By: E&P Staff
With a unanimous vote of its board Wednesday, Hollinger International Inc. guaranteed that the publishing company of the Chicago Sun-Times and dozens of other newspapers will operate with a court-appointed “special monitor” overseeing its corporate actions.
Chicago-based Hollinger International said Wednesday afternoon its board had unanimously determined not to endorse for election to the board two representatives from Hollinger Inc., the Toronto-based holding company Conrad M. Black once used to control his global newspaper operations.
Since Inc.’s controlling voting stake lets it elect its nominees, the International action triggers a process that will lead to former U.S. Securities and Exchange Commission (SEC) Chairman Richard C. Breeden taking the position as International’s special monitor, responsible for protecting “the interests of the company’s non-controlling shareholders to the extent permitted by law,” International said.
Earlier in the day, International had disclosed that Inc. had sent a letter laying out its intention to nominate to the board its Chief Restructuring Officer, Randall Benson, and an Inc. director, Stanley M. Beck.
Inc. owns a 17.4% equity interest in International, but controls the newspaper publisher with a 66.8% voting stake, and can elect any director it chooses.
International said it would not endorse election of the Inc. representatives at next Tuesday’s long-delayed annual meeting “due to extensive and pervasive conflicts” between the two companies.
International is suing Inc. as well as Black and other former Inc. and former International officers, charging they schemed to loot the publishing company of some $400 million in improper fees and insider deals.
International has nominated seven people as directors, replacing a 10-person board of such celebrities as Henry Kissinger, former Gov. James R. Thompson and former Ambassador Richard Burt.
In its statement Wednesday, International said it was expanding its board size to nine “to facilitate the company’s shareholders’ fair consideration of the board’s seven nominees.”
If Inc. decides not to nominate or vote for its candidates at the Jan. 24 annual meeting in New York City, International said, the size of the board would remain at seven.
The special monitor would be appointed under terms of a Jan. 16, 2004 court order of the U.S. District Court in Chicago in the case of the SEC vs. Hollinger International. The order specifies that any new potential director must be nominated “with the concurrence of 80% of the then incumbent directors.”