By: Mark Fitzgerald
The activist hedge fund Davidson Kempner Capital Management LLC has claimed victory in its proxy war with Sun-Times Media Group to take control of struggling publisher’s board.
Davidson Kempner late Friday, two days before the regulatory deadline, said it had received and delivered the required number of consents by holders of a majority of shares outstanding to oust all Sun-Times directors but one.
Replacing all directors but Robert Poole, who holds 11% of Sun-Times shares, will be Jeremy L. Halbreich, the former Dallas Morning News general manager; Robert A. Schmitz, a specialist in business restructuring; and Michael E. Katzenstein, another executive with experience restructuring troubled companies.
“Through the provision of these consents, the stockholders have made clear their desire and support for a board of directors that is made up of professionals experienced in publishing and restructuring,” Davidson Kempner said in a statement. “Given the operating and financial challenges before Sun-Times, we believe that the reconstituted board has the better potential to guide and lead Sun-Times.”
Davidson Kempner, which owns a 6% stake in Sun-Times has also made it clear it intends to replace CEO Cyrus F. Freidheim Jr., who is also a board member.
The hedge fund blames the current directors for the parlous financial condition of the Chicago Sun-Times parent, which is burning through about $20 million in cash each quarter. Sun-Times has cut expenses furiously in the past year with layoffs, outsourcing and consolidation of newspapers and production facilities. It recently announced plans to wring another $50 million in costs in the first half of this year.
Sun-Times had no comment except to say late Friday that it had received the consents “purporting to effect the reconstitution of the company’s board of directors.” It said it intended to retain an independent inspector to verify the consents as soon as practicable.