Hollinger Int'l tries to block sale of Cayman newspaper shareholder

Thursday, January 29, 2004

NEW YORK, USA: The US subsidiary of Conrad Black's media empire announced Monday that it has adopted a "poison pill" shareholder rights plan and filed a new lawsuit in a bid to block the sale of Black's newspaper holdings, including a 40% interest in Cayman Free Press, which publishes a daily newspaper in the Cayman Islands.

The board of Hollinger International, the Chicago-based operational arm of the media group also filed a lawsuit in Delaware Chancery Court seeking "relief regarding a number of actions taken by Lord Black."

The board asked for a court injunction barring the planned sale of the media group to Press Holdings International, controlled by the secretive and wealthy Barclay twins of Britain.

The actions opened a new front in the battle between Black's Toronto-based holding company, Hollinger Inc., and the US-based Hollinger International for control of the media empire that also includes London's Daily Telegraph, the Jerusalem Post and Chicago Sun-Times.

Black's attorney John Warden called the action a "futile attempt to interfere with the proposed bid despite the benefits it would deliver to Hollinger International and all of its shareholders."

Black controls Hollinger Inc., which in turn has a 72.6 percent voting share and 30.3 percent equity interest in Hollinger International.

In its statement Monday, the US firm said Black, though the holding company "is attempting to sell a super-voting minority stake in the company ... at a time when (Hollinger Inc.) and Lord Black's liabilities to the company are under investigation and in dispute."

According to earlier media reports, the committee investigating alleged financial wrongdoing by Black has been unable to account for dividend payments from Cayman Free Press of some $1.5 million.

Under the poison pill plan, any takeover giving an outside party a stake of 20 percent or more would trigger "shareholder rights" allowing existing shareholders to buy common stock at a 50 percent discount.

The move came shortly after Hollinger Inc. sought to tighten control over US-based Hollinger International, which is the operational arm of the company and which has ousted Black as chairman.

The Toronto firm on Friday imposed new by-laws on Hollinger International that could effectively give Black a veto on any major decision by the operational firm.

Black's attorney said that the latest action by the board is illegal because it violated the by-laws imposed last week.

Black is seeking to sell the empire to David and Frederick Barclay, reclusive and wealthy British twins who own the London Ritz Hotel and Scotsman newspaper, for $466 million.

That effort prompted a quick response from Hollinger International, which promptly sacked Black and filed a $200 million lawsuit alleging irregularities in the finances of the operations.

The US unit also said it would seek "alternatives" to Black's plan, and on Friday said it had "accelerated the process" of finding a buyer "to enhance value for shareholders."

Britain's Associated Newspapers group is reportedly preparing a $900 million counter-bid for the Daily Telegraph and Sunday Telegraph to thwart the deal struck by the Barclay brothers to buy Black's newspaper empire. 

  Back...

  Most popular articles: viewed, printed and e-mailed

  Printable version