The Thing Is: Black to face his high noon in hicksville

Hollinger
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The Independent Online

Wilmington, in the US state of Delaware, population 72,000, is not used to being thrust into the limelight. One local tourism website, under "Things to do", has just one entry: the local public library. But this week it will be the centre of attention: there, one of the state's leading sons, Judge Leo Strine, will decide the fate of global media empire Hollinger International, owner of the Telegraph titles.

In the defendants' corner is Lord Black of Crossharbour, who holds the controlling stake in the New York listed company, which he has agreed to sell to the Barclay brothers, owners of The Scotsman and The Business newspapers and the Ritz hotel. In the other corner are the board of Hollinger International and its shareholders who are trying to block the deal, which they believe is underpriced and against their interests. For good measure, they are also trying to recover $200m (£106m) in unauthorised payments and "excessive" management fees which they believe Lord Black and his holding company, Hollinger Inc, have pocketed unfairly. There is still a chance that an out-of- court settlement could be reached, but with proceedings beginning on Wednesday and a decision expected by the end of the month, time is running out.

At times the dispute has bordered on the farcical. Hollinger Inc has filed its own legal action against the Hollinger International board, accusing it of "blatant thievery".

On Friday night Lord Black, ousted as Hollinger International chairman, filed a new, $850m suit against chief executive Gordon Paris, four board members and adviser Richard Breeden, accusing them of engaging in a "conspiracy" against him.

The directors, who include such grandees as former US secretary of state Henry Kissinger, are probably wondering how they got dragged into this mess. But they are determined to stop Lord Black selling out to the Barclays. They have already appointed investment bank Lazard to carry out a separate auction of Hollinger International's assets. But their chances of winning are slim, since Lord Black is the controlling shareholder. As Hollinger Inc's defence document filed with the Delaware Chancery court last week argues, nothing can be done without his approval. And that includes the proposed auction.

However, this did not stop bidders lodging first-round bids last week. After all, it's not every day that trophy assets like the Telegraph titles and the Chicago Sun-Times come up for grabs. Financial buyers Collins Stewart, Candover and 3i all made bids for the Telegraph Group, as did Richard Desmond, owner of the Express newspapers, and the Daily Mail and General Trust, owner of the Daily Mail. However, the bids are believed to be at best £550m, £200m short of the valuation of the Telegraph Group when it was delisted from the London Stock Exchange eight years ago.

Sources also told The Independent on Sunday that Gannett, the US-based newspaper group which owns The Herald in Scotland, and US private equity group Blackstone had tabled bids for Hollinger International.

If the judge rules in Lord Black's favour, the Barclay brothers will take control, making this irrelevant. Or maybe not. The Barclays, despite insisting that they would not break up the Hollinger International group, could keep the Telegraph titles but sell the other newspapers if there are tasty bids left on the table. Over to you, Judge Strine.

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