By: Mark Fitzgerald
The proxy war for control of Sun-Times Media Group’s board of directors is on.
Late Wednesday, Sun-Times filed a “consent revocation statement” with the Securities and Exchange Commission (SEC), opposing a solicitation to shareholders by the hedge fund Davidson Kempner Capital Management LLC to vote to replace all but one of the directors of the Chicago Sun-Times parent, and to reduce the size of the board. The hedge fund is one of the biggest holders of Sun-Times stock with a 5.9% stake, and notes for many more shares now held by the former holding company Hollinger Inc.
In its argument to shareholders, Sun-Times said the “majority” of its board “believes that such a wholesale replacement of the company’s directors would bring unnecessary disruption to the management and operation of the company.”
Sun-Times noted it announced its intention to restructure the board by the first of the new year, and that two of its board members will retire around that time.
Sun-Times said it had tried to work with Davidson Kempner representatives before it filed proxy materials seeking to replace all board members but Robert Poile of Polar Securities, a large Sun-Times stockholder, with a slate of nominees including Jeremy L. Halbreich, the former Dallas Morning News president and general manager who in 1998 founded the community newspaper chain American Consolidated Media.
“However, rather than cooperate with the Nominating and Governance Committee to assemble a board that represents all stockholders, Davidson Kempner has instead sought to elect only its own nominees,” the Sun-Times statement says.
The statement takes direct aim at hedge fund’s arguments for change: “The Davidson Kempner public filings argue that ‘the company must take dramatic steps to arrest the cash burn rate before it exhausts the remaining liquidity on the balance sheet’ and that ‘stakeholders cannot afford to risk delay to a wholesale changeover at the Board level.’
“However, other than vague generalities, Davidson Kempner has offered no suggestion of what strategies their nominees would offer to address the challenges facing the company, why they believe those strategies would be more effective than those already being employed by the board or why a reconstituted board including only their hand-picked directors would be more capable of working with existing management to deploy those strategies.”
To read the complete revocation statement, check out E&P’s business-oriented Fitz & Jen blog.