News from Reuters
Barclay Brothers Withdraw Offer for Hollinger Inc
Tuesday, March 02, 2004
By Adam Pasick
LONDON (Reuters) - British tycoons David and Frederick Barclay
have pulled their offer to buy press baron Conrad Black's
Hollinger Inc.
Toronto-based Hollinger Inc.'s main asset is a controlling
voting stake in Chicago-based Hollinger International Inc.
A U.S. court stopped Black last week from selling his majority stake in Hollinger Inc. to the publicity shy Barclay twins, who own Edinburgh's Scotsman newspaper and London's Ritz Hotel and live in a castle in the Channel Islands.
The ruling made the withdrawal of their offer for the rest of Hollinger Inc. a formality, though the pair could still take another shot at taking control of Black's newspaper stable by making a bid directly to the Hollinger International board.
The Barclays closely held Press Holdings International Ltd. said in a filing with U.S. regulators late on Tuesday it was still weighing its options.
It said the brothers "are considering a number of alternatives with respect to potential transactions involving Hollinger International, which may include, among others, acquisition of securities or assets".
Investment bank Lazard is seeking buyers for Hollinger International or its newspapers. That is expected to attract a host of potential bidders, including private equity groups and publishers in the United States and Britain.
The Barclays have not publicly ruled out placing a bid through Lazard, but a source familiar with the matter said they were likely to prefer a bid for all of Hollinger International rather than bid for individual assets.
"They're much more likely to make a full scale bid for Hollinger International.... They'll just make an offer to the board," the source said.
Spokesmen for Lazard and the Barclays declined to comment.
INTEREST PAYMENT MISSED
In withdrawing their bid for Black's holding company the Barclays also ended their agreement to fund a buyback of Hollinger Inc. debt.
The company missed a $7.4 million interest payment on Monday and said it was trying to find a way to make the payment within 30 days, after which it would be in default.
Ratings agency Standard & Poor's said its rating on Hollinger Inc.'s debt was not affected by the missed payment, though it is still considering downgrading the firm.
The agency said there is a "strong likelihood" of the $7.4 million interest payment will be made within the 30-day grace period.
The funding crisis stems from a bitter feud between Hollinger International and Black, who was forced out as chairman and chief executive after the company accused him of receiving millions of dollars in unauthorized payments.
Hollinger International also cut off management fees to Black and other executives, which they had used to service Hollinger Inc.'s debt.
When the judge blocked the sale to the Barclays, he included a clause saying Hollinger International must offer short-term financing to Hollinger Inc. to help make the interest payment.
The judge, Leo Strine, also said Black, former Hollinger International officer David Radler, and a private company controlled by Black must "live up to their substantial obligations" to Hollinger Inc. (Additional reporting by Jeffrey Hodgson in Toronto and Siobhan Kennedy in London)
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