Court considers temporary hold on NordStar takeover of Toronto Star publisher

Court considers temporary hold on NordStar takeover of Toronto Star publisher
An appeals court is considering whether to temporarily block a 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.

Divisional Court Justice Michael Penny is now considering the request for a stay after a hearing Friday morning. Penny told lawyers for all the parties he’d be issuing his decision later this afternoon. 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.

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.”

Morris also argued that Proud had exercised “dissent rights,” meaning he’ll be compensated for giving up his shares, and thus had no right to have his arguments heard by Gilmore either.

“They did not have standing to oppose the arrangement,” Torstar’s lawyers argued in a written submission.

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 that the stay should be granted to keep the deal from closing before an appeal is scheduled to be heard next Friday. 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.

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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 signed by Torstar’s biggest shareholders had already guaranteed their support for NordStar.
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