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Postmedia - Preliminary Prosepectus

Postmedia - Preliminary Prosepectus

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Published by TheGlobeandMail
Newspaper publisher Postmedia Network Canada Corp. is preparing to list its shares on the Toronto Stock Exchange.
Newspaper publisher Postmedia Network Canada Corp. is preparing to list its shares on the Toronto Stock Exchange.

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Categories:Business/Law, Finance
Published by: TheGlobeandMail on Mar 15, 2011
Copyright:Attribution Non-commercial

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03/15/2011

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No securities regulatory authority has expressed an opinion about these securities and it is an offence to claimotherwise.A copy of this preliminary prospectus has been filed with the securities regulatory authorities in each of theprovinces of Canada, except Québec, but has not yet become final. Information contained in this preliminaryprospectus may not be complete and may have to be amended.This preliminary prospectus does not constitute a public offering of securities.Non-Offering Prospectus
PRELIMINARY PROSPECTUS
March 15, 2011
POSTMEDIA NETWORK CANADA CORP.No securities are being offered pursuant to this Prospectus.
This preliminary prospectus (the “
Prospectus
”) is being filed with the securities regulatory authorities in each of theprovinces of Canada, except Québec, to enable Postmedia Network Canada Corp. (the “
Corporation
”) to become areporting issuer pursuant to applicable securities legislation in each of the provinces of Canada, except Québec,notwithstanding that no sale of its securities is contemplated herein.Since no securities are being offered pursuant to this Prospectus, no proceeds will be raised and all expenses inconnection with the preparation and filing of this Prospectus will be paid by the Corporation (as herein defined)from its general corporate funds.
There is no market through which the securities of the Corporation may be sold and securityholders may notbe able to resell securities of the Corporation owned by them. This may affect the pricing of the securities inthe secondary market, the transparency and availability of trading prices, the liquidity of the securities, andthe extent of issuer regulation. You should carefully review and evaluate certain risk factors before makingany investment decision with respect to the securities of the Corporation. See “Risk Factors”, beginning onpage 97 of this Prospectus.
The Corporation has applied to list its securities on the Toronto Stock Exchange (the “
TSX
”). The listing will besubject to the Corporation fulfilling all the listing requirements of the TSX, including meeting all minimum listingrequirements.
No underwriter has been involved in the preparation of this Prospectus or performed any review orindependent due diligence of the contents of this Prospectus. No person is authorized by the Corporation toprovide any information or to make any representation other than those contained in this Prospectus withrespect to the Corporation or the securities of the Corporation.This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities.
The head and registered office of the Corporation is located at 1450 Don Mills Road, Don Mills, Ontario M3B 2X7.
 
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TABLE OF CONTENTS
NOTE REGARDING FORWARD-LOOKINGSTATEMENTS....................................................................IINOTICE REGARDING PRESENTATION OFFINANCIAL INFORMATION......................................... IIIRECENT DEVELOPMENTS.............................................IVGAAP AND NON-GAAP FINANCIAL MATTERS..........IVMARKET, RANKING, INDUSTRY DATA ANDFORECASTS......................................................................IVTRADEMARKS, SERVICE MARKS ANDCOPYRIGHTS....................................................................VCURRENCY TRANSLATION............................................VGLOSSARY OF TERMS......................................................IPROSPECTUS SUMMARY.................................................1CORPORATE STRUCTURE...............................................8
Name, Address and Incorporation.......................................8Intercorporate Relationships ...............................................8
THE BUSINESS....................................................................8
Acquisition of the Business.................................................8Overview of the Business ...................................................9Recent History and Development of the Business..............10Competitive Strengths ......................................................12Business Strategy.............................................................13The Canadian Newspaper Industry....................................14Newspaper Operations......................................................14Digital Media and Online Operations................................15Operations........................................................................17Seasonality.......................................................................20Employees .......................................................................20Unions.............................................................................20Facilities..........................................................................21Printing............................................................................21Outsourcing......................................................................21Capital Expenditures Requirements...................................22Intellectual Property.........................................................22Environmental, Health and Safety Protection.....................22Legal Proceedings............................................................23Regulation........................................................................23
SIGNIFICANT ACQUISITION.........................................24SELECTED FINANCIAL INFORMATION......................29MANAGEMENT’S DISCUSSION AND ANALYSIS........34
The Acquisition................................................................34Overview and Background................................................35Key Factors Affecting Operating Results...........................35Other Factors....................................................................37Proposed Accounting Policies...........................................39Operating Results.............................................................40Liquidity and capital resources..........................................59Sources of Cash................................................................59Uses of Cash....................................................................60Financial Instruments and Financial Instruments Risk Management ....................................................................61Financial instruments........................................................62Contractual obligations and commitments.........................63Guarantees and Off-Balance Sheet Arrangements..............64Reconciliation of Non-GAAP Financial Measures.............64
DESCRIPTION OF SHARE CAPITAL.............................64
General............................................................................64Rights upon Liquidation, Dissolution or Winding-Up........65Voting Shares...................................................................65Variable Voting Shares.....................................................65Coattail Provision.............................................................66Declaration as to Canadian Status .....................................66
DIVIDEND POLICY..........................................................66OPTIONS TO PURCHASE SECURITIES........................67PRIOR SALES....................................................................67PRINCIPAL SHAREHOLDERS........................................68
Registration Rights Agreements........................................68
SHAREHOLDER RIGHTS PLAN.....................................69EMPLOYEE SHARE PURCHASE PLAN.........................74DIRECTORS AND EXECUTIVE OFFICERS..................76
Directors and Executive Officers.......................................76Nominating Agreement.....................................................77Consulting Agreement......................................................78Biographies......................................................................78Cease Trade Orders or Bankruptcies .................................81Penalties or Sanctions.......................................................83Conflicts of interest..........................................................83
STATEMENT OF EXECUTIVE COMPENSATION........83
Compensation Discussion and Analysis.............................84Incentive Plan Awards......................................................85Employment Agreements..................................................85Compensation of Directors of Postmedia...........................87DSU Plan.........................................................................87Insurance Coverage for Directors and Officers andIndemnification................................................................87Option Plan......................................................................88RSU Plan.........................................................................90
CORPORATE GOVERNANCE.........................................91
Board of Directors............................................................91Committees of the Board..................................................94
RISK FACTORS.................................................................97
Risks Relating to Our Business.........................................97Risks Relating to Our Indebtedness.................................110Risks Relating to the Shares............................................112
LEGAL PROCEEDINGS.................................................114
Legal proceedings ..........................................................114
INTERESTS OF MANAGEMENT AND OTHERS INMATERIAL TRANSACTIONS.......................................114
Registration Rights Agreement.......................................114Nominating Agreement...................................................114Consulting Arrangement with John Paton........................115
AUDITORS, TRANSFER AGENTS AND REGISTRARS115MATERIAL CONTRACTS .............................................115EXPERTS.........................................................................115INDEX TO FINANCIAL STATEMENTS.......................117CERTIFICATE OF THE CORPORATION....................143
 
