Lord Conrad Black yesterday signalled his withdrawal from the Hollinger publishing group he founded by agreeing a $466.5 million (€376.4 million) cash sale of the holding company behind the Telegraph titles in the UK and the Chicago Sun-Times.
The surprise disposal of Hollinger Inc to the Barclay brothers, the UK property and publishing entrepreneurs, was finalised hours after Lord Black was ousted as chairman of Hollinger International at the weekend.
The offer values Hollinger Inc - which owns 30.3 per cent of Hollinger International's equity and 72.8 per cent of the voting rights - at $326.54 million. The Barclays will also assume $140 million in debt.
However, completion of the deal could be hampered by a string of lawsuits against Lord Black, other former executives and Hollinger Inc. On Friday, the US Securities and Exchange Commission, the US financial watchdog, obtained a federal court order to "preserve" the corporate assets of Hollinger International.
The regulator launched an investigation into Hollinger in November, after an internal probe discovered that Lord Black and other executives received $32 million in fees that were not approved by the board.
Hollinger International is also seeking more than $200 million in another suit filed against Lord Black, Mr David Radler, the former chief operating officer, and Hollinger Inc.
Yesterday, officials close to the Barclays said the bidders would conduct a "proper legal analysis" of any potential liabilities only after gaining control of the company.
Hollinger International, meanwhile, said the company and its board intended to review the offer for Hollinger Inc.
The Barclays' bid promises to relieve short-term liquidity problems at Hollinger Inc, where Lord Black remains chairman.
The Barclay brothers plan to finance their audacious takeover offer for Hollinger Inc, the Toronto holding company controlled by Lord Black, from cash reserves in their publishing, property and retail empire.
After several weeks of secret talks with Hollinger Inc, the twin entrepreneurs yesterday said that Press Holdings International, their Jersey-registered newspaper subsidiary, would pay 605.5 million Canadian dollars ($466.5 million) for Hollinger Inc, including C$181.7 million of debt.
Ravelston, Lord Black's private company, which owns 78 per cent of Hollinger Inc, would receive almost C$300 million for its stake in the business, whose main asset is a 30 per cent holding in Hollinger International. That holding includes 73 per cent of the voting rights.
The offer values Hollinger Inc at C$8.44 per common share, compared with a Friday close of C$3.90 per share. Lord Black, however, had previously signed an undertaking that he would not pursue a transaction if it risked jeopardising a separate strategic review at Hollinger International that could lead to a sale or break-up of the company.
Lazard, the investment bank, will shortly sign confidentiality clauses with potential bidders for assets including the Daily Telegraph and Chicago Sun-Times. The potential conflict between a sales process at the operating company and the disposal of its controlling shareholder threatens to derail the Barclays' approach.
One person close to Hollinger International said: "The board is determined to keep control of this process and if assets are to be sold they have to deal with the board of International. " - (Financial Times Service)
