TORONTO - Canwest Global Communications has approved the sale of its newspapers to a group led by National Post president and CEO Paul Godfrey in a $1.1-billion deal that preserves jobs and pays off the insolvent company's bankers.

The buyer of Canwest Limited Partnership is a group of the media company's bond holders, who are paying $950 million in cash as part of Monday's transaction.

Canwest LP owns and operates daily newspapers across the country including the National Post, Montreal Gazette, Vancouver Sun and Ottawa Citizen as well as more than 20 community newspapers, online operations and other publications.

The deal was deemed superior to other bids received by the company for its newspapers, which were put up for sale as Canwest restructured under the federal Companies' Creditors Arrangement Act under a mountain of debt.

Monday's developments put Godfrey, a 71-year-old Toronto politician-turned executive, at the helm of a newspaper company that is struggling to deal with technological changes in the market as well as a squeeze on advertising caused by the recession.

But the soon-to be Canwest CEO said he welcomes the challenge.

"I am looking forward with great anticipation to the months and years ahead as we work together to continue the transformation of this publishing powerhouse to an integrated, multi- platform news and information company," Godfrey said in a memo to Canwest's employees.

"The (bondholder) group's involvement in this acquisition should be seen as a strong vote of confidence in the power of the major brands making up this family, and in the future potential of this business. This Canadian solution has limitless potential and will prove to be most rewarding for all of our stakeholders."

While the sale makes Godfrey one of Canada's most powerful media executives, it also means the founding Asper family has lost control of the company founded in 1975 by Izzy Asper as a small TV station in Winnipeg.

The company eventually became a media giant but lost its way with

debt-fuelled acquisitions of the former Southam chain of newspapers from Conrad Black a decade ago and then the Alliance Atlantis specialty TV stations in 2006. Those deals sank the company under a $4 billion debt load and made it impossible to stay afloat when the recession hit.

Monday's bid is slated for approval by a bankruptcy court next Monday and is expected to close July 15. Under the plan, Godfrey will be CEO of the company, which will remain publicly traded on the stock market.

The transaction is expected to provide enough cash to pay off the banks, which were owed about $925 million.

As well, Canwest said the offer "also maintains all existing newspaper operations and will provide continuing employment to all existing full-time employees and substantially all part-time employees of the LP Entities. In addition, the new company will maintain all employee pension and benefit plans."

Godfrey is the former CEO of Sun Media and current president of the National Post. He also used to run the Toronto Blue Jays as a senior executive with Rogers Communications (TSX:RCI.B), the baseball club's parent.

Canwest spokesman John Douglas said the Godfrey-led transaction preserves the heart of the newspaper operations and positions the company for future growth.

"We entered creditor protection looking to preserve the strength and value of the assets, position them well for the future, and protect employees and come out with an outcome that was in the best interests of all stakeholders," Douglas said in an interview from Canwest's head office in Winnipeg.

"What you see today is a bid led by Mr. Godfrey that is more money that others would have otherwise expected, ensures that all the full-time employees maintain their jobs, ensures that often century-old newspapers continue to operate, serving the communities that they always have, and positions the newspapers very well for future growth."

The banks who currently own Canwest's newspapers had set a floor price of $950 million for the newspapers.

The Communications Workers of America, which represents more than 800 workers at five of Canwest's dailies, said that settling the ownership question will relieve a lot of anxiety felt by its members.

"It was a great relief for our members and other employees who learned today that the new owners would assume responsibility for all benefits and pensions for active and retired workers," union director Arnold Amber said.

"There also is no plan at this time to cut full-time staff."

Other bidders included, Torstar Corp., backed by Fairfax Financial Holdings Ltd. (TSX:FFH), which owns about 20 per cent of the publisher of the Toronto Star.

"We took a hard long look at this opportunity. In the end, the successful price was well beyond what we were prepared to pay. We wish the new owners well," said David Holland, president and chief executive of Torstar.

Winnipeg-based Canwest has already restructured its Global TV network business under court protection from creditors, while its newspaper assets were put on the market earlier this year under a separate process.

Canwest's TV stations have already been sold in a separate $2-billion deal to Shaw Communications Inc. (TSX:SJR.B), the big Calgary cable and satellite TV operator.

Godfrey landed at the National Post a year ago after leaving his position as head of the Toronto Blue Jays. In the 1970s, Godfrey was a key supporter of the original proposal to bring a baseball team to Toronto.

A former chemical engineering grad from the University of Toronto and a member of the Order of Canada, Godfrey is a former senior executive with Quebecor's Sun Media newspaper group and publisher of the Toronto Sun between 1984 and 1991.

Godfrey was chairman of Metropolitan Toronto -- a position that has since been eliminated under municipal amalgamation -- from 1973 to 1984. In the 1960s and early 1970s, he was an alderman for North York, one of Toronto's municipalities.

In a memo to staff late Monday, Canwest interim president Kevin Bent said Godfrey will lead a business that has gone "through the most difficult economy any of us can remember."

"Our industry is still changing and we will continue to move our strategy forward because success is contingent upon our ability to engage and grow audiences, grow revenues, develop new revenue streams and continue to transform and evolve our organization," said Bent, who is also publisher of the Vancouver Sun and Province newspapers.