David George-Cosh

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Torstar Corp. shareholders voted Tuesday morning in favour of a friendly privatization arrangement led by former Fairfax Financial Holdings Ltd. president Paul Rivett after an eleventh-hour rival bid was rejected by the company's board, with the publisher's chair describing it as "disingenuous".

Torstar said in a late Monday press release — less than 24 hours before a crucial shareholder meeting to vote on the takeover offer — that it received a cash offer from Canadian Modern Media Holdings Inc. (CMMH) worth 80 cents per share for the owner of newspaper dailies such as The Toronto Star, Hamilton Spectator and Waterloo Region Record. 

While that offer is worth more than the 74 cents a share offered by NordStar Capital LP -- a group led by Rivett, businessman Jordan Bitove and former Ontario premier David Peterson -- Torstar said that Monday's bid from CMMH didn't include any contingency value rights or any financing information.

Torstar also noted a subsidiary of Fairfax and the trustees of the Torstar Voting Trust are “obligated” to maintain their support for the NordStar bid after entering into hard lockup arrangements.

As a result, Torstar will continue to back NordStar's offer, the company said. 

"We believe that CMMH's submission of a proposal [Monday] is disingenuous and made for the purpose of confusing shareholders and obfuscating its own missteps," said Torstar chair John Honderich in a statement.  

"The terms of the voting support agreements entered into with the Torstar Voting Trust and Fairfax have been publicly disclosed and make it impossible for their proposal to be considered a superior proposal. These facts are all well known to CMMH."

However, a source directly familiar with CMMH's bid told BNN Bloomberg that the firm delivered a fully binding offer to Torstar on Monday morning that was backed by a "significant Canadian financial institution". Commitment letters were also signed by the group's lawyers, but Torstar representatives didn't respond to CMMH's offer until the press release was posted late Monday, the source added. 

"It was a rock-solid offer and they waited all day to respond" to CMMH, the source said. 

Torstar said Tuesday that over 98 per cent of the votes cast supported NordStar's bid, matching preliminary results from a prior press release. The company said that nearly 82 per cent of votes by shareholders, excluding the company's voting trust or Fairfax subsidiary (which owns approximately 40 per cent of Torstar, according to Bloomberg data), backed the NordStar offer. Before the shareholder vote started on Tuesday, Honderich described the sale process as “very sound.”

After winning shareholders’ approval Tuesday, there is one last chance for CMMH to sway the company before the sale to NordStar is final. 

In a response to Ontario NDP Leader Andrea Horwath, who asked the Ontario Securities Commission to hold a hearing into the Torstar deal, the regulator's chair Grant Vingoe said "investors and interested parties" should raise their concerns at an Ontario Superior Court hearing on Thursday when a judge will formally rule on the sale. 

"This process requires Torstar to demonstrate, among other things, that the proposed transaction is 'fair and reasonable' to the corporation and its shareholders," Vingoe said in the letter obtained by BNN Bloomberg.