Low-profile Canso takes Postmedia deal’s lead
Canso Investment Counsel Ltd. takes its name from an aircraft that can weather the elements, and taking on turbulent debt is exactly what the corporate bond portfolio manager did to support Postmedia Network Canada Corp.’s recent newspaper deal.
Canso has a long Canadian history managing money for institutional and accredited investors, but it doesn’t play like other Bay Street firms. Tucked in Richmond Hill, Ont., more than 28 kilometres north of Toronto’s financial core, Canso shies away from the spotlight. The firm has $10-billion in assets under management, but doesn’t make a habit of commenting on its investments publicly.
It even kept its name off the press release on Monday that unveiled the Postmedia purchase of 175 Sun Media newspapers from Quebecor Inc. for $316-million. The bulletin only revealed that one bondholder who already owned a huge chunk of debt would take the entire $140-million of additional bonds that the transaction required.
That means Canso’s total interest in Postmedia will jump to at least $240-million, making it one of the company’s biggest bondholders.
Behind Canso is founder John Carswell, who studied commerce at the Royal Military College of Canada and was a navigator in the Royal Canadian Air Force before earning an MBA from Queen’s University. He worked at other investment firms such as TAL Investment Counsel Ltd. and Foyston, Gordon & Payne where he focused on fixed income.
When Mr. Carswell set off to start his own firm in 1997, he named the group after an amphibious airplane flown by his father who won a Canadian Air Force Cross for search and rescue missions in B.C.
Yet Canso flew so far beneath the radar that sources said even Postmedia didn’t know how large a bondholder the firm had become until quite recently.
It was not until Postmedia started talking to existing debt holders to see if they would buy more bonds that it became clear Canso owned at least half of the outstanding first-lien bonds. That meant Canso had at least $100-million before the Sun Media deal. Canso then agreed to buy the whole $140-million of new debt. And Canso had leverage to ask for all of it – it owned so much that its consent would be needed to allow the financing.
Canso was one of the investors in the refinancing of BlackBerry Ltd., and it is a big owner of Yellow Media Ltd.’s securities.
Article first appeared in the Globe and Mail – 7 Oct 2014
Ed note: With John Carswell (RMC 78), Joe Morin (RMC 86), Nic Desjardins (RMC 02) and now Jhordan Dorrington (RMC 12) Canso must have the highest concentration of RMC grads of any Canadian money manager.
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