Hollinger: Black Offers to Suspend H-Inc Voting Control

29 September 2004

"Little more than smoke and mirrors", opined unnamed sources inside newspaper publishing group Hollinger International (H-Intl) of Lord Conrad Black's offer to waive his voting control of the company pending settlement of all litigation against him.

Black, who reduced his H-Intl holding in July from 30% to 18.2%, nevertheless controls no less than 68% of the voting shares. This neat trick is performed via a Byzantine preferential stock structure whereby the stock is held by H-Intl's parent Hollinger Inc (H-Inc), which is in turn controlled by Black's privately owned company Ravelston Management.

So is His Lordship's offer a genuine, constructive concession? Or just another example of his prestidigitationary powers?

Said an H-Intl insider on Tuesday: "It will have no impact. As long as Conrad Black is involved in Inc, he's running the show." Other insiders dismiss the offer as mere "camouflage to try to persuade people that Conrad Black doesn't dominate Hollinger Inc, when it is obvious to everyone in the world that he does".

But H-Inc insists the offer is kosher. Black would set-up a voting trust containing all the shares in H-Intl. Control would be exercised "only by persons who are not involved in the significant current litigation and a majority of whom would be independent [of Black and his private company]".

One observer suggests His Lordship's good faith should undergo the ultimate test: would his offer cut the mustard with the Delaware Court of Chancery's Judge Leo Strine?

Data sourced from Financial Times; additional content by WARC staff