction is a meaningful reduction of Corus’ debt and annual interest costs, while improving its capital structure and liquidity.
“The proposed transaction will solidify our financial foundation and position Corus for the long-term,” said Corus CEO John Gossling. “With significant support from our secured lenders and bondholders, we will be well positioned to continue what we do best — creating and delivering content that entertains and informs millions of Canadians across our expansive suite of leading TV, radio and digital assets, with Global’s exciting fall premiere season now underway.”
“Significant support” is Gossling’s way of sharing that a debt-for-equity exchange is underway, putting Corus in the hands of its lenders and out of the control of the Shaw family. And, it will be done in a court-administered manner via the Ontario Superior Court of Justice, and through a plan of arrangement under the Canada Business Corporations Act.
“In addition to right-sizing the balance sheet, we intend to continue executing our strategic plan,” Gossling added. “This includes focusing on attractive opportunities or partnerships to enhance revenue and value, including through a focus on digital services and products, as well as maintaining discipline over costs and cash management, and finding additional operational efficiencies.”
First, Corus’ revolving facility provided by its senior lenders has been amended and increased to $125 million CDN. Second, it provides a window to avoid bankruptcy and build a list of secured and non-secured creditors.
“This transaction represents the culmination of the strategic work to optimize Corus’ capital structure and manage the company’s balance sheet, following the assignment of its senior credit facility earlier in 2025,” said Mark Hollinger, Independent Lead Director of Corus’ Board of Directors. “After conducting a robust and comprehensive review process with our external financial and legal advisors, the Board concluded this Recapitalization Transaction represents the best available option for the Company and its stakeholders at this time.”
A LENDER TAKEOVER IS EXECUTED
Just how is the Shaw family relinquishing its control of Corus?
The publicly traded company entered into consent and waiver deal with all of the lenders under its senior credit facility and, at the same time, a support agreement with holders representing more than 74% of Corus’ aggregate $750 million of senior unsecured notes.
Concurrently, Corus entered into a Shareholder Support Agreement with the Shaw Family Living Trust — indirectly the holder of more than 80% of the Class A Voting Shares in the company. Those shares and their Class B non-voting shares will be transferred to the lenders.
What does this resolve? Corus will engage in a total reduction of third-party indebtedness and other liabilities of over $500 million; annual cash interest savings of up to $40 million; continued access to the senior secured revolving credit facility just increased from $75 million CDN; and a key extension of relief of financial covenants under the Senior Credit Facility beyond December 31, 2025.
What happens next? The Recapitalization Transaction not only sees its revolver raised to $125 million CDN, but an existing secured term loan will be fully redeemed at par value, with Corus issuing new first lien senior secured notes in the aggregate principal amount of $300 million CDN with a five-year maturity date. Some $250 million CDN of the Senior Notes will be settled in exchange for second lien secured notes with a six-year maturity date in an equal aggregate principal amount.
Additionally, some $500 million CDN of the Senior Notes will be exchanged for common shares of a newly formed corporation that are expected to represent 99% of all of the issued and outstanding shares of “NewCo” on a non-diluted basis and will be the only class of shares of NewCo outstanding after closing.
For the Toronto Stock Exchange, the task will be to have NewCo shares substituted for the company’s Class B Non-Voting Shares.
Meanwhile, the Corus Board of Directors will be “refreshed” at closing and comprise, initially, five directors.
Jefferies Financial Group Inc. is advising Corus on the restructuring, while Canaccord Genuity Group is an adviser for the creditor group.
