By: E&P Staff In a revised agreement that would end control of the Sun-Times Media Group (STMG) by an insolvent Toronto holding company, Hollinger Inc. has agreed to turn over its stake in the Chicago Sun-Times publisher to one of its major creditors, Davidson Kemper Management LLC.
The agreement would end the super-voting class of stock that allowed Hollinger Inc. to control a 70% voting stake in STMG with just a 19.7% equity stake.
The agreement replaces a settlement announced in April, which would also have converted super-voting stock into stock with just one vote per share.
For its part, Davidson Kempner (DK), which holds about 42% of Hollinger Inc.'s debt DK, agreed not to force the holding company into bankruptcy. DK will also be paid an upfront fee of $1.5 million, and legal fees of up to $3 million.
The six directors Hollinger forced on the board in a corporate coup a year ago agreed to resign once the agreement is given approval by the Canadian court that is overseeing Hollinger Inc.'s insolvency.
The settlement would be the final end to the complex corporate structure press baron Conrad Black used to control a newspaper empire that once spanned three continents, and is now concentrated entirely in the Chicago market.
Black, the former chairman of STMG when it was known as Hollinger International, was convicted of U.S. federal fraud charges in connection with improper fees from sales of Hollinger International's community papers, and is serving a six-year prison sentence. He maintains his innocence and is appealing.
The settlement also provides that STMG and Hollinger Inc. will split evenly any money they win in their litigation against Ravelston Corp. Ltd., another company owned by Black, and his former lieutenant F. David Radler. Radler pleaded guilty to fraud on charges similar to Black's. He testified against Black in exchange for a lighter sentence. He is serving a 39-month sentence.
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