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IMPORTANT INFORMATION ABOUT THIS PROSPECTUS
No person has been authorized to provide any information or to make any representation not contained in thisProspectus, and, if provided or made, such information or representation should not be relied upon. You should assume that theinformation contained in this Prospectus is accurate only as of the date of this Prospectus. No securities are being offeredpursuant to this Prospectus.Capitalized terms, except as otherwise defined herein, are defined in the section entitled “Glossary of Terms”.
Except as otherwise indicated or the context otherwise requires in this Prospectus, for periods prior to theAcquisition references to “the Corporation”, “Postmedia”, “we”, “us” and “our” refer to Canwest LP and itsconsolidated subsidiaries; and for periods following the Acquisition those terms refer to Postmedia Network CanadaCorp. and, if the context requires, its consolidated subsidiaries.NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, and therefore are, or may be deemed to be, “forward-looking statements.”These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms“believes”, “estimates”, “anticipates”, “expects”, “seeks”, “projects”, “intends”, “plans”, “may”, “will” or “should” or, in eachcase, their negative or other variations or comparable terminology. These forward-looking statements include all matters thatare not historical facts. They appear in a number of places throughout this Prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition,liquidity, prospects, growth, strategies and the industry in which we operate. These statements reflect management’s currentbeliefs with respect to future events and are based on information currently available to management. Forward-lookingstatements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause theCorporation’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, without limitation, those listedin the “Risk Factors” section of this Prospectus. Should one or more of these risks or uncertainties materialize, or shouldassumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements couldvary materially from those expressed or implied by the forward-looking statements contained in this Prospectus. Such risksinclude, but are not limited to: competition from other newspapers and alternative forms of media; the influence of prevailingeconomic conditions and the prospects of our advertising customers on advertising revenue; the failure to fulfill our strategy of building our digital media and online businesses; failure to maintain our print and online newspaper readership and circulationlevels; decreases in advertising revenue could have a negative impact on our results of operations; financial difficulties of certain of our contractors and vendors; competition with alternative emerging technologies; not being able to achieve aprofitable balance between circulation levels and advertising revenues; not realizing our anticipated cost savings from our costsavings initiatives; seasonal variations; intellectual property rights; damage to our reputation; variations in the cost andavailability of newsprint; variations in the cost and availability of ink; disruptions in information systems and technology andother manufacturing systems; labour disruptions; equipment failure; environmental, health and safety laws and regulations;controversial editorial content; unresolved litigation matters; failure to comply with “Canadian newspaper” status; thecollectability of accounts receivable; goodwill and masthead impairment charges; disruptions in the credit markets; changes toour insurance policies; our under-funded registered pension plans; changes in pension fund investment performance; foreignexchange fluctuations; disruptions to the operations and services suppliers provide to us; increases in distribution costs due toincreases in fuel prices; outsourcing certain aspects of our business to third-party vendors; retaining and attracting sufficientqualified personnel; increases in sales, income and other taxes; the occurrence of natural or man-made disasters; compliancewith the Sarbanes-Oxley Act of 2002; internal controls; the implementation of International Financial Reporting Standards;operating as a stand-alone company; change of laws; reliance on inaccurate third-party information; our financial statementsnot being comparable to prior periods; our substantial indebtedness; the terms of the ABL Facility, the Term Loan Facility andthe indenture that governs the Notes, restricts our operating subsidiary’s current and future operations; interest rate risk andforeign exchange rate risk; our subsidiaries not being able to generate sufficient cash to service all of their indebtedness; noprevious public market for the Shares; volatility of the market price for Shares; dual class share structure; holding companystructure; risks relating to the future sales of Shares by directors and officers and risks relating to dilution. See “Risk Factors”for a complete list of risks relating to an investment in the Corporation. By their nature, forward-looking statements involverisks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.Those factors should not be construed as exhaustive and should be read with the other cautionary statements in this Prospectus.

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