Telegraph Sale: Black Nibbles Nails as Judge Ponders

26 July 2004

Mulling the planned $1.2 billion (€989.9m; £655m) sale of Britain's Telegraph Group, Vice Chancellor Leo Strine of the Delaware Court of Chancery has spent the past month ploughing his way through depositions equivalent to several coniferous forests.

On Friday in open court he took further and final evidence as to whether or not Hollinger International [H-Intl] has the right to sell its Telegraph assets to Press Holdings, the acquisition vehicle of the secretive British twin tycoons, Sir Frederick and Sir David Barclay.

Hollinger Incorporated [H-Inc], the holding company controlled by fallen media mogul Lord Conrad Black (within whose former fiefdom the Telegraph properties were the crown jewel) opposes the sale.

At the hearing's conclusion Vice Chancellor Strine withheld judgement, instead assuring the warring parties he will rule on the matter by June 30 at latest -- the date by which the sale to the Barclays must be finalized.

The courtroom was packed with rune-readers eager to second-guess the verdict but Judge Strine gave little away. The haruspices learned, however, that H-Intl plans to use cash raised by the sale to reduce debt, pay a shareholder dividend or repurchase stock.

Attorneys acting for H-Intl also alleged that Black had continued covert dealings involving the Telegraph with, among others Cerberus Partners, Triarc Companies and Leucadia National -- despite Judge Strine's earlier order to the contrary.

The judge noted that Black had seemingly been willing to sell the Telegraph for $1.1 billion -- $100 million less than the sum agreed between H-Intl and the Barclays.

But the ultimate outcome of the hearing depends on whether Judge Strine finds the UK publications are "substantially all" of the assets of Hollinger International; and whether the deal will "fundamentally change" the newspaper holding company.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff