Hollinger International moves to block sale of company

NEW YORK (AP) — Hollinger International Inc. fired back at its controlling shareholder Conrad Black on Jan. 26, taking legal steps to block his deal to sell the company to the Barclay brothers of Britain. 

Hollinger International also adopted a "poison pill" measure, a defensive tactic used in corporate takeover battles that would allow minority shareholders to take a greater stake in the company in an attempt to stop a sale. 

The moves marked the latest escalation in hostilities between Black, a Canadian-born newspaper baron, and the board of directors of Hollinger International, which publishes The Daily Telegraph of London, the Chicago Sun-Times and The Jerusalem Post. 

John Warden, one of Black's attorneys, denounced Hollinger's move to adopt the poison pill as "a descent into the lawless conduct of corporate affairs" and a "futile attempt" to block the deal with the Barclays. 

The company has accused Black of siphoning off millions of dollars in unauthorized fees for himself and senior associates, and is demanding that he repay the money. The company also has ousted him as chairman, though he remains on the board and retains voting control through Hollinger International's parent company, Hollinger Inc. of Toronto. 

Black has made a deal to sell his majority stake in Hollinger Inc. to the Barclays, who own several newspapers and have interests in retailing. That deal, if it goes through, would allow the Barclays to assume Hollinger Inc.'s approximately 70 percent voting power in Hollinger International. 

On Jan. 26, Hollinger International said it was suing Black in Chancery Court in Delaware to block the deal with the Barclays and to eliminate the super-voting class of shares held by the parent company should the deal be consummated. That would dilute the Barclays' voting stake in Hollinger International from 70 percent to about 30 percent. 

Hollinger International took the steps after Black moved Jan. 23 to change the bylaws of the Canadian parent company to give him veto power over any major transaction. 

The "poison pill" measure and the lawsuit were approved by a committee of Hollinger International's board made up of all directors except Black, his wife and Daniel Colson, a longtime business partner who is seen as loyal to him.