Board Coup At STMG -- Could Force 'Chicago Sun-Times' Sale

By: Mark Fitzgerald Hollinger Inc., the Toronto-based controlling shareholder in Sun-Times Media Group (STMG), replaced three STMG directors with its own representatives Wednesday in a board coup that could hasten the sale of the flagship Chicago Sun-Times.

Just before STMG's annual meeting in June, Hollinger CEO G. Wesley Voorheis wrote STMG CEO Cyrus Freidheim demanding the company "commence a formal process to consider all the strategic alternatives" that might push up STMG's sagging stock value.

Voorheis repeated the demand in a statement Wednesday: "The concerns we expressed in our June 11, 2007 letter to Sun-Times remain, and have been heightened as the value of Sun-Times' shares continues to decline. We have always believed that Sun-Times should implement a formal strategic process to enhance value for all Sun-Times shareholders. The actions we have taken are consistent with this."

In a statement, STMG said it had notified Richard C. Breeden, the "special monitor" who was given special corporate powers by a court after disclosures of alleged massive swindles by former newspaper magnate Conrad Black and other top executives of STMG, which was then known as Hollinger International. Black once controlled his newspaper empire through the Hollinger Inc., which owns a 70% voting stake and 19.6% equity stake in STMG. He has been forbidden by court order from exercising his control of Hollinger Inc.

STMG said it "will also continue to evaluate its full range of options with respect to the actions taken by Hollinger Inc."

At the same time as it announced it was replacing the STMG board members, Hollinger Inc. said it had settled class-action lawsuits alleging it violated securities laws in Canada and the U.S. -- and that it was seeking bankruptcy protection.

Hollinger said it and two of its Canadian subsidiaries 4322525 Canada Inc. and Sugra Limited, had filed for court-supervised restructuring under the Companies' Creditors Arrangement Act in Canada, and in the United States under Chapter 15 of the U.S. Bankruptcy Code.

The three directors removed from the Sun-Times board are John F. Bard, John M. O'Brien and Raymond Troubh.

Hollinger increased the size of the board to eleven from eight, and added its representatives: William E. Aziz, Brent D. Baird, Albrecht Bellstedt, Peter Dey, Edward C. Hannah, and CEO Voorheis.


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