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Torstar bidding on Canwest papers, FFH may back


omagh
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http://www.theglobeandmail.com/report-on-business/torstar-among-final-bidders-for-canwest-papers/article1499394/

 

Torstar, which is believed to be backed by Fairfax Financial Holdings Ltd., will now compete with a group of other bidders that is said to include several industry heavyweights. B.C. newspaper proprietor David Black, and newspaper executive Paul Godfrey backed by Onex Corp. and Alberta Investment Management Corp., have been mentioned as bidders so far.

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Keep in mind that FFH is a long-term investor & many of these other bids are effectively straw-men.

 

If they buy now they are buying at liquidation prices, averaging their cost down, & essentially just re-cycling their portion of the sales proceeds. As long as you know how to actually produce & distribute newspapers (Torstar), a newspaper is actually a cash cow; you blow up when you over-leverage against that future cashflow, & forget that it can materially vary.

 

5 years out the purchase will look like a steal, FFH's cost base will be well below the then market cap, & the story will be all about how prescient FFH was. They will have avoided a permanent capital loss, & hopefully sold to escape drinking the cool-aid.

 

This is what FFH does, & it does it very well. Good on them.

 

SD 

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I cant recall but I think that FFh is the largest shareholder ahead of the Atkinson Trust.  If they are now formally backing Torstar they need to request that they have an equal number of A shares plus one.  This will clear up the problems with the politics operating between the CEO and the trust.  The CEO will then answer to FFH, not the Atkinson Trust.  The Trust will only benefit from such an arrangement.  I hope FFH is playing hard ball this time around. 

 

My main problem with Torstar is not its assets per say but rather the interference of the trust. 

 

There is absolutely no reason for Rivett and FFH to play second banana when they are the ones putting up the capital. 

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