Black's Cash Crisis Greases Grip on Hollinger

02 July 2004

The cash crisis enmeshing discredited newspaper proprietor Lord Conrad Black has been temporarily staved off -- at a price.

Desperate to raise cash to meet Hollinger Incorporated's [H-Inc] fiscal obligations, the former Canuck tycoon has sold part of his controlling holding in publishing group Hollinger International [H-Intl], thereby raising £85 million ($154.07m; €126.51m).

The downside, however, is that the sale reduces Black's holding from 30% to 18.2%, although the preferential stock structure conjured by the prestidigitator peer still confers on him no less than 68% of the voting shares.

But His Lordship's financial problems, although assuaged for the time being, have not disappeared. A high-stakes poker game between Black's holding company H-Inc and its subsidiary H-Intl, could lead to a delay in filing the former's 2003 annual report with the US Securities and Exchange Commission .

There is little doubt as to which player holds the better hand. Black complains that H-Intl is effectively blocking the completion of H-Inc's annual report by declining to furnish key information. And further delay in filing could force H-Inc to default on a $120m bond issue.

It has already missed a June 30 repayment deadline and is now two days into 30-day period of grace in which it must file the SEC report or formally default on the bond payment. This would cost Black his stake in H-Intl.

Assuming Black manages to retain the stake, he may be able to block the £665m sale of that company's prime asset -- the UK's Telegraph Group -- to the brothers Barclay. But investors in H-Intl are seemingly ready to to declare "a plague on both your houses".

Said one minority stockholder who declined to be named: "Whatever they [the warring parties] can do to expedite the resolution of this entire process is good. The company is not going to get $1.25bn from Conrad and probably will not be getting even $100m. The faster we can get a resolution the better it is for everyone."

Data sourced from:; additional content by WARC staff