Toronto Star article on the Nordstar LBO Bid for Torstar features Pycap CEO Stuart Browne for Insight & Commentary
Chair disputes claim that a higher bid was tabled for Torstar — and industry observers look at what’s next for the publisher
By Josh Rubin Business Reporter
At first glance, a pair of conservative-leaning entrepreneurs might seem like unlikely guardians of the progressive values of the Toronto Star.
But that’s just what Jordan Bitove and Paul Rivett say they are, after being anointed the preferred bidders for Torstar, the newspaper’s publisher, last weekend.
Barring an unforeseen twist, the company will be theirs, thanks to lock-in provisions in their latest 74-cent-a-share bid, submitted last Saturday through NordStar Capital, that prevent rival bids from being considered by the two main shareholders.
But questions are now arising about a second proposal to buy Torstar that became public late last week, from surprise bidder Canadian Modern Media Holdings (CMMH).
The second group of suitors say they were prepared to offer much more for Torstar, with investment banker Neil Selfe, a member of the bidding team, claiming they were ready to go as high as 80 cents per share — higher than NordStar’s 74 cents. He has publicly asked why Torstar’s owners would lock into a lower bid “if (they) were focused on maximizing shareholder value.”
Selfe’s claim has set off a public debate over who submitted what bid when: Both Torstar’s chair and NordStar say no firm bid was ever tabled for 80 cents.
Meanwhile, some industry observers say there might be another reason the NordStar bid was locked in 48 hours before this past Monday’s deadline: Sometimes, it’s not all about the money.
Torstar chairman John Honderich flatly disputes Selfe’s claim that CMMH made a firm superior offer. He says that Selfe’s group began with a proposal for 72 cents a share, plus contingent value rights (CVRs) that could be worth as much as 50 cents a share, and that they hadn’t improved the cash portion of the offer before the revamped NordStar bid came in, despite being given the opportunity.
“There was no 80-cent offer on the table when we made our decision. All we had was an offer for 72 cents and CVRs. We went back to Selfe twice on Saturday to urge him to increase the cash component of his bid. He didn’t. Only after the improved offer from NordStar became public did he then take a pen, scratch out 72 and put in 80, and then send it to us,” Honderich said.
By that point, the voting trust and Fairfax had already signed hard lock-ups guaranteeing their support for the improved NordStar bid, Honderich said.
Former Ontario premier David Peterson, who’s part of the NordStar bid, said in an emailed statement that the CMMH bid couldn’t have been better because it was never made official.
“There was no other binding offer on the table. A non-binding proposal is not a superior offer. A binding offer includes a legal commitment with financing. Unlike NordStar, CMMH group never made a binding offer and never publicly disclosed a source of financing,” said Peterson.
A source, who asked not to be identified because they were not authorized to speak publicly, said CMMH asked Torstar for an assessment of the value of the contingent value rights — which can mean extra money for shareholders if a specified milestone is met in the future — before considering a raised bid, but the group did not receive one. The source added that the only thing missing to make the CMMH bid legally binding was a “signature page” which was being held in escrow pending the value rights assessment.
Multiple sources have confirmed to the Star that CMMH’s bid was being financed by Canadian Western Bank, an Alberta-based business bank. Selfe declined to comment for this story, citing nondisclosure agreements.
Whether or not the owners of Torstar could have gotten a higher bid from CMMH — and whether that bid would actually be successfully financed — may never be known. But observers note that, as with any sale, money isn’t the only consideration.
Sources say the five families who have long controlled Torstar’s A-class shares were concerned that the new owners maintain the Star’s progressive values, in particular the Atkinson Principles which have guided the Star’s journalism for decades.
Torstar is more than a corporate entity, it is also one of the largest publishers in the country. If the decision to sell considered both principles and cold, hard cash, that’s fine with journalism industry watchers like Tim Currie, head of the journalism program at the University of King’s College in Halifax.
