Transaction currently structured so shareholders don't benefit
NEW YORK — Hollinger Intl. said Monday that a board committee has approved a shareholder rights plan, or “poison pill,” and sued to block Conrad Black from selling the newspaper group, parent of the Chicago Sun-Times and Jerusalem Post.
About a week ago, Black announced plans to sell Hollinger Intl. parent Hollinger Inc. to Press Holdings Intl., a U.K. company owned by brothers David and Frederick Barclay. He struck the deal in the midst of a financial scandal, in which he’s accused of paying himself millions of dollars in illicit fees from Hollinger coffers. While Black claimed a quick sale was the only way to save the valuable newspaper properties, other shareholders went berserk.
“The transaction is being proposed at a time when Hollinger Inc. and Lord Black’s liabilities to the company are under investigation and in dispute. Further, the transaction is currently structured in such a way that does not enable other shareholders (besides Black) to benefit,” Chicago-based Hollinger Intl. reiterated in a statement Monday. Black and his holding companies are based in Toronto.
The committee of Hollinger Intl.’s board filed suit in Delaware Chancery Court to block the deal, force Black to continue a strategic review of the company’s options, restrain Black from disbanding the committee and see that if the sale goes through, the Barclays would wind up with only 30% — not 70% — of the voting control.
The shareholder rights plan would give small stockholders the ability to take larger positions to fend off a hostile takeover. It would let them buy more shares if and when a person or group acquired 20% or more of the company’s outstanding voting stock without the approval of the company’s directors.