Posted on 01/18/2004 12:30:58 PM PST by freeforall
NATIONAL POST Latest News
Press Holdings International to buy Hollinger Inc. for $605.5M
Canadian Press
Sunday, January 18, 2004
TORONTO -- A private British newspaper, hotel and retail company is paying more than $600 million to buy Conrad Black's embattled Hollinger publishing group in a blockbuster deal announced Sunday.
Press Holdings International Ltd., a company owned by Sir David and Sir Frederick Barclay, announced it had signed a deal with Black to buy his controlling stake in Hollinger Inc. of Toronto for $8.44 a common share. Including cash bids for preference shares and other debt, the deal values Hollinger Inc. at $605.5 million.
Press Holdings said once the friendly takeover is completed Hollinger would become a private company.
"I am delighted that we have been able to enter into this agreement and I have no doubt that the financial strength and direction that we can bring will allow the group to flourish," Sir David Barclay said in a release.
Press Holdings, based in the British Channel Islands, owns a group of newspapers in the United Kingdom, including The Scotsman, Scotland on Sunday and The Business. The privately owned businesses have annual gross revenues of around $7 billion US and include The Ritz Hotel in London, Littlewoods Stores and the mail order catalogue businesses Littlewoods and Shop Direct. The Barclays also have operations in Japan, Sweden and Ireland.
Sunday's acquisition announcement follows other major developments over the weekend that affect Black and his battered newspaper group.
On Saturday, Black's key operating company - Chicago-based Hollinger International - filed a lawsuit against Black, his right-hand man David Radler and companies controlled by the two for upward of $200 million US.
And late Saturday night, another statement from Hollinger International announced that the board had deposed Black as chairman of the company, effective immediately.
The lawsuit alleges breach of fiduciary duty in connection with "unwarranted non-competition payments and excessive and unjustifiable management fees," said a statement from Hollinger International.
The lawsuit accuses Black and his associates of financial irregularities, "sham" accounting and other corporate actions that cost the company's minority shareholders millions of dollars in lost revenues.
The action, filed in U.S. District Court in New York, was launched by a special committee of the Hollinger International board acting on behalf of non-controlling public shareholders.
It seeks repayment of of more than $200 million US, plus prejudgment interest, costs and fees.
In addition to repayment of all non-compete payments and a rebate on management fees, the lawsuit also demands that Black and Radler refund all salaries and dividends they collected while their contested actions were being carried out.
"This litigation marks a substantial step towards returning to our shareholders the value that was inappropriately taken from this company," Gordon Paris, chairman of the special board committee reviewing the payments to Black, said in a statement.
The legal move intensifies the battle between Black and Hollinger International shareholders over the media baron's management of the embattled newspaper publisher.
Through a complex multiple voting share structure, Black still has a controlling stake in the company despite his exit as chief executive last fall after a financial scandal that threatens to destroy his media empire.
Critics of Black, including major institutional shareholders, accused him of running the publicly traded publisher of the Chicago Sun-Times, London Telegraph and other papers as a private company for the benefit of himself and his associates.
On Friday, the U.S. Securities and Exchange Commission cracked down on Black's corporate power and alleged that Hollinger International's books were tampered with and that material information was not disclosed.
The regulator got an injunction in Chicago that ensures the special committee of the Hollinger International board can contine its job of investigating $32 million US in alleged unauthorized payments to Black and his associates.
© Copyright 2004 The Canadian Press
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