“It’s pretty clear that the legacy of the Atkinson Principles are very important to the families, and it certainly seems from the outside as though that’s a reason why they may have left some money on the table,” said Currie.
Not that the bottom line isn’t a factor, acknowledged James Compton, an associate professor at Western University’s Faculty of Information and Media Studies.
“Has Torstar been concerned with making money? Of course. But they’ve invested money in journalism, and like any good news organization, had a core set of values. … In their case, that’s the Atkinson Principles,” said Compton, a former journalist who specializes in studying the Canadian media industry.
Keeping up those progressive values and journalism also make solid business sense, argues Allan Thompson, director of Carleton University’s journalism program.
“I think the Star has enormous value as a brand … and that brand is as a progressive voice which invests in journalism,” said Thompson, a former Star reporter. “It’s not just the political perspective, it’s the fact they’ve been willing to invest in good journalism.”
That has meant, Compton said, that the Star has partly avoided the fate of many American media organizations which have cut staff to the bone after getting taken over by hedge funds and private equity firms. That trend is something Compton said has also loomed as a danger in Canada, where the majority of Postmedia shares are controlled by U.S.-based hedge fund Chatham Asset Management. (Last week, Chatham also won a bankruptcy court auction for the McClatchy newspaper chain in the U.S.).
The prospect of the Star falling into similar hands is something Compton worries about. In many cases, the debt loads assumed by new owners after takeovers have been crippling to newsrooms.
“This is a problem across North America. Value is being extracted and not put back into the newsrooms. Value is being extracted to make the debt payments. The business model is stripping assets, cutting costs and making debt payments,” said Compton.
The fact that NordStar’s bid financing comes from Canso Investment Counsel — also Postmedia’s largest debt holder — has stoked fears that NordStar plans to eventually sell the Star to Postmedia. That fear has been articulated by, among others, former Ontario finance minister Greg Sorbara, who’s part of the CMMH bid team.
NordStar has previously said through a spokesperson that it intends to pay back a “significant” amount of its Canso loan when the deal closes, and that the financing doesn’t mean there’s a merger coming.
“Let us be absolutely clear: The financing arrangements for the NordStar bid are not, in anyway whatsoever, connected directly or indirectly with any other media company,” a NordStar spokesperson said in late May, after Canso’s involvement became public.
Private equity executive Stuart Browne doesn’t think NordStar bought Torstar to merge the Star with Postmedia.
“I don’t see any evidence that there’s a consolidation play here. As long as they keep making their debt payments, there’s nothing that Canso could do,” said Browne, CEO of Pycap Venture Partners and a lecturer at York University’s Schulich School of Business.
Instead, said Browne, NordStar likely intends to boost the Star’s efforts to attract more digital subscribers, while selling some non-core assets, such as its stake in digital community discussion board VerticalScope.
It’s also not a coincidence, Browne argued, that the deal is happening during a global pandemic.
“The industry has been in distress anyway, and then COVID hit, so I think they saw value at these prices,” said Browne, adding that there could be some cost-cutting to reduce the company’s losses.
The NordStar team did not comment on their long-term plans for Torstar when approached for this story, but after news of their then-63-cent bid became public in late May, Bitove and Rivett said they planned to boost the Star’s digital offerings and said they weren’t planning big cuts.
“Our focus is on the Star’s journalism and digital transformation. And you need capital to support that,” said Bitove at the time. A report published in the Globe and Mail said Bitove and Rivett were seeking up to $100 million from the sale of non-core assets, but Bitove said there’s no exact number.
“You can’t grow revenue on the back of cuts. We don’t subscribe to cutting. But that said, we support management and we support (Torstar CEO) John Boynton and the team. So there’s no current focus on that. Our current focus is that we’re excited to bring new potential revenue sources and partners to the business and find ways to grow, not cut,” added Rivett.
While the Star doesn’t have the digital subscription base of U.S. outlets such as The New York Times or The Washington Post, there’s still hope for subscription growth, which could stem the losses Torstar has suffered over the last few years, University of King’s College’s Currie argued. Just because people have been used to getting news online for free doesn’t mean they won’t ever pay for it.
