Glacier Ventures International Corp.
TSX : GVC

Glacier Ventures International Corp.

January 11, 2006 18:13 ET

Glacier Acquires Hollinger Canada Operations

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 11, 2006) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES

The Board of Directors of Glacier Ventures International Corp. ("Glacier" or the "Company") (TSX:GVC) is pleased to announce that Glacier has agreed to acquire substantially all of the remainder of the Canadian interests of Hollinger International Inc. ("Hollinger").

Glacier will indirectly acquire Hollinger's 87% interest in Hollinger Canadian Newspapers, Limited Partnership ("HCNLP") for $117.0 million, or $0.737 per HCNLP unit, subject to adjustment in certain circumstances, and indirectly acquire Hollinger's 100% interest in Eco Log Environmental Risk Information Services Ltd. ("Eco Log"), KCN Capital News Company ("KCN") and certain real estate for $4.7 million.

Glacier has also entered into lock-up agreements with two other persons for the concurrent acquisition of approximately 3% of the units of HCNLP for $0.737 per HCNLP unit or $4.4 million in the aggregate, subject to positive adjustment in certain circumstances.

Following the completion of the acquisitions of in excess of 90% of the HCNLP units, Glacier proposes to amend the limited partnership agreement to consolidate the HCNLP units on the basis of one HCNLP unit for every 25,000,000 HCNLP units held by each holder. The consolidation will result in the holders of the remaining approximately 10% of HCNLP units being paid an amount of $0.737 per unit held prior to the consolidation, subject to positive adjustment in certain circumstances. The holders of these units will be provided with dissent appraisal rights with respect to the units being paid out.

The purchase price for 100% of the HCNLP units is $134.8 million.

HCNLP owns and operates 1) the Business Information Group ("BIG"), which publishes a variety of trade magazines, directories, newsletters, electronic databases and specialty websites, 2) a group of daily and weekly newspaper and related printing operations in British Columbia, including the Nelson Daily News, West Kootenay Weekender, Cranbrook Daily Townsman, Kimberley Daily Bulletin, East Kootenay Weekly Extra, East Kootenay Weekly Weekender, Trail Times, Fernie Free Press, Grand Forks Gazette, Grand Forks Boundary Bulletin, Creston Valley Advance, Kamloops Daily News, Kamloops The Extra, Prince George Citizen, Prince George This Week, Prince George Extra, Alaska Highway News, North Peace Express, The Northener, Peace River Block News, The Regional Advertiser, The Northern Horizon, The Mirror, Prince Rupert Daily News, and Prince Rupert Daily News Extra, 3) the Real Estate Weekly and Kodiak Press in Vancouver, B.C., and 4) The Sherbrooke Record and Brome County News in the eastern townships of Quebec.

KCN publishes the Merritt News and Merritt News Extra in B.C. Eco Log is an electronic information and report service provider that accesses key federal, provincial and private sector databases to help identify potential environmental risks in Canada for real estate developers, banks, insurance companies and a variety of other customers.

The transactions are expected to close by February 3, 2006, subject to standard closing and regulatory conditions.

The transactions complete Glacier's acquisition of all of Hollinger's Canadian operations. As previously announced, effective January 1, 2006, Glacier acquired a 50% interest in the operations of the Great West Newspaper Group Ltd. ("Great West"), which publishes a group of community newspapers and related publications in Alberta, and as at December 30, 2005, Glacier acquired a 50% interest in Fundata Canada Inc. ("Fundata"), which provides investment fund related electronic and print information and analytics to the Canadian and global investment community and a wide variety of Canadian newspapers and media.

The pro rata forecast fiscal 2005 revenue and earnings before interest, taxes, depreciation and amortization ("EBITDA") for the interests acquired by Glacier in the Hollinger Canada operations (including Great West and Fundata) is approximately $105 million and $18 million respectively on a normalized basis, assuming 100% of the units of HCNLP are acquired and after giving effect to the Kodiak Press adjustment described following (see "HCNLP Disclosure Information").

The acquisition of the Hollinger Canada operations fits with Glacier's strategy of growing through two core segments: 1) the business and professional information sector and 2) the newspaper and trade publication sector.

