Directors of Hollinger International, which publishes The Daily Telegraph, will meet today to see if they can block the sale of a controlling stake in the media empire to the Barclay brothers.
The sale on Sunday by Lord Black of his newspaper interests to the Barclays, appeared to have made a mockery of the Hollinger board's attempts to find buyers for its titles, which include The Spectator magazine, The Jerusalem Post and the Chicago Sun-Times.
An emergency meeting of the board of Hollinger International, which has formed a "special committee" to probe allegations of embezzlement by Lord Black, will decide whether to "fight" the sale.
The deal could also be blocked by lawsuits from shareholders or action from the regulator, the Securities and Exchange Commission, which is investigating the company.
The Hollinger special committeehired a top City bank, Lazards, to sell the company's assets. However, Lord Black's sale of his stake in Hollinger Inc, the company which controls Hollinger International, seemed to make the Lazards process largely irrelevant, analysts said.
Richard Desmond, publisher of The Daily Express, and the company behind The Daily Mail, were among the businesses that were negotiating with Lazards to buy the Telegraph. However, Lord Black's by-passing of the Hollinger board and Lazards is said to have left the board furious.
Instead of buying the newspapers, which Lazards wanted the Barclays simply bought Lord Black's controlling share in Hollinger International - at a knock-down price. While Lazards will continue to review the sale of Hollinger's assets, it is believed any sale that includes the Telegraph will be resisted by the Barclays. Industry sources said yesterday that the Barclays do not like running publicly listed companies, so they may seek to buy out the other shareholders once their "unconditional" deal with Lord Black completes. The board also launched a lawsuit against Lord Black and his business partner on Saturday, demanding that $200m (£122m) in fees that they received be returned, including the "non-compete" fees at the heart of the controversy.
The scale of the enmity between Lord Black and the board that removed him as chairman was laid bare in a letter written by the Tory peer. Lord Black said the committee was "a desperate attempt to prevent me from completing a transaction for Hollinger Inc. and divert attention from misrepresentations they had made about the non-compete payments in November. Neither of those efforts will be successful."
He said that he has been made to resign over false allegations that the non-compete fees were never approved by the board. Lord Black said he now had evidence that the fees "were in fact known to and approved or ratified by the independent directors of Hollinger International, including Audit Committee Chairman James Thompson".
In November, when he resigned, Lord Black signed an agreement that he would not sell his shareholding while Lazards was trying to find buyers. In the letter released on Sunday, Lord Black said this arrangement "invalid" as it was based on the idea that the non-compete fees were never approved.
City financiers predicted that the dispute between Lord Black and the board would now end up in a further legal wrangle, as lawyers argue over whether he was entitled to sell his shares in Hollinger Inc.
The Barclays were willing to buy Lord Black's entire shareholding and take on the legal risk that came with this. Other potential buyers balked at this.
For Mr Desmond, there is a consolation prize - the printworks in London's Docklands that he shares with the Telegraph. The joint venture allows him to buy out the 50 per cent he does not own, if the Telegraph changes hands. He is expected to cut costs at Westferry Printers and exploit the 200 acres of land for lucrative residential use.Reuse content