By: Seth Sutel, Associated Press Writer
(AP) The owners of a British newspaper group 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.
The deal reached with a company owned by David and Frederick Barclay, who own several newspapers in the United Kingdom including The Scotsman and The Business, would place a total value of $326 million U.S. on Hollinger Inc., plus the assumption of $140 million in debt.
Hollinger Inc. 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. Hollinger International said it had received notice of the deal for its parent company and was evaluating it.
The deal, if it goes through, would mark the exit from the newspaper business of one of its more flamboyant figures. Black’s ownership of The Daily Telegraph has helped make him a major figure in business and social circles in England, where he holds the title Lord Black of Crossharbour.
In a statement Sunday, Black said it would be “distressing” to part with the newspapers, “but these fine titles must not be hobbled any longer by the current controversies and financial uncertainty. They will be in good and caring hands and we will be able to focus exclusively on resolving current legal and public relations concerns.”
In a letter to the board of Hollinger International, David Barclay said the deal with Black was “the only viable alternative” to resolve the contentious relations between Black and his associates with Hollinger International and its Toronto-based parent company.
Black’s control of Hollinger International has brought “significant media controversy” to the company, Barclay said, which is “harming the public image and stock price of Hollinger International and undermining its credibility in the financial markets.”
Press Holdings International, an entity controlled by the Barclays, agreed with Black to buy his controlling interest in Hollinger Inc. from Ravelston Corp., a privately held company that Black controls. Ravelston owns 78% of Hollinger Inc., which in turn has 70% of the voting rights of Hollinger International.
The proposed deal is subject to Canadian regulatory approval.
A Press Holdings spokeswoman declined to comment beyond the company’s statement.
Black has railed against his critics in the months since questions were raised about the lavish fees paid to him and his top deputies. The controversy reached a boiling point last fall, just as Black was beginning a book tour to promote his 1,280-page biography of Franklin Delano Roosevelt.
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 conducted by a special committee formed in the wake of shareholder protests over the fees paid 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 full report is expected this spring.
Black is facing a deadline Sunday to repay the first installment of $7.2 million in fees made to him that the company says were unauthorized. But Black is now disputing whether the fees were in fact unauthorized, and it’s not clear whether he intends to pay.
Also Sunday, former Hollinger International president David Radler said the company’s lawsuit against him and Black “lacks any factual or legal basis” and that the fees he received had been properly disclosed to and approved by the company’s board.
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.
Black built Hollinger International into a major newspaper publisher starting with a base of small community newspapers in Canada. He later renounced his Canadian citizenship to become a British Lord.