“As an industry, we made a huge mistake three decades ago in not monetizing online readership. But people used to get their music online for free. Now, they’re paying. Not as much as they should be, if you ask a lot of artists, but they’re paying,” said Currie.
Kelowna, BC – The Okanagan Valley is getting more public EV charging stations courtesy of ChargerQuest. In collaboration with the Fairfield Inn & Suites by Marriott, two (2) SMART EV charging stations are now available in mid-town Kelowna just off Harvey Ave/ Highway 97 at 1655 Powick Rd. Located at an incredible destination that is close to everything Kelowna has to offer, the Fairfield Inn Kelowna is an ideal place to stay, dine, shop and play.
“Despite COVID-19’s unprecedented impact on the hospitality industry as a whole, the incredible team at Fairfield Inn Kelowna was open to the CQ opportunity, adding an incredible amenity for their guests and the broader community. It is this type of leadership that inspires change and accelerates business and emission-free travel.” Christopher Misch - CEO, ChargerQuest “I've been pondering the idea of getting an EV charging station for our hotel for some time; however, the cost and maintenance were a deterring factor for us. With the increasing demand for stations and efforts to support a green initiative, I knew we would have to make a decision soon. Low and behold, Chris from Green Dot reached out with a great service. They took care of the installation and logistics - super easy. Now we are proud to display these charging stations at our hotel and provide our green friendly guests with a well-needed service! Thanks Chris!” – Cedric Younge - General Manager, Fairfield Inn & Suites by Marriott Kelowna ChargerQuest is a leader in providing turnkey EV charging solutions for our host location partners. Our talented team works with hotels, parking authorities, municipalities, tourist destinations, and qualified commercial properties - offering EV charging as an amenity to your customers and team. ChargerQuest is Canada’s leader in deploying SMART EV charging stations everywhere YOU want to go. ChargerQuest plans to deploy up to 250 public EV charging stations across Canada. Chargerquest.com
Toronto, Ontario – July 9, 2020 – w8time, a Canadian start-up that tracks and shares queue times, announced today a new strategic partnership with Pycap Venture Partners, a venture capital and corporate finance firm. The new partnership will help w8time to further expand its offerings geographically and launch a new app this summer.
“Waiting in line is something that has always been a part of our reality but was exasperated by the current crisis. Our vision is to become the authority of time saving solutions using the aid of advanced algorithms, compatible with Artificial Intelligence,” said Founder of w8time, Guillermo Herrera-Valencia. “With Pycap providing strategic oversight, we are better poised to keep the community better informed and launch our app in the up-coming weeks.”
Powered by the community
w8time emerged during the pandemic crisis as a public service that tracks wait times in an effort to better distribute traffic and consequently save users time. Founded by Guillermo Herrera-Valencia, a Toronto-based start-up technology professional, and co-founded by Henrry Araujo, an Application Advisory Developer and Data Engineer, w8time began from humble beginnings when Guillermo tracked the queue through Instagram @w8time for his neighbour liquor store in Toronto. Immediately, he received positive feedback from the local community who also helped power the platform and requested for further expansion. Since then, the platform has grown to increase its user base and contributors help to track wait times at grocery, liquor and hardware stores across Ontario with a heavy emphasis in Toronto.
What’s next for w8time
w8time aims to transform the waiting experience. The company is on the heels of launching its app late this summer. The app will continue to track wait times at shops, but hope to expand to airports, restaurants, retail stores, doctor’s offices, theme parks and more. In addition to tracking wait time, the app will also offer rewards to community users updating lineup wait times. Together, Pycap and w8time will expand the user base beyond the Toronto area. The beta version is available, be one of the first to try it here https://w8time.org/beta
w8time joins Pycap’s portfolio of early-stage technology companies including ChargerQuest, SRX Collect, Be-Hive and more. Pycap is best known for providing strategic advisory and financial services to early-stage companies. The new partnership will see the venture capital company provide strategic oversight as w8time expands.
