Diane Bondareff  /  AP file
Conrad Black agreed to sell the Toronto-based newspaper publisher a day after Hollinger said it was removing Black as chairman and suing him.
updated 1/19/2004 10:50:51 AM ET 2004-01-19T15:50:51

A British newspaper company announced a deal Sunday with embattled press baron Conrad Black to take over his controlling interest in Hollinger Inc., the Toronto-based parent company of newspaper publisher Hollinger International Inc.

News of the deal comes just a day after Hollinger International said it was removing Black as chairman and suing him to recover more than $200 million the company claims was improperly diverted to him, an associate and entities he controls.

Press Holdings International’s offer for Hollinger Inc. would value the company at $326 million, plus the assumption of $140 million in debt. Press Holdings said in a statement Sunday that it would circulate the offer to shareholders within 10 days.

Hollinger Inc. in turn has a controlling interest in Hollinger International, a Chicago-based company that owns The Daily Telegraph of London, the Chicago Sun-Times and The Jerusalem Post. The company said it had received notice of the offer for its parent company Hollinger Inc. and was evaluating it.

Press Holdings is controlled by brothers David and Frederick Barclay, and owns several newspapers in the United Kingdom, including The Scotsman, as well as The Ritz hotel in London.

In a letter to the board of Hollinger International, David Barclay of Press Holdings said: “We believe this continued media controversy is significantly harming the public image and stock price of Hollinger International and undermining its credibility in the financial markets. As part of the acquisition, the negative media attention should cease.”

Press Holdings said it had agreed with Black to buy his controlling interest in Hollinger Inc. from Ravelston Corp., a privately held company that Black controls. Ravelston owns 78 percent of Hollinger Inc., which has 70 percent of the voting rights of Hollinger International.

The proposed deal is subject to Canadian regulatory approval.

Black’s spokesman declined comment on the deal. A Press Holdings spokesman did not immediately return a call for comment.

In November, Black was forced to give up his post as chief executive of Hollinger International after an internal review by a special committee found that $32 million in unauthorized payments were made to Black and some of his senior deputies.

That review is being made by a special committee formed in the wake of shareholder protests over the fees to Black and other concerns about the company’s management. The special committee, which is being advised by former Securities and Exchange Commission chairman Richard Breeden, is continuing its review. Its report is expected this spring.

On Friday, a federal judge in Chicago issued an order at the SEC’s request to bar any interference with the investigation. The SEC said in its lawsuit that there had been efforts by corporate insiders to “to thwart and obstruct the efforts” of the review.

Hollinger International’s board includes several prominent public figures, including Henry Kissinger, defense adviser Richard Perle and former Illinois Gov. James R. Thompson.

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