Embattled

Canadian broadcaster
Corus Entertainment Inc.

is moving closer to a restructuring that would

give bondholders control

of the equity, according to people familiar with the matter.

The company is working on a

debt restructuring plan that

would result in creditors receiving a mix of

equity and secured debt

, the people said, speaking on condition they not be identified because the matter is still private. It may be announced within the next few weeks, they said, though that timeline could still change.

The deal would put bondholders in position to make further changes to the business, a collection of

Canadian television and radio networks

that have suffered from declining revenue and earnings for years. There’s also the potential for selling assets such as real estate, one of the people said. Corus has done significant cost-cutting in recent years, including to its news division.

The

Shaw family

of Alberta technically controls Corus through their holdings of unlisted voting stock. But for more than a year, the equity has been trading on the basis that balance sheet restructuring is inevitable. The remaining analysts who cover the stock all have price targets near zero. Corus traded at nine Canadian cents in Toronto on Wednesday afternoon.

Like many traditional broadcasters, Corus’ business model has been under pressure from streaming services and declining interest in conventional TV advertising.

The company’s perceived lack of financial stability has also made it vulnerable in content deals. Last year, Corus lost the rights to key programming and trademark deals with Warner Bros Discovery Inc., which included HGTV and The Food Network.

Toronto-based Corus had long-term debt of $1.08 billion at the end of May, including $750 million in unsecured notes — these currently trade at about one-third of their face value, according to data compiled by Bloomberg.

Canso Investment Counsel Ltd.

is a major holder of the bonds, the people said.

Corus and Canso declined to comment.

Corus reported $895 million in revenue for the nine-month period ended May 31, down 11 per cent from the same period a year earlier, and a pretax loss about about $35 million.

But the television networks are profitable and a restructured Corus could potentially provide an equity value of more than $500 million, the people said.

Creditors are working with Canaccord Genuity Group, while Jefferies Financial Group is advising Corus.

Telecommunications and media firm Quebecor Inc. made an offer last year to acquire Corus, but would have required creditors to take a significant haircut. Nothing came of it.

Quebecor chief executive Pierre Karl Peladeau said in a recent interview that he’s eyeing an expansion in broadcasting beyond the French-speaking province of Quebec, and that Corus would be an ideal fit.

“We’re still saying that this makes a lot of sense for Corus as a company to be part of a larger asset-based company doing the same thing,” Peladeau told Bloomberg News.

  • Streaming grows in Canada despite rising prices
  • Corus Entertainment sees potential ad revenue bump from ‘buy Canadian’ trend

“There are many things that we can bring for the survival of the company,” he added. “That’s true. That’s not tomorrow, not next month. But if they do not do anything, it’s a survival issue.”

Bloomberg.com