Black Goes to Law to Protect Hollinger Inc Sale

20 January 2004

As WAMN observed Monday: "Despite the handshakes, the [Hollinger Incorporated] deal is very far from being inked".

The board of Hollinger International meets today (Tuesday) to discuss whether it can -- or should -- block Lord Conrad Black's $466.5 million (€377.13m; £259.76m) sale of his controlling stake in parent company Hollinger Inc to Press Holdings International, the media vehicle of Britain's gothic Barclay twins [WAMN: 19-Jan-04].

Black, cash-strapped and desperate for a deal, last night filed a court injunction in Canada to block any intervention by Hollinger International in the deal. Thanks to the labyrinthine preference share structure of Hollinger Inc, Black is able to control 73% of the voting rights in the parent company while owning a mere 30% of its stock.

But these voting rights in operating unit, Hollinger International, lapse if ownership of the subsidiary changes hands. The legal conundrum hinges on whether the sale of thirty percent of the parent company constitutes a change of ownership of its offshoot?

The Barclay brothers think not; the board of Hollinger International (and some institutional shareholders) believe otherwise.

Says Black: "The offer by Press Holdings International will provide substantial benefits to all shareholders of Hollinger Inc as well as benefiting Hollinger International by allowing the company’s fine media properties to move forward without further distractions or financial uncertainty."

Richard Breeden, a former chairman of the US Securities and Exchange Commission, with other members of the Hollinger International special committee, was yesterday trying to unravel the complexities of the Black-Barclays deal to establish whether it is in the best interests of all the shareholders.

Christopher Browne, Black's personal nemesis and a partner in Tweedy Browne, the second largest investor in Hollinger International, harbours no doubts: “I’d rather have the Barclay brothers controlling Hollinger than Conrad any day.”

Meantime, today's Hollinger International board meeting will mull the latest missive from His Lordship in which he says he will not reimburse the company for $32.6m of disputed "non-compete" fees received directly by him. He had previously agreed to do so under a restructuring plan agreed with the special committee.

Black now claims the payments were "known to and approved or ratified by the independent directors of Hollinger International including audit committee chairman James Thompson". He said: "As a result of these discoveries I am not obligated to and do not feel it is appropriate to return these non-compete payments to the company."

Data sourced from: Times Online (UK) and; additional content by WARC staff