By: E&P Staff
Hollinger Inc., the Toronto-based holding company Conrad Black once used to run his global newspaper empire, filed lawsuits against Hollinger International in the U.S. federal court Thursday, alleging the Chicago Sun-Times publishing company fraudulently stripped it off assets, including The Daily Telegraph of London.
Separately, Hollinger announced it was filing a “statement of claim” in the Ontario Superior Court of Justice in Canada against The Ravelston Corp. Ltd., another former Black-owned holding company, and several people, including Black; his wife Barbara Amiel-Black; former Sun-Times Publisher David Radler; and former Hollinger executives John Boultbee and Peter Atkinson.
In a prepared statement on the U.S. claims, Hollinger said: “Hollinger’s counterclaim alleges that, in the 1990s, International wrongfully participated in a scheme to strip Hollinger of assets by acquiring them at prices it knew to be far below fair value. This was part of a plan to drive down the value of Hollinger, reduce it to a holding company with no operating assets, precipitate a serious liquidity crisis, and create an opportunity for The Ravelston Corporation Limited to become the controlling shareholder of Hollinger without expending any of its funds.”
Ravelston was another holding company controlled by Black and several close associates. It is now in receivership, and under supervision of the Ontario Commercial Court in Canada.
Hollinger’s principal asset now is its approximately 66.8% voting and 17.4% equity interest in Hollinger International, which has changed its name to Sun-Times Media Group.
The Sun-Times Media Group is suing Hollinger Inc. on a claim that it allowed Black and others to loot $400 million from International. Black, who is also suing both Inc. and International, has been indicted on U.S. federal criminal charges along with other former International and Inc. key executives. Former Sun-Times publisher and Black business partner David Radler has pleaded guilty to similar charges in exchange for a reduced sentence and his pledge to testify against Black.
“This counterclaim demonstrates that, long before International experienced the ill effects it alleges in its claim, International benefited significantly from its illegal actions directed against Hollinger, and which caused serious harm to Hollinger,” Randall Benson, Hollinger Inc.’s chief restructuring officer, said in a prepared statement. “While International’s allegations about what happened to it between 1998 and 2003 have been widely disseminated, the evidence shows that, prior to that period, Hollinger had been victimized by International in a series of calculated and linked transactions, including the transfer of its primary operating assets to International at less than full value.”
In the Canadian litigation, Hollinger is asking for $500 million in damages “for breach of contract, conspiracy, negligence, breach of fiduciary duty, unjust enrichment and unlawful interference with (Hollinger’s) economic interest” plus additional damages of $250 million, and $5 million in punitive damages.
“We believe that Hollinger was the initial victim of a planned series of transactions, including the sale of its primary operating assets at below fair value. This campaign started in the 1990s and laid the groundwork for better-known events that continued up to 2003,” Benson said. “On behalf of the public minority shareholders of Hollinger, we intend to vigorously pursue restitution.