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 yesterday. Press Holdings International Ltd., a company owned by Sir David and Sir Frederick Barclay, said it had signed an agreement with Black and his private holding company to buy his controlling stake in Hollinger Inc. of Toronto for $8.44 a common share.
Including cash bids for preferred shares and other debt, the deal values Hollinger Inc. at $605.5 million Cdn.
A statement issued yesterday by Black said it would be "distressing" to part with the London Telegraph and other Hollinger papers, "but these fine titles must not be hobbled any longer by the current controversies and financial uncertainty.
"They will be in good and caring hands and we will be able to focus exclusively on resolving current legal and public relations concerns," Black said.
David Barclay said he was "delighted" to enter the agreement to buy Hollinger Inc. "and I have no doubt that the financial strength and direction that we can bring will allow the group to flourish."
Yesterday's deal came a day after Hollinger International, the Chicago-based company that Black controls through Hollinger Inc., announced its board had ousted the Canadian-born businessperson as chairperson, effective immediately.
Hollinger International also launched a lawsuit claiming $200 million US against Black, his right-hand man David Radler and companies controlled by the two men.
In a letter to the Hollinger International board yesterday, Press Holdings called its intentions "well-meaning and constructive" and said the friendly takeover is "in the best interests of Hollinger International and its stockholders.
"We would like to meet with the board at the earliest possible time, to discuss in detail the benefits to Hollinger International and its stockholders that we believe would result from the transaction and the role we envision for the board in the process."
A statement issued by Ravelson Corp. and Argus Corp., two private companies Black controls and which in turn own 78 per cent of Hollinger Inc. common shares, said the offer of $8.44 Cdn a share will be made to all shareholders.
It also said Gordon Paris, who chairs the special Hollinger International committee that has been investigating alleged misconduct at the Chicago-based company, and Richard Breeden, a former chairperson of the U.S. Securities and Exchange Commission who is advising the committee, were given a chance to match any offer for control of Hollinger Inc., but "effectively declined" that offer Thursday and cancelled a meeting Friday.
On Friday, the Securities and Exchange Commission got a court order in Chicago to ensure Black couldn't fire a special committee of independent directors who are investigating allegations of financial misconduct.
John L. Warden, one of Black's lawyers, issued a statement saying, "in the last several days, we provided the special committee with evidence contradicting its earlier statements that independent directors had not approved or ratified certain non-compete payments to Lord Black that the special committee questioned in November.
"We believe this lawsuit is an attempt by the special committee now to divert attention from the fallacy of their earlier claims," Warden said.
Hollinger International said yesterday its board had received a letter from the Barclays' Press Holdings International with respect to its intended takeover of Hollinger Inc.
It said the board will review the offer and its implications for Hollinger International.