“The waiting experience is something that everyone can relate to and w8time has the right people supporting the company to take it forward. We see the potential in this mission and are proud to be one of the first major partners,” said Stuart Browne, CEO and Founder of Pycap Venture Partners. “We’re honoured that the w8time team selected us to help them move the company forward.”
w8time, pronounced wait time, takes the waiting experience to a new level. w8time is a public service powered by the community which tracks lineup waiting times. w8time also offers carefully curated content to make the wait time more enjoyable. Visit w8time.org to learn more.
Pycap Venture Partners is a venture capital and corporate finance firm providing financing and value creating solutions for early stage companies, administrative, investment and management services for venture capital and private equity investment vehicles. Pycap’s portfolio currently has 10 companies including SRX Collect, Be-Hive, Alta Robotique, ChargerQuest and w8time. Visit pycap.ca to learn more..
Pycap Venture Partners CEO, Stuart Browne joined Solina Teav of Grand Challenges Canada and Ganesh Ramanchandran on a webinar panel hosted by Prepr. The topic centered on the financing landscape for impact driven and social innovations. During this discussion, Stuart highlighted the various options for entrepreneurs to adapt to the ‘new normal’ resulting from the pandemic, and obtain external sources of capital.
Prepr are passionate innovators and entrepreneurs, who want to pay it forward by helping individuals, teams and businesses to develop the skills and competitive advantages they need to succeed in today’s economy. Their mission is to create a global learning network, to up-skill and re-skill 1,000,000 individuals to become problem solvers from around the world by 2024 and become their learning companion. Pycap recently joined the Prepr community to offer support to those looking to make a positive change.
Kelowna, BC – Canada’s ChargerQuest (CQ) Inc. has expanded into the BC market for the first time installing four (4) EV charging stations in Kelowna with Eldorado Resort comprising Hotel Eldorado & Manteo Resort locations. Leveraging an innovative program for progressive businesses, CQ continues to create an accessible solution to the lack of intercity EV infrastructure and plans to expand its EV charging network throughout the Okanagan Valley. By partnering with these two remarkable lakefront resorts, CQ is creating a new amenity for visitors, while also supporting the adoption of emission-free travel. In 2020/21 ChargerQuest plans to install up to 50 more charging stations across British Columbia. “We are excited to partner with Hotel Eldorado and Manteo Resort by adding electric vehicle charging stations as an amenity for guests – now tourists, business travellers and visitors coming to Kelowna have the ideal place to stay overnight and reenergize their vehicles.” Christopher Misch – CEO, ChargerQuest “Adding EV charging as an amenity for our guests is a step in the right direction, doing our part to promote environmentally friendly travel.” – Brent Lavery, General Manager, Eldorado Resort – Manteo, Hotel Eldorado & Eldorado MarinaChargerQuest is a leader in providing turnkey EV charging solutions for our commercial partners. Our talented team works with hotels, parking authorities, tourist destinations, and qualified commercial properties – offering EV charging as an amenity to your customers and team. ChargerQuest is Canada’s leader in deploying smart EV charging stations everywhere YOU want to go. ChargerQuest plans to deploy up to 250 public EV charging stations across Canada
Pandemic Relief: Schulich School of Business & Pycap Venture Partners Team Up to Help Small Businesses Get Vital Funding
TORONTO, April 14, 2020 (GLOBE NEWSWIRE) — The Schulich School of Business at York University and Pycap Venture Partners today announced the establishment of the COVID-19 Small Business Support Centre designed to help small businesses and entrepreneurs access financial support programs.
