Controlling ‘Sun-Times’ Shareholder Warns Of Dire Future

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By: E&P Staff

Hollinger Inc., the Toronto-based holding company Conrad Black used to control his dissipated newspaper empire, revealed in regulatory filings Thursday that it is hemorrhaging money, is in violation of debt covenants — and that its future is grim.

Hollinger’s principal asset is its 19.7% equity stake and 70.1% voting interest in Sun-Times Media Group (STMG), publisher of the Chicago Sun-Times and about a hundred other papers in the Chicago market. STMG recently changed its name from Hollinger International to distance itself from its former Chairman Black, who goes on trial in Chicago next week on federal criminal fraud charges.

Thursday Hollinger filed its first audited financial reports since allegations surfaced that Black and other key Hollinger International executives plundered the newspaper publishing company of hundreds of millions of dollars through phony non-compete agreements, and other improper means.

The filings with Canadian regulatory authorities show Hollinger Inc. is losing money at an accelerating rate, and has been hammered by the falling price of STMG’s publicly traded stock, as well as the publishing company’s decision to stop paying dividends.

“The corporation’s ability to continue as a going concern is uncertain due to the corporation’s non-compliance with certain covenants under the indentures governing its notes, contingent liabilities related to various disputes, investigations and legal proceedings,” Hollinger said in its most up-to-date report for the quarter ended Dec. 31, 2006.

Hollinger said it lost C$22.7 million (US$19.2 million), or 65 Canadian cents a share, in the quarter, compared with a loss of C$19 million, or 54 Canadian cents a share, in the same period a year earlier.

Hollinger filed delayed annual reports dating back to 2003.

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