NEW YORK — Conrad Black, discredited former chairman of Hollinger Inc., has agreed to sell his controlling stake in the newspaper group to U.K. businessmen (and twin brothers) David and Frederick Barclay in a deal worth about $466 million.
Black announced the pact shortly after he was fired as Hollinger’s non-executive chairman over the weekend and sued by the company for more than $200 million.
On Monday, Black tried to protect the deal. Two of his private holdings companies initiated a notice of action in the Superior Court of Justice in Ontario seeking a declaration that the agreement to sell Hollinger Inc. is valid and binding.
Bankers had been prepping to auction the prize assets, which include London’s Daily Telegraph, the Chicago Sun-Times and the Jerusalem Post. A number of U.S. firms, including Tribune, were said to be interested. The papers are owned by Hollinger Intl., a Chicago-based subsid of Toronto’s Hollinger Inc.
In a statement Sunday, Black said it was “distressing” for him to part with the newspapers, “but these fine titles must not be hobbled any longer by the current controversies and financial uncertainty.”
But the controversial pact with the Barclays’ Press Holding Intl. could be contested by Hollinger shareholders or overturned by regulators in the U.S. and Canada.
Media baron Black resigned as Hollinger CEO in November amid accusation that he diverted millions of company dollars to himself, associates and entities he controls and that he tinkered with the books.
Hollinger shareholders are concerned that any sale of Black’s stake not interfere with restitution of the money he allegedly siphoned from his company.
News of the sale — which includes about $320 million in cash and the rest in assumed debt — came after a showdown between Black and a special committee of Hollinger’s board, which uncovered $32 million in unauthorized payments to Black and other execs last fall.
Black agreed to repay $7 million, but later balked at the terms. On Friday, the committee sued him to recover $200 million, plus interest it says was looted from the company. On Saturday, it stripped his chairman title. In an unusual step, the SEC issued a court order forbidding Black from disbanding the committee or firing the board, although the commission hasn’t formally charged him with any wrongdoing.
David Barclay, in a letter to the Hollinger Intl. directors, said his group would cooperate with the special committee and the review process by investment bank Lazard LLC.
The Barclay brothers, reclusive billionaires with a diverse investment portfolio, own the Scotsman, an Edinburgh daily; the Business, a weekly; the Edinburgh Evening News; and Scotland on Sunday. Andrew Neil, a former Rupert Murdoch protege and editor of the Sunday Times, runs the Barclays’ newspaper biz.
The brothers have invested in casinos and hotels including London’s landmark Ritz. Previous holdings included Liverpool’s Cavern Club, the nightclub where the Beatles were launched, and struggling newspaper the European, which they shuttered in 1998.
(The Associated Press contributed to this report.)