Business

Winnipeg Free Press - PRINT EDITION

Canwest papers to suspend severance payments

Move temporary, company spokesman says

By: Martin Cash

Posted: 01/12/2010 1:00 AM | Comments: 0 (including replies)

ABOUT 75 former employees of Canwest Limited Partnership will have their severance payments at least temporarily cut off while the newspaper company is in bankruptcy protection, even as 27 senior managers receive about $5 million in incentive bonuses.The same scenario was part of the parent company's creditor protection filing in October. But Gary Engler, a vice-president with the Communications, Energy and Paperworkers (CEP) union in Vancouver representing unionized staff at Canwest papers in B.C., said he believes this deal is not as offensive to the employees as the one included in the Canwest Media Inc. (CMI) filing in October.

"This one seems more designed to getting employees on-side," Engler said. "There is something in it for the banks in minimizing conflict with employees."

On Friday, the newspaper group, which owes about $1.4 billion, was placed in bankruptcy protection. The bank group that has $950 million in secured loans has started a sale process with a floor or "stalking horse" bid of about $1 billion.

There are 66 employees, most of whom are on salary continuance after accepting buyouts, who will have their payment suspended while Canwest LP is under the court-sanctioned Companies Creditors' Arrangement Act protection, according to documents filed in an Ontario court on Friday.

Another nine former management employees will also have their severance payments interrupted.

But Canwest spokesman John Douglas said the difference between the bankruptcy protection filings of the two divisions (Canwest LP and CMI) is that salary continuance payments are only interrupted during the CCAA period and depending on how the papers emerge from bankruptcy protection, payments could be resumed.

"They (salary continuance payments) are not compromised, they are just stayed," Douglas said. "Which means they are part of the process. The creditor bid contemplates paying out the claims."

In the case of the CMI action filed in October, about 20 senior employees received almost $9 million in bonuses and about 60 former employees of Canwest's television division had their severance payments terminated.

The Canwest LP newspaper group employs about 5,300 people. Friday's court filings make it clear in several instances that no layoffs are expected to occur as a result of the action.

The Canwest parent company is headquartered in Winnipeg, but its newspaper division, based in Toronto, does not have any publications in Winnipeg.

However, the newspaper division does have a major call-centre operation here, called ReachCanada Contact Centre. That centre employs close to 300 people doing newspaper subscription and customer service work. In addition, there are another 75 employees in Winnipeg who are shared between Canwest Limited Partnership and Canwest Media Inc. providing accounts receivable functions for both divisions as well as information technology services.

No layoffs are anticipated at that call centre/back office operation in Winnipeg. In fact, there are job postings for the call centre.

Canwest CEO Leonard Asper has made it clear he was adamantly opposed to the timing of CCAA filing by the newspaper division. As well, in a letter to a senior Scotiabank official acting as agent for the bank syndicate that is owed about $950 million, he said the suggestion that the two divisions will separate could cause millions of dollars in damages to the companies.

He also warned bankers the premature CCAA filing would cause employee turnover at the newspapers.

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition January 12, 2010 B3

(You must be logged in to post your reaction)

Your reaction?

More Business

Undock

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010; View the changes. New to commenting? Check out our Frequently Asked Questions.