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Squabble for Board Seats at Hollinger: Canadian Firm Seeks to Name 2 Directors

Posted on: Wednesday, 28 December 2005, 12:00 CST

By James P. Miller, Chicago Tribune, Chicago Tribune

Dec. 28--As Chicago Sun-Times parent Hollinger International Inc. prepares for a large-scale shake-up of its board of directors, a major stockholder has launched a potentially disruptive claim to receive two board seats.

According to documents Hollinger International filed with the Securities and Exchange Commission on Tuesday, the Chicago-based newspaper company has squared off with Hollinger Inc., a Toronto-based holding company that owns a 17.4 percent equity stake, but a controlling voting interest, in Hollinger International.

Saying it wants "proportional" representation, the Canadian company is seeking to name two representatives to Hollinger International's board next month, the filings show.

But the Chicago company is resisting. Because the two companies have competing interests and are engaged in litigation, Hollinger International contends that Hollinger Inc.'s representatives would have inherent conflicts of interest that would bar them from acting independently.

The squabble has surfaced as Hollinger International seeks to remake its board in the wake of a major scandal.

Reflecting the interests of former Chief Executive and majority stockholder Conrad Black, the company's board was traditionally long on international political experts like Henry Kissinger, while directors with hands-on experience in corporate management were relatively scarce.

Directors forced Black out of the top spot at Hollinger International in late 2003, after an internal probe found evidence that he and then-President F. David Radler had improperly diverted to their own pockets millions of dollars that should have gone to the company.

Since then, the scandal has expanded into a maelstrom of civil and criminal litigation. Black, who also was ousted as chairman in early 2004, has denied any impropriety, but Radler has pleaded guilty to criminal fraud charges and is cooperating with federal prosecutors.

Despite the controversy, until now a number of board members linked to the Black era have remained. Black and his wife, Barbara Amiel Black, resigned their board seats in mid-2005. But Kissinger, former Illinois Gov. Jim Thompson and four other incumbent directors aren't standing for re-election at the company's coming annual meeting.

Normally, their departure would create six vacancies on the company's board. But in its Tuesday proxy materials covering the company's planned Jan. 24 annual stockholder meeting in New York, Hollinger International said it wants a board with only seven members.

The proxy has only two new nominees, joining five incumbents: John Bard, 64, the former chief financial officer of Wm. Wrigley Jr. Co.; and Raymond Troubh, 79, a longtime financial consultant.

Hollinger International separately filed with the SEC a series of documents spelling out the rift with Hollinger Inc.

Although Hollinger Inc. is firmly under the control of Canadian trustees for now, it remains the vehicle by which Conrad Black has potential voting control of Hollinger International.

In a letter to Hollinger International, Hollinger Inc. nominated Randy Benson, its chief restructuring officer, for one of the two board seats it wants and provided a list of five other potential candidates.

Hollinger International softened its position in a later communication, saying it would accept one representative from Hollinger Inc.

jpmiller@tribune.com

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Copyright (c) 2005, Chicago Tribune

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NYSE:HLR, Toronto:HLG.C, NYSE:WWY,

Source: Chicago Tribune

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