The Centre will help business owners and entrepreneurs with the following:
“Many business owners and entrepreneurs are overwhelmed right now with the process of assessing the increasing number of government and private sector programs available to them,” says Stuart Browne, CEO of Pycap Venture Partners and an instructor in the Schulich Entrepreneurial Studies Program, where he teaches a course on Venture Capital & Private Equity. “Our opening goal is to help 3,000 small business owners and entrepreneurs in the next 90 days, but our partnership with Schulich is allowing us to scale our support services exponentially.”
“Schulich is proud to team up with Pycap Venture Partners to assist small business owners and entrepreneurs,” says Dezsö J. Horváth, Dean of the Schulich School of Business. “Our School has a long and successful track record of supporting entrepreneurs and small businesses throughout Canada. The Support Centre will provide critical assistance to help small businesses stay afloat during these unprecedented times.”
The Schulich Pycap COVID-19 Small Business Support Centre will also create jobs for fifteen Schulich students and recent graduates. Schulich students and graduates will also receive additional training from Pycap Venture Partners in real-world venture capital and/or corporate finance-related skills. To learn more about the Centre, please visit: www.pycap.ca/c-19-support.
Known as Canada’s Global Business School™, the Schulich School of Business offers business programs year-round at its state-of-the-art complex at York University; at its Miles S. Nadal Management Centre located in the heart of Toronto’s financial district; and at its campus in Hyderabad, India. Schulich also operates a number of satellite centres in Beijing and Shanghai, China; Mumbai, India; Seoul, South Korea; Mexico City, Mexico; and Sao Paulo, Brazil. Schulich offers undergraduate, graduate and postgraduate business degrees that lead to rewarding careers in the private, public and nonprofit sectors, and has more than 30,000 alumni working in over 90 countries. The School pioneered Canada’s first International MBA and International BBA degrees, as well as North America’s first ever cross-border Executive MBA degree, the Kellogg-Schulich Executive MBA. The School has one of the largest portfolios of one-year, specialized Masters programs of any business school in North America.
About Pycap Venture Partners
Pycap Venture Partners is a venture capital and corporate finance firm providing financing and value creating solutions for early stage companies, administrative, investment and management services for venture capital and private equity investment vehicles. Pycap CEO Stuart Browne has spent 10 years in the venture capital industry working directly with early-stage companies as an advisor, investor, interim CFO and managing partner. Stuart has been a trusted partner for many entrepreneurs in navigating their companies through difficult times and helping them thrive despite being against the odds.
For more information, please contact:
Chris Carder, Co-Director of Schulich’s Entrepreneurial Studies Program & Entrepreneur-In-Residence: firstname.lastname@example.org or 416-275-3647
Stuart Browne, CEO of Pycap Venture Partners: email@example.com or 416-315-7892
The Chartered Professional Accountants of Ontario (CPA Ontario) added Pycap’s seminar on Venture Capital and Private Equity to a video series that will be part of their online professional development offerings.
CPA Ontario is the governing body of the self-regulating accounting profession. It serves and supports 92,000 members and 21,000 students in their qualification and professional development in a wide range of senior positions in public accounting, business, finance, government, not-for-profits and academia.
Pycap Venture Partners was featured with a cover page highlight in the business magazine Dreamer2Creator. The article focused on the venture capital industry, trends and strategies entrepreneurs can use to improve their financial health and strengthen their position to receive financing.
Pycap CEO Stuart Browne was a judge for the prescreening Roadshow for SCI Commercialization Acceleration Program / 21st China High Tech Fair in November.
Toronto’s Sci Innovation centre held their Flagship Demo Day welcoming a delegation of premier Chinese investors to experience presentations and exhibitions from some of Canada’s brightest news innovators and startups within the Biotech, Internet, AI, Advanced Manufacturing and more.
The purpose of the event is to assist Canadian innovators in connecting with notable investors for opportunities to develop their leading technology and projects. The goal of the Sci Innovation Centre is to offer Canadian innovators access to large amounts of Chinese investment and also providing safe and successful partnership in the Chinese market.
Canadian innovators and startups presented thier unique ideas and projects for which they seek to grow utilizing resources in China.