Price impasse delays Black offer

PRICING difficulties are continuing to delay the posting of an offer from Conrad Black, the proprietor of the Telegraph Group, to the holders of shares in the Telegraph that his interests do not already own.

Mr Black and the directors of American Publishing, his US- listed company vehicle, are hoping to negotiate the lowest price they feel will satisfy the non-executive directors of the Telegraph. But so far there has been an impasse, with insiders saying there could be as much as 60p a share separating the two sides.

An adviser close to Mr Black said that his camp believed the independent directors of the Telegraph, who are being advised by NM Rothschild, were still holding out for an offer of 510p or more a share. That is despite the fact that Mr Black told the Independent on Sunday a fortnight ago that the price he might offer would be "nowhere near" 500p. Mr Black added in that interview, which enraged some members of the Telegraph's committee of independent directors, that he did not "give a damn" whether shareholders accepted an offer or not.

A reorganisation proposed by Mr Black earlier this year would see shares in the Telegraph, currently owned by his Canadian holding company, Hollinger, sold to another Black-controlled company in the US, American Publishing. First, though, Mr Black is attempting to buy out the 41.5 per cent of the Telegraph stock he does not already own.

On Friday, Telegraph shares closed down 1p at 442p.

According to one minority shareholder with links to management in the Telegraph group, the offer price is still some way from being decided.

"The difficulty is determining what the long-term value of the company is. The UK price war is not going to last for ever and that means the value is probably higher than the current market suggests."

The value of the Telegraph's 20 per cent holding in John Fairfax Holdings, the Australian media group that last week announced a strong rise in profits, and the value of its 15 per cent holding in Southam are crucial factors in arriving at a price. More uncertain, however, is the thinking about the state of the UK price war and rising newsprint costs. Sources close to the negotiations said that the finance necessary for any buyout of Telegraph shareholders would be available.

"Financing is not the issue. The issue we are debating is the price - but obviously the financing structure will be determined by the price," said one source.

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