A member of one of the five families that control Torstar Corp.‘s voting trust has broken ranks to say he does not support a $60-million takeover of the publishing company by NordStar Capital LP.
Butch Folland, a member of the Hindmarsh family that owns 18.8 per cent of Torstar’s class-A voting stock, said he did not agree with the controlling trust’s decision to lock in support for NordStar’s bid of 74 cents a share, cutting off any further bidding war for the company that publishes the Toronto Star and other newspapers.
“I was really disappointed in the outcome. I felt that the process wasn’t really fair in the way it affected me,” Mr. Folland said in an interview from his home near Pointe au Baril, Ont.
Mr. Folland, 79, said he gave his approval to NordStar’s initial bid of 63 cents a share in late May. The agreement included a “soft lockup” provision with the controlling shareholders that would allow them to support a higher offer if one emerged.
Earlier this month, Canadian Modern Media Holdings Inc. floated an unsolicited bid of 72 cents a share. That led NordStar to raise its bid and extract unqualified support from the major holders, including the families that have controlled the company for more than six decades.
NordStar, led by investors Jordan Bitove and Paul Rivett, is awaiting a judge’s decision on whether to approve the deal after a court hearing on Thursday.
“I certainly did not agree to that,” Mr. Folland said. “I agreed to the first offer, and would liked to have been informed and saw a little bit more about the second offer. Every bit of information I’ve gleaned since then has been what I’ve read in the newspapers.”
On Tuesday, holders of Torstar’s Class-A and Class-B shares voted in overwhelming majorities to approve the NordStar deal, despite grumbling among some shareholders that the bid was not allowed to be topped.
A day earlier, Canadian Modern Media, set up by technology entrepreneurs Matthew and Tyler Proud, along with Bay Street dealmaker Neil Selfe, offered 80 cents a share. The Torstar board ruled it out as unworkable, partly because of the hard lockups in place for the NordStar deal.
Mr. Folland’s objections show that support for the deal among the descendants of prominent early figures at the Star is not unanimous, even though the trust voted almost unanimously in favour. He has not intervened in the court approval proceedings, however.
Mr. Folland is great-grandson of legendary Star publisher Joseph Atkinson, and the grandson of Harry Hindmarsh, who was the Star’s president after Mr. Atkinson’s death in 1948. His personal ties to the Toronto Star date back to age 13 when he took a job as an office boy.
“I’ve got a love affair for this paper,” he said. “There’s no doubt about it. I don’t like the idea of selling it, but if we’re going to sell it, let’s try to appease as many people as possible and get the shareholders a fair value.”
Torstar chairman John Honderich has spoken on behalf of the voting trust. His family, along with the Campbell, Thall and Atkinson families, round out the trust’s membership. At Tuesday’s shareholder meeting, Mr. Honderich said the process that culminated in NordStar’s bid was “very sound.”
He declined to comment when contacted by The Globe and Mail on Friday. NordStar has also said the process was stringent, pointing to Torstar’s effort to seek other bidders after it made its first approach early this year. That included reaching out to 26 potentially interested parties. There were no takers.
Canadian Modern Media and shareholder and former Torstar executive Patrick Collins objected to the deal at the court hearing on Thursday, arguing that the auction should be extended. Justice Cory Gilmore said she needed time to review the documents and has yet to give her decision on whether to approve the NordStar transaction
Mr. Folland lamented that the approval process for the family trust did not allow for each family member to weigh in and be kept informed throughout the process; the designated representative speaking on their behalf was bound by a confidentiality agreement. He said his siblings were subject to the same limits.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
Jeffrey Jones