Hollinger: Directors Strike Back Against Black

28 January 2004

The board of Hollinger International has launched its latest counter-offensive to the manoeuvres of former chairman/ceo Lord Conrad Black.

Directors on the newspaper group's newly formed corporate review committee have unanimously approved a 'poison pill' rights issue designed to scupper the deal between Black and Press Holdings International, vehicle of the reclusive Barclay brothers.

Black controls holding company Hollinger Inc, which owns 73% of the voting rights (but only 30% of the equity) in the media group. He wants to sell the parent to the Barclays, thereby handing them control of Hollinger International despite opposition from the latter's board.

The 'poison pill' issue, however, would make Black's deal less attractive by heavily diluting the Barclays' shareholding.

In addition, the media group has filed a lawsuit aiming to thwart Black's various legal manoeuvres. It has asked the court to overrule the media mogul's attempts to disband the corporate review committee using a Delaware bylaw.

Hollinger International's suit also seeks to block the sale of its parent to the Barclays on the grounds that it is of no benefit to shareholders. Directors claim Black should not be able to complete the deal while he is under investigation by US regulators for receiving allegedly unapproved payments from the firm.

Furthermore, the media company -- whose titles include Britain's Daily Telegraph, the Chicago Sun-Times and the Jerusalem Post -- wants to convert Hollinger Inc's supervoting stock into ordinary shares should the Barclays deal go through, thereby undermining the parent's power.

In response, Black slammed Hollinger International's latest moves as a "descent into the lawless conduct of corporate affairs".

The media firm's board, however, argued that the action was necessary if directors were to "effectively represent all of the company's shareholders, not just one with a minority stake that has controlling votes."

Data sourced from: multiple sources; additional content by WARC staff