Tweedy Browne Renews Calls for Hollinger Probe

16 June 2003

Media group Hollinger International and its chairman/ceo Lord Conrad Black face renewed demands for an independent probe into their affairs.

As before [WAMN: 22-May-03], the complaints originate from New York investment firm Tweedy Browne, owner of nearly 18% of Hollinger stock.

In a filing with the US Securities & Exchange Commission last week, Tweedy revealed it is launching a fresh bid to have the media group’s independent directors set up an investigation.

The move, says the investment company, follows Hollinger’s failure to give any sign that it is dealing with the initial complaint, which concerned $73 million (€62m; £44m) of fees paid to Black and other executives [WAMN: 26-May-03].

Tweedy now wants information on two new areas. First, the disposal of $38m of assets to Bradford Publishing, which the group alleges is owned by Black and Hollinger chief operating officer David Radler.

Second, the company’s dealings with Canadian media group CanWest. Tweedy is questioning whether a $4m-per-year management fee Black receives from CanWest may have caused a conflict of interest for his Lordship when he was negotiating a deal with the firm in 2000. As a result of this pact, says Tweedy, CanWest still owes Hollinger $38.4m.

The investment firm is now not alone in making such complaints. It emerged over the weekend that another shareholder, US group Cardinal Capital Management, has raised similar questions to Tweedy’s, seeking “documents and records” from Hollinger.

Black has stoutly defended his and his company’s conduct [WAMN: 11-Jun-03]. Any inquiry, he insists, will conclude that “the big winner” was Hollinger’s shareholders. “I'm looking forward to the [investigation's] result,” he declared.

• Separately, plans to restructure Hollinger’s finances have been abandoned due to lack of investor support.

The group wanted holders of a certain class of preference shares – which must be redeemed in April next year – to exchange them for newly issued stock that would mature four years later and give a higher dividend. This would have given Black more room for manoeuvre as the company attempts to recover from the ad recession.

However, shareholders have not taken up the offer, meaning Hollinger must find £60m by April. To meet this repayment, Black may have to offload some assets.

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