Corus Entertainment has received court approval to move forward with a proposed recapitalization transaction that’s poised to save the company up to $40 million in annual cash interest payments and cut its third-party debt by over $500 million.
Despite failing to gain the support of Class B shareholders in a vote in late January, Corus continued to pursue court approval of the arrangement. The company revealed late Tuesday it’s now received an order from the Ontario Superior Court of Justice to proceed, pursuant to a plan of arrangement under the Canada Business Corporations Act. It also requires regulatory approval from the CRTC and Toronto Stock Exchange (TSX), where shares of Corus stock were trading up slightly at .035 cents Wednesday morning.
The plan otherwise received strong support, with 99.9% of votes cast by Senior Noteholders (in the principal amount of $750M) in favour, alongside 99.7% of Class A shareholders. Class B shareholders voted just 61.2% in favour. At least two-thirds (66⅔%) of votes cast by holders of Class B Non-Voting Shares was required to pass the resolution.
Corus says the plan is designed to strengthen its financial foundation and support the company’s long-term business strategy. In addition to reducing its third-party debt and other liabilities, it will grant the company continued access to a $235 million secured revolving credit facility and extend debt maturity by five years.
