Some minority shareholders of Hollinger Inc. are banding together to try to fight Conrad Black's efforts to take private the newspaper holding company.Ken McLaren, a Vancouver investment adviser, has teamed up with Montreal money manager Stephen Jarislowsky to oppose the $7.25 offer that Lord Black's private company Ravelston Corp. says it will make for the 22 per cent of Hollinger Inc. shares it doesn't already own.
Mr. McLaren yesterday sent a letter to about 15 of the largest minority shareholders of Hollinger Inc. to ask their support in opposing the deal.
In the letter Mr. McLaren says he believes "a strong case can be made that a price, significantly higher than the proposed offer, is warranted."
He also says he believes the Ontario Securities Commission "should prevent Lord Black and Ravelston from proceeding with this offer on the basis that it unfairly abuses the rights of the minority shareholders . . ."
Mr. McLaren refers the shareholders to Mr. Jarislowsky, "who shares in the concerns for the interests of minority shareholders in this offer."
Mr. Jarislowsky, who runs investment firm Jarislowsky Fraser Ltd., said in an interview yesterday that the Ravelston offer is "totally unfair" because it doesn't take into account money that Hollinger Inc.'s subsidiary Hollinger International could gain from its massive lawsuit against Lord Black.
There is also further uncertainty about the value of the company because no financial results for Hollinger Inc. have been reported for more than a year, and an investigation into related party transactions at the firm has not been made public, Mr. Jarislowsky said.
It would be a "travesty" if the OSC allowed a $7.25-a-share offer to go through under these circumstances, he said.
OSC spokeswoman Wendy Dey said the commission does not have enough information yet about the Ravelston offer -- which has not been formally presented to Hollinger Inc. shareholders -- to decide what action to take. "Obviously we're going to look at the public interest issues when we do have the right information."
The timing of any offer will be important to any possible regulatory action, OSC officials said. For instance, it will make a substantial difference if the formal offer comes after the company releases up-to-date financial reports.
There are about 7.7-million Hollinger Inc. common shares in the public float, and Ravelston needs a majority vote of those minority shares to proceed with a going-private transaction.
Mr. McLaren and his clients hold about 130,000 shares, while Mr. Jarislowsky holds about 32,000. Mr. Jarislowsky said his holding stems from the period when he was a director of Southam Inc., the company that once held Hollinger's Canadian newspaper assets. He was also a director of Hollinger International's Telegraph Group in Britain.
Gathering support from other minority shareholders could be a difficult task for Mr. McLaren, as there are hundreds of small shareholders across Canada and the United States, and few large blocks.
Two of Canada's main pension funds -- Ontario Teachers Pension Plan and Canada Pension Plan Investment Board -- hold blocks of shares. Teachers had about 128,000 shares as of December, 2003, while the CPP board had 56,000 shares as of Sept. 30. Spokesmen for both pension organizations would not say yesterday whether the funds would support or oppose the Ravelston buyback proposal.
At least one minority shareholder solidly backs Lord Black's offer. Toronto investment manager Lawrence & Co., which runs a hedge fund that is the largest Hollinger Inc. shareholder after Ravelston, has said the offer is reasonable and fair. Lawrence president Ravi Sood said he might take legal action if the OSC tried to block the offer.
Mr. McLaren said that in addition to contacting Hollinger Inc. shareholders, he will make his views known to GMP Securities Ltd., the brokerage firm that is advising the Hollinger Inc. board about the Ravelston offer.
© The Globe and Mail
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