Hollinger International Mulls Sale, Won't Pursue KPMG Damages

by Glen Shapiro, LawAndTax-News.com, New York

30 January 2006

It emerged last week at Hollinger International's first annual meeting since the departure of Conrad Black from the group that the company may be sold as the next "logical step".

Speaking to shareholders at the New York meeting, Hollinger International chief executive, Gordon Paris raised the issue, although he did not give details on how this would be affected by Hollinger Inc's control of Hollinger International.

Speaking to the Financial Post, Gene Fox, managing director of Cardinal Capital Management, which holds around 6% of Hollinger International, confirmed that:

"[Hollinger International] shareholders would like to see a sale sooner rather than later. It's in everybody's interest to resolve what is a very problematic corporate governance issue."

It also emerged at the meeting that two Hollinger Inc directors have been voted onto Hollinger International's board, and that former SEC chairman, Richard Breedon has been appointed as the company's "special monitor".

Hollinger International further announced that plans to pursue a damages claim against its former auditor, KPMG, have been dropped.

Earlier this year, Hollinger International revealed that its quarterly loss in the three months to September was slightly less than in the same period the previous year, partly due to a reduction in legal costs related to former chief executive Conrad Black.

The group reported a $9.12 million loss in Q3, down from $29.6 million in 2004, and stated that around $9.4 million had been spent during the three month period on legal fees, down from $13.3 million in the third quarter of 2004.

It also emerged this month that Lord Black has had the charges against him augmented, meaning that he is now facing a maximum prison sentence of 95 years if found guilty.

In addition to the eight counts of mail and wire fraud with which he was charged late last year, and to which he pleaded not guilty, Lord Black is now facing one count each of racketeering, obstruction of justice, money laundering and wire fraud.

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