TORONTO — Conrad Black is an ''ungovernable,'' ''lawless'' and ''manipulative'' person whose attempt to turn Hollinger Inc. into a private company is really a move to retake control of U.S. subsidiary Hollinger International Inc., a regulatory hearing was told yesterday.
Lawyers for Hollinger International and for some shareholders of Hollinger Inc. vilified Lord Black as they attempted to persuade a panel of the