By: Mark Fitzgerald
Canada’s stock market reacted giddily Monday to Conrad M. Black’s announcement that he will be stepping down as Hollinger International Inc. CEO this Friday. At the 4 p.m. EST close of the Toronto Stock Exchange, stock in the holding company Hollinger Inc. (TSE ticker: HLG.C) had soared to Canadian $5.00 — up C$1.49 or 42.45% from last Friday’s close. At midday, the stock had been even higher, up 45% to $5.20.
On Wall Street, investors also reacted positively, but not as dramatically, to the weekend’s developments. At the 4 p.m. closing bell of the New York Stock Exchange, shares in Hollinger International (NYSE ticker: HLR) were priced at U.S. $15.73, up $2.23 or 16.52% from Friday’s close. During Monday’s session, the stock traded as high as $16.10. Black’s private holding company Ravelston Corp. controls Hollinger Inc., which in turn controls Hollinger International, the Chicago-based publisher of the Chicago Sun-Times, the Daily Telegraph in London, and other newspapers.
Published financial reports from Toronto said the run-up in Hollinger Inc. stock — which was still off its 52-week high of C$6.10, which it reached in January — was propelled by investor feeling that Black’s departure would smooth the way for a sell-off of some Hollinger International newspapers.
In a Form 6-K filed Monday with the Securities and Exchange Commission, Hollinger International said Black would resign as CEO effective this Friday. Resigning along with Black were Hollinger International COO and Sun-Times Publisher F. David Radler and Hollinger International Vice President and Corporate Counsel Mark Kipnis. All three also agreed to pay their part of a combined U.S. $15.6 million in supposed “non-compete” payments paid to them individually in connection with the sale of Canadian papers to CanWest Global Communications. While the company had previously assured investors the payments had been authorized by independent directors of the board, the 6-K filing said that “did not occur ‘and that statements that the payments were’ made ‘to satisfy a closing condition’ were not accurate.”
Another Hollinger executive who shared in those payments, Executive Vice President J.A. Boultbee, was fired after the executive committee failed “to reach agreement with him on several matters,” the SEC filing said.