Corus Entertainment secures court approval for $500 million deleveraging through CBCA plan

Corus Entertainment Inc. and 17311737 Canada Inc. obtained a final order on March 24, 2026 from the Ontario Superior Court of Justice (Commercial List) approving a plan of arrangement under the Canada Business Corporations Act to implement a comprehensive recapitalization transaction following a contested fairness hearing involving dissenting Class B shareholders.

Corus is Canada’s largest independent pure-play media and broadcasting company, operating 25 specialty television networks, 15 conventional television stations, and 36 radio stations, alongside digital and content businesses, with approximately 2,261 employees as of August 31, 2025.

The company entered the restructuring with a materially impaired balance sheet. As at August 31, 2025, it reported approximately $1.3 billion in assets against $1.9 billion in liabilities, resulting in negative equity of $668.3 million. Its capital structure included approximately $110 million drawn under a revolving credit facility, $301.1 million under a term loan, and $750 million in senior unsecured notes.

Recent operating performance reflected continued deterioration, including an 18% decline in revenue, a 32% drop in segment profit, and negative free cash flow of $53.6 million for the first quarter of 2026.

The restructuring followed a 24-month effort to stabilize the business through cost reductions and strategic initiatives, culminating in a formal strategic review launched in April 2024. Corus retained Jefferies LLC in September 2024 to run parallel processes, including a sale process, a capital raising process, and negotiations with existing stakeholders. The sale process canvassed 38 potential buyers, while the capital raising process contacted 54 prospective investors. Neither process produced a viable transaction. Bids received were non-binding and insufficient to repay secured debt or provide meaningful recovery to noteholders, and offered no recovery to equity.

Following these failed processes, a major noteholder acquired the secured debt in March 2025 and amended the credit agreement to provide temporary covenant relief and liquidity runway while a balance sheet solution was negotiated. These negotiations resulted in the CBCA arrangement, which was approved on March 24.

The arrangement implements a deleveraging transaction that restructures the company’s funded debt and equitizes a substantial portion of unsecured claims. Key elements include:

• amendment and extension of the revolving credit facility into a new $125 million first lien facility;

• exchange of the $301.1 million term loan into $300 million of new first lien secured notes plus limited cash consideration;

• partial equitization and restructuring of $750 million in senior unsecured notes, including issuance of $250 million in second lien notes and the acquisition of $500 million of notes by a new entity in exchange for equity; and

• issuance of warrants representing 10% of post-restructuring equity to first lien noteholders.

The arrangement faced opposition from a group of Class B shareholders, who challenged the fairness of the transaction and sought additional disclosure and adjournment.

The Court rejected these requests, noting that the objections were not timely and that shareholders had opportunities to test the evidentiary record through cross-examination but declined to do so.

Counsel includes Osler for the companies, Bennett Jones for the Ad Hoc Committee of Senior Unsecured Noteholders, TGF for for the Major Noteholder, Dentons for the Supporting Shareholders, Weirfoulds for the Opposing Shareholders, and BLG for GBC 25 Dockside Inc.