'Telegraph' owner turns to Black for emergency funds

Hollinger, the group that controls The Daily Telegraph and Sunday Telegraph newspapers and The Spectator, has been forced to turn to its chairman, Lord Black of Crossharbour, for emergency money because of a cash crisis.

In a statement filed with the US Securities and Exchange Commission late last week, the group said it had experienced a "shortfall between the dividends and fees received from its subsidiaries and its obligations to pay its operating costs". It admitted it had turned to Ravelston, the private investment vehicle of Lord Black, to fund the shortfall. Ravelston has said it will pay up to $14m (£9m) a year to Hollinger to tide it over temporarily. The group warned that it may not be able to buy back a chunk of $70m prefer- ence shares it had hoped to redeem next year. Hollinger shares tumbled in the US and Canada on the news.

The liquidity problem has been caused by the poor performance of many newspa- pers in Lord Black's empire.

Through a complex structure, Hollinger owns 31.8 per cent of Hollinger International, parent company of the Telegraph titles, The Spectator, the Jerusalem Post and the Chicago Sun-Times. It has 72.8 per cent of the voting rights in the media subsidiary.

A week ago, Hollinger International reported a loss of $239m for 2002, though this was an improvement on the $335m deficit in 2001. More than $23m in fees went to Ravelston, of which $6.6m went directly to Lord Black.

Analysts warned that Lord Black may have to sell assets to shore up its balance sheet. They believe he may sell his remaining Canadian newspapers or the Sun-Times before selling the Telegraph titles.