UK's Telegraph Group Underwrites $310m Hollinger Debt

19 November 2003

Telegraph Group, a wholly-owned UK subsidiary of Lord Conrad Black's Hollinger International, has guaranteed a $310 million (€259.38m; £182.12m) credit facility on behalf of its beleaguered parent, it emerged Tuesday.

The unit's 2002 accounts, filed with Companies House [a UK government agency], indicate that the guarantees -- secured by fixed and floating charges over all the assets of Telegraph Group - were used against total debts of $265m at "certain of its parent companies" at the end of last year.

The accounts also show that dividends paid by the UK business soared last year from £660,000 to £54.8 million, with the payments to parent companies surpassing by nearly 40% pre-tax profits of £39.7m. This munificence compares with a fall in revenues from £327.6m to £310.2m.

Telegraph Group ceo Daniel Colson -- who earlier this week added to his duties the role of chief operating officer at Hollinger International -- defended the guarantees: "The credit facilities provided by our banking syndicates are guaranteed by operating subsidiaries, and the banks insist on cross-guarantees."

Colson is likely to find his appointments diary crammed to overflowing in the coming weeks as Telegraph Group, the jewel in the Hollinger crown, come under increasing siege from wannabe buyers.

Heading the queue as frontrunner is the controversial British press baron Richard Desmond, whose unsavoury 'top shelf' magazine publishing empire Northern & Shell funded his purchase of Express Newspapers two years ago.

Desmond is said to be salivating at the prospect of laying hands on the UK's best-selling broadsheet, the Daily Telegraph plus its Sunday sibling and, according to upmarket newspaper rival The Times of London, has appointed stockbrokers Seymour Pierce to prepare a bid.

Meanwhile The Times proprietor, Rupert Murdoch's News International, remained loftily above the scurryings: "News International has expressed no interest in acquiring the Telegraph Group and we have no interest in acquiring the Telegraph Group," yawned chairman Leslie Hinton.

Hinton's disinterest is born of the certain knowledge that Britain's Competition Commission would stamp on any bid by News International, which already controls around 37% of UK newspaper readership (The Times, Sunday Times, The Sun and the News of the World).

Data sourced from multiple origins; additional content by WARC staff