Following the acquisition of the balance of Hollinger's Canadian operations, Glacier's combined daily and community newspaper group will now offer distribution of approximately 1,020,000 copies across B.C., Alberta, Saskatchewan and Manitoba. Glacier's trade publication group will consist of the largest agricultural publication group in Western Canada, the Business In Vancouver Media Group, and 73 trade magazines published by the Business Information Group. Glacier's business & professional information group will include Specialty Technical Publishers which publishes regulatory & compliance information, CD Pharma Interactive Medical Productions which develops electronic interactive continuing medical education programs for doctors, and a variety of directories, specialty websites and electronic information published by the Business Information Group.

Private Placement and Debt Financings

In conjunction with the acquisitions of HCNLP, Eco Log, KCN and certain real estate, Glacier will raise $29.6 million of equity by private placement of subscription receipts ("Subscription Receipts") at a price of $2.85 per Subscription Receipt. The private placement has been arranged by a syndicate of investment dealers co-led by Raymond James Ltd., BMO Nesbitt Burns Inc. and CIBC World Markets Inc., together with Canaccord Capital Corporation, Sprott Securities Inc. and Haywood Securities Inc. and is expected to close on January 13, 2006. Each Subscription Receipt will, upon satisfaction of certain conditions, entitle the holder to receive, without further consideration, one common share of the Company. Proceeds from the sale of Subscription Receipts will be held in escrow and released to the Company at the time of closing of the acquisitions of the new businesses. The private placement is in addition to the $50.4 million of common equity issued by Glacier on December 30, 2005.

Glacier has also entered into a commitment letter for a $125 million senior term loan credit facility with three major Canadian chartered banks to partially finance the acquisition of these interests. The facility also includes a separate revolving term loan facility for operating and acquisition purposes.

The private placement and new credit facility availability are conditional upon the closing of the indirect acquisitions of 90% of HCNLP and 100% of Eco Log and KCN.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States or to a U.S. person absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

HCNLP Information Disclosure

As part of its due diligence, Glacier was provided access to a variety of business and other information with respect to HCNLP. The following summarizes the information deemed by Glacier to be material:

- The revenue for the period ended December 31, 2004 as indicated by the HCNLP unaudited internal financial statements was $93.5 million. EBITDA was $13.8 million, before Hollinger management fees of 3% of revenue. The loss from operations of $5.2 million is net of a $13.4 million net receivable write-off relating to various claims of CanWest Global Communications Inc. ("CanWest") as described following. See unaudited consolidated financial statements attached. The write-off is included in "Other (income) expense, net" in these financial statements.

- Revenue as indicated by the HCNLP unaudited internal financial statements was $46.4 million and $69.8 million respectively for the six months ended June 30, 2005 and nine months ended September 30, 2005. See unaudited consolidated financial statements attached.

- EBITDA as indicated by the HCNLP unaudited internal financial statements was $7.4 million and $11.6 million respectively for the six months ended June 30, 2005 and nine months ended September 30, 2005, before Hollinger management fees of 3% of revenue. See unaudited consolidated financial statements attached.

- Hollinger has become aware that CanWest intends to move the majority of its printing from HCNLP's Kodiak Press in Vancouver, B.C. This loss of business has begun and is anticipated to be completed in early 2006. The loss of business is expected to reduce Kodiak's revenue by $6 million annually and reduce EBITDA by approximately $3 million annually. This adjustment was taken into account by Hollinger and Glacier in determining the purchase price for the units of HCNLP.

- HCNLP is party to several claims, including claims by CanWest relating to CanWest's acquisition of various assets of Hollinger and HCNLP in 2000 and related purchase price adjustment provisions. CanWest's claims exceed the amount Hollinger had originally expected to receive from CanWest, and the matter is currently under arbitration. Hollinger has agreed to provide an indemnity for 100% of any amounts owing under this arbitration and will place certain funds received from Glacier in escrow until the arbitration is resolved. Glacier has agreed to pay Hollinger an amount equal to any net proceeds received from CanWest under the arbitration, although Glacier does not expect any such amount to be material. Hollinger has also indemnified Glacier for other potential liabilities.

- A distribution of $0.225 per HCNLP unit, or $41.2 million in aggregate, was paid effective December 28, 2005. As a result, the cash balance at closing will be significantly less than indicated on the September 30, 2005 unaudited consolidated balance sheet attached.

- The purchase and sale agreement between Hollinger and Glacier with respect to Hollinger's interest in HCNLP requires that HCNLP have $2 million of cash at closing, and that the purchase price be adjusted for any variance thereto. Any positive adjustment will be paid to all unit holders of record at closing on a pro rata basis.

This press release contains references to non-GAAP earnings measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and adjusted EBITDA. Non-GAAP earnings measures do not have standardized meanings prescribed by GAAP and therefore may not be comparable to similar measures presented by other reporting issuers. These measures have been included in this press release as they are measures which management uses to assist in evaluating a company's operating performance against its expectations and against other companies in the information communications industry. Management believes that non-GAAP financial measures assist in identifying underlying operating trends.

These non-GAAP financial measures, particularly EBITDA and adjusted EBITDA, are also common measures used by investors, financial analysts and rating agencies. These groups may use EBITDA and other non-GAAP financial measures to value a company.

Attached to this press release are the unaudited internal consolidated balance sheets and unaudited statements of partners' equity for HCNLP as at December 31, 2004, June 30, 2005 and September 30, 2005 and the unaudited internal consolidated statements of operations and unaudited statements of adjusted EBITDA for the year ended December 31, 2004, six months ended June 30, 2005 and nine months ended September 30, 2005. These financial statements of HCNLP are the financial statements provided by Hollinger to Glacier as part of its due diligence. The financial statements are Hollinger management's internal financial statements and have not been reviewed or audited by Hollinger's auditors or Glacier's auditors.

Shares in Glacier can be traded on the Toronto Stock Exchange under the symbol GVC.

About the Company: Glacier Ventures International Corp. is an information communications company focused on expanding across North America through both internal growth and the strategic acquisition of information communications companies that provide essential information and related services through print, electronic and online media.

Forward-Looking Statements

Certain statements in this press release are not historical and may constitute forward-looking statements reflecting financial performance. Investors are cautioned that all forward-looking statements involve risks and uncertainties. Forward-looking statements are based on management's estimates, beliefs and opinions on the date the statements are made. Glacier assumes no obligation to update forward-looking statements if circumstances should change. Additional information on these and other potential factors that could affect Glacier's financial results are detailed in documents filed from time to time with the applicable Canadian securities regulatory authorities.

CAUTION TO ALL READERS

Attached hereto are the unaudited consolidated balance sheets and unaudited consolidated statements of partnership equity as at December 31, 2004, June 30, 2005 and September 30, 2005 and the unaudited consolidated statements of operations and unaudited statement of EBITDA for the year ended December 31, 2004, the six month period ended June 30, 2005 and the nine month period ended September 30, 2005 of Hollinger Canadian Newspapers, Limited Partnership (the "Financial Statements").

The Financial Statements are management's internal financial statements and have not been audited or reviewed by the auditors of Hollinger Canadian Newspapers, Limited Partnership or by the auditors of Glacier Ventures International Corp.



HOLLINGER CANADIAN NEWSPAPERS, LIMITED PARTNERSHIP
Unaudited Consolidated Balance Sheets
(thousands of dollars)
----------------------------------------------------------------------
----------------------------------------------------------------------


December 31, June 30, September 30,
2004 2005 2005
----------- ---------- ------------
ASSETS

CURRENT
Cash $ 136,467 $ 29,563 $ 33,990
Accounts receivable, net 13,631 14,340 12,513
Inventories 778 995 880
Prepaid expenses and other 1,671 1,792 1,380
Due from associated
companies 233,647 246,050 245,823
Due to associated companies (223,891) (233,943) (234,866)
----------------------------------------------------------------------
162,303 58,797 59,720

ASSOCIATED COMPANIES LONG
TERM RECEIVABLE 385 385 385

INVESTMENTS 13 29 29

PROPERTY, PLANT AND
EQUIPMENT, net 11,044 10,755 10,374

GOODWILL and INTANGIBLE
ASSETS, net 26,993 26,993 26,993
----------------------------------------------------------------------
$ 200,738 $ 96,959 $ 97,501
----------------------------------------------------------------------
----------------------------------------------------------------------

LIABILITIES

CURRENT
Accounts payable $ 4,100 $ 2,860 $ 3,485
Accrued expenses 5,874 6,031 6,029
Income taxes payable 1,593 675 (176)
Deferred revenue 4,981 6,601 5,262
----------------------------------------------------------------------
16,548 16,167 14,600

FUTURE INCOME TAXES 157 227 227

PENSION LIABILITIES 1,298 2,007 2,389
----------------------------------------------------------------------
18,003 18,401 17,216
----------------------------------------------------------------------

----------------------------------------------------------------------
PARTNERS' EQUITY 182,735 78,558 80,285
----------------------------------------------------------------------
$ 200,738 $ 96,959 $ 97,501
----------------------------------------------------------------------
----------------------------------------------------------------------


THESE FINANCIAL STATEMENTS HAVE NOT BEEN AUDITED OR REVIEWED.


HOLLINGER CANADIAN NEWSPAPERS, LIMITED PARTNERSHIP
Unaudited Consolidated Statements of Partners' Equity
(thousands of dollars)
----------------------------------------------------------------------
----------------------------------------------------------------------

December 31, June 30, September 30,
2004 2005 2005
----------- ---------- ------------

----------------------------------------------------------------------
Balance at beginning
of year 189,856 182,735 182,735

Net income (loss) allocable
to the Partnership (6,206) 11,058 12,785
Cash distributions (915) (115,235) (115,235)
----------------------------------------------------------------------
Balance at end of period $ 182,735 $ 78,558 $ 80,285
----------------------------------------------------------------------
----------------------------------------------------------------------


THESE FINANCIAL STATEMENTS HAVE NOT BEEN AUDITED OR REVIEWED.


HOLLINGER CANADIAN NEWSPAPERS, LIMITED PARTNERSHIP
Unaudited Consolidated Statements of Operations
(thousands of dollars)
----------------------------------------------------------------------
----------------------------------------------------------------------


Year ended 6-months ended 9-months ended
December 31, June 30, September 30,
2004 2005 2005
----------- -------------- --------------

REVENUE FROM OPERATIONS
Advertising $ 67,539 $ 35,025 $ 51,635
Circulation 14,610 5,918 9,960
Job printing and other 11,381 5,492 8,249
----------------------------------------------------------------------
93,530 46,435 69,844
----------------------------------------------------------------------

COST OF OPERATIONS
Labour 39,325 19,856 29,591
Newsprint 7,507 3,779 5,641
Management fees 3,128 1,458 2,177
Other 32,857 15,426 23,034
----------------------------------------------------------------------
82,817 40,519 60,443
----------------------------------------------------------------------
OPERATING PROFIT 10,713 5,916 9,401
----------------------------------------------------------------------

Depreciation 1,535 1,042 1,619
Interest and dividend
income (10,752) (1,375) (1,593)
Other (income) expense, net 25,093 (4,869) (3,477)
----------------------------------------------------------------------
15,876 (5,202) (3,451)
----------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
BEFORE INCOME TAXES (5,163) 11,118 12,852
INCOME TAXES 1,043 60 67
----------------------------------------------------------------------
NET INCOME (LOSS) ALLOCABLE
TO THE PARTNERSHIP $ (6,206) $ 11,058 $ 12,785
----------------------------------------------------------------------
----------------------------------------------------------------------


THESE FINANCIAL STATEMENTS HAVE NOT BEEN AUDITED OR REVIEWED.


HOLLINGER CANADIAN NEWSPAPERS, LIMITED PARTNERSHIP
Unaudited Statement of Adjusted EBITDA
(thousands of dollars)
----------------------------------------------------------------------
----------------------------------------------------------------------


Year ended 6-months ended 9-months ended
December 31, June 30, September 30,
2004 2005 2005
----------- -------------- --------------

Net income (loss) allocable
to the Partnership $ (6,206) $ 11,058 $ 12,785
Interest and dividend income (10,752) (1,375) (1,593)
Other (income) expense, net 25,093 (4,869) (3,477)
Depreciation 1,535 1,042 1,619
Income taxes 1,043 60 67
----------------------------------------------------------------------
EBITDA $ 10,713 $ 5,916 $ 9,401

Management fees 3,128 1,458 2,177

----------------------------------------------------------------------
ADJUSTED EBITDA 13,841 7,374 11,578
----------------------------------------------------------------------
----------------------------------------------------------------------


THESE FINANCIAL STATEMENTS HAVE NOT BEEN AUDITED OR REVIEWED.



The Toronto Stock Exchange has neither approved nor disapproved the form or content of this release.

Contact Information

  • Glacier Ventures International Corp.
    Mr. Orest Smysnuik
    (604) 872-8565
    or
    Glacier Ventures International Corp.
    Mr. Jonathon Kennedy
    (604) 872-8565
    www.glacierventures.com