The deal will reduce its debt by C$307 million ($236 million) and cut around C$50 million from its annual cash interest payments, the company said.

"The outcome we announced today represents the best way forward for Postmedia," said company Chairman Rod Phillips, who headed the special committee that oversaw the process.

Postmedia launched a strategic review in April, looking to sell assets and restructure its heavy debt load as it struggles with falling print advertising revenue.

It owns the National Post, Montreal Gazette, Calgary Herald, Ottawa Citizen and Sun tabloids in Toronto, Calgary, Edmonton, Ottawa and Winnipeg.

The company said it had reduced its first-lien obligations to C$225 million and extended them by around four years to July 2021. It exchanged second-lien notes for 98 percent of existing equity, meaning shareholders' total stake will be reduced to 2 percent.

Postmedia also secured C$110 million of new second-lien debt priced in U.S. dollars, due in mid-2023, that offers no cash interest for three years.

It expects to complete the transaction by September.

Phillips said the deal is supported by 80 percent of debtholders and 75 percent of shareholders.

One notable absence from the deal was Postmedia's largest shareholder, GoldenTree Asset Management LP, which a Wall Street Journal report in March said was looking at selling its stake.

"They're not involved at all," Postmedia Chief Executive Godfrey said on a call.

Postmedia signed support deals with its biggest investors, including first-lien holder Canso Investment Counsel Inc.

Godfrey said the company would not consider selling any media assets, and that new investments would be focused on online publishing.

Postmedia posted a loss of C$23.7 million in the three months to the end of May, compared with a loss of C$140.8 million a year earlier.

Revenue rose 6.4 percent to C$218.3 million, although it would have fallen 12.9 percent without the contribution of Sun Media assets acquired in a deal that closed earlier this year.

The company will maintain separate voting shares for Canadian investors and non-voting ones for foreigners that allow it to receive the favorable tax treatment afforded to Canadian publishers.

(Additional reporting by Vishaka George in Bengaluru; Editing by Savio D'Souza and Richard Chang)

By Alastair Sharp