Two former executives at Hollinger International have began paying back unauthorised fees they received to the media company, even though the chairman, Lord Black of Crossharbour, has missed the first payment deadline.
David Radler, the former president, and Peter Atkinson, the former executive vice president, both made the payments due at the end of last month to Hollinger International, publisher of The Daily Telegraph and The Chicago Sun-Times. Lord Black, who resigned in November as chief executive but remains chairman, queried this week whether the fees at issue were actually improper. A total of $15.6m is due from four individuals, who had benefited from "management fees" that the rest of the Hollinger board were unaware of, payable in instalments.
Separately, it emerged in a Hollinger International company filing that, once Lord Black meets the first instalment of the money, he would, in some circumstances, be able to sell part or all of his stake in the parent company, Hollinger Inc.
Such a divestment would probably scupper the "strategic process" now being undertaken by Hollinger International to try to sell its assets and the company has tried to prevent Lord Black making such a move.
Hollinger Inc, which is majority-owned by Lord Black and his allies, owns a third of the equity of Hollinger International and wields over 70 per cent of the voting rights.
According to the Hollinger International filing, Lord Black can sell down his stake in Hollinger Inc if the "transaction is necessary to enable Hollinger Inc avoid a material default or insolvency".
Outside of these circumstances, Lord Black has undertaken not to support "a transaction that would "negatively impact" the "strategic process".
However, Hollinger International insiders admit that a cash crisis is possible at Hollinger Inc, which was supported financially by the controversial management fees previously enjoyed by Lord Black and other directors. Hollinger Inc has some $120m of bond debt that it must service.
Lord Black and Mr Radler, who owe $7.2m each to Hollinger International according to a document signed in November, and Mr Atkinson and another ex-director, Jack Boultbee, each owe $602,500. All four were due to pay 10 per cent of the sum owed, plus interest, by 31 December.
Mr Radler paid the $850,000 due on that date and Mr Atkinson paid $60,000. Mr Boultbee has refused to pay. Lord Black has now been given until 18 January to come up with the $850,000 first payment.Reuse content