By: Mark Fitzgerald
Conrad Black and his Hollinger Inc. holding company have paid his former company, Hollinger International, $30 million in allegedly unauthorized ?non-compete? payments from the sale of numerous community papers between 1999 and 2001. At the same time, Black and Hollinger formally filed an appeal of the Delaware Chancery Court ruling that ordered the repayment.
On June 28, the chancery court ordered Black to pay Hollinger International $8,693,053 plus interest from June 1. Black and Hollinger were also jointly ordered to pay Hollinger International $21,154,025 plus interest from June 1.
Hollinger Inc. also said it is preparing yet another lawsuit against the newspaper publisher — this one to force it to release financial information. Hollinger International has said it is unable to provide an annual report because a special committee investigating alleged fraud by Black and other former executives is still looking into the company?s tangled accounts.
Hollinger Inc. missed the June 30 deadline to file information with Canada?s securities regulators, and it said in a statement that if it does not file an annual report by Aug. 8, it may be forced to sell its controlling stake in Hollinger International.
Black and Hollinger Inc. said their separately filed appeals were authorized by the litigation committee of its board of directors, consisting of independent directors Richard Rohmer and Gordon W. Walker. The committee had also authorized preparation of the new lawsuit over the annual report issue, the company said.
In a separate statement issued last week, Hollinger Inc. warned that it could be on the hook for higher interest payments on $78 million in bonds that are secured by its 18% equity stake in Hollinger International. The company said Wachovia, the U.S. bank acting as trustee of the stock collateral, had served it with a non-compliance notice that it was violating the terms of its covenant to provide regular filings of financial reports. Hollinger said the non-compliance did not trigger a default forcing it to sell all or part of its Hollinger International stock, but it could if bondholders comprising at least 25% of the bonds made that demand.
With its ownership of super-voting shares, Hollinger?s 18% equity stake translates into a 68% voting interest of the publisher of the Chicago Sun-Times, The Daily Telegraph in London and other papers.
“Despite its requests, Hollinger has not, to date, received access to the financial records and management personnel of Hollinger International Inc. and the working papers of Hollinger International’s auditors,” Hollinger Inc. said. The company said its cash on hand at the end of business last Wednesday was about $18 million.