A deal that saw the creation of the largest newspaper chain in Atlantic Canada is going to court.
SaltWire Network filed the multimillion-dollar lawsuit Wednesday against Transcontinental Inc., the company that sold its media assets in Atlantic Canada in 2017.
SaltWire Network alleges Transcontinental overstated revenues the business would produce, hid facts regarding the condition of its assets and wasn’t forthcoming about several business practices.
Ian Scott, SaltWire Network’s chief operating officer, said that during the due diligence process a buyer relies on the truthfulness of its counterparty.
“If your counterparty is not being honest or is hiding things, there’s a lot of stuff that you can’t really determine in the due diligence,” he said in an interview Wednesday.
SaltWire Network said the court documents filed in Nova Scotia Supreme Court set out multiple concerns related to the sale, including overstating Transcontinental’s printing and distribution business.
It also said Transcontinental misrepresented revenue streams associated with several of the purchased assets.
Scott said Transcontinental’s actions made earnings look better than they were.
“So, we paid more for it than we should have,” he said.
He also said the conditions of some equipment and operations, such as printing presses, were “deplorable”.
“Our due diligence teams weren’t permitted, in some cases, to review that equipment before, so we ended up with some challenges there,” Scott said.
SaltWire Network alleges it suffered significant damages and losses because of Transcontinental’s actions.
Scott said SaltWire has been trying to work with Transcontinental to resolve the matter without taking the matter to the courts.
“We weren’t able to get any satisfaction through that process, so that’s why we filed,” he said.
The lawsuit sets out claims for general, specific, aggravated and punitive damages, interest and costs, but has not set a dollar value on those claims.
Transcontinental has 15 days to respond to the lawsuit.
A spokeswoman for Transcontinental said the company was aware of the legal proceedings but had not received them as of Wednesday afternoon.
The spokeswoman said the company intended to defend itself and would not provide any further comment since the matter was before the courts.
HFX 487088 Notice of Action by Chronicle Herald on Scribd
