By: Mark Fitzgerald
Sun-Times Media Group (STMG) late Tuesday announced a series of sweeping changes to its board of directors, the status of its publicly traded stock, and the so-called Special Commission that alleged its former Chairman Conrad Black and other executives had “looted” the parent of the Chicago Sun-Times.
With the announcement, STMG essentially acceded to demands from two big shareholders, including hedge fund Davidson Kempner Capital Management, which owns 4.85 million shares, a 5.9% stake, plus notes from Conrad Black’s old holding company Hollinger Inc. that are secured by another 16.4 million shares.
Among other things, Davidson Kempner said it wanted all board members but one to resign, to be replaced by a smaller board of its nominees, including former Dallas Morning News President Jeremy L. Halbreich.
STMG announced several board members were resigning, the special committee was being disbanded, and that the board’s Nominating and Governance Committee is looking at “a general restructuring of the board” to be finished by around Jan.1.
“To that end, the Nominating and Governance Committee is evaluating candidates for appointment to the board, including the persons who have been suggested by” Davidson Kempner, STMG said.
STMG said Chairman of the Board Raymond G. H. Seitz, had announced his intention to resign effective Dec. A board member since 2003 who was elected non-executive chairman after Black’s ouster, he was also a member of the Special Committee.
Also resigning are the two other Special Committee members, Gordon A. Paris and Graham W. Savage. STMG said their resignations would be effective when their replacements were named, but no later than Dec. 31.
STMG is also losing the special monitor who was appointed in the aftermath of the Black scandals. The company said it had reached a settlement with the lawsuit that the Securities and Exchange Commission (SEC) filed against the company when it was known as Hollinger International Inc. and still included executives from the Black regime. Former SEC Chairman Richard Breeden is the special monitor.
Under the settlement with the SEC, STMG will not have to pay any monetary penalties, its statement indicated. The settlement needs approval from the SEC and a federal court.
The Special Committee is no longer needed, STMG said, because the criminal case against Black and other executives is essentially complete and because it has settled litigation with a former Black holding company that once owned a controlling stake in the company. The full board will handle all litigation issues, STMG said.
STMG is also deregistering its Class A common stock, and will no longer file periodic reports with the SEC after filing a final annual report for the full year 2008.
STMG stock will continue to trade, but will no longer be eligible for the Over The Counter Bulletin Board where it trades now. It said it expects to be quoted on the Pink Sheets.
“In reaching its decision, the board determined that the benefits accruing to the company and its shareholders from having the Class A common stock continue to be registered, particularly given that the stock was previously delisted from the New York Stock Exchange in May 2008, are substantially outweighed by the burdens and costs of continued compliance with certain provisions of the Sarbanes-Oxley Act of 2002 and with the periodic reporting requirements under the federal securities laws,” STMG said.
Finally, the company announced the resignation of CFO William G. Barker III, who it said was leaving for another opportunity. He will be replaced effective next week by David C. Martin, who joined STMG in April 2006, and was most recently vice president, financial planning.