By: Mark Fitzgerald
Hollinger International (NYSE: HLR) said today it will loan parent company Hollinger Inc. (Toronto Stock Exchange: HLG) $7.4 million to make the overdue first interest payment and avert a default on $120 million in bonds.
The loan was ordered as part of the final order and judgement entered by Vice Chancellor Leo E. Strine Jr. in the recent litigation in Delaware Chancery Court, Hollinger International said. It said the loan will be secured by Class A, or super-voting, shares of Hollinger Inc. with a market price of about $15 million. Conrad Black controls Hollinger International — publisher of the Chicago Sun-Times, the Daily Telegraph in London and other papers — through Hollinger Inc. shares that represent an equity interest of about 30% in Hollinger International, but a voting stake of about 73% in the publisher.
As reported, Hollinger Inc. did not make the interest payment due March 1 on the $120 million in bonds, risking a default that would strip Black of those supervoting shares. There is a grace period of 30 days for the payment. Hollinger International said under terms of Strine’s order, its loan is “conditioned on HLG taking prompt steps to require Mr. Black, (fired Sun-Times Publisher) David Radler and Ravelston Corporation Ltd. (a Black holding company) to repay their obligation to HLG.”
Also today, Hollinger International said it was now proceeding with it’s “strategic process” — the sell-off of its newspapers around the world, in pieces or as a package. The company said it “was pleased with the preliminary interest displayed in its properties,” and was inviting bids for “all of Hollinger International, as well as offers for each of the Telegraph Group, the Chicago Group, the Jerusalem Post and the Canadian Group.”
The company said it “welcomes the Barclay brothers” to bid. Earlier this week, the reclusive billionaire twins formally withdrew their bid for Hollinger Inc. after Strine blocked Black from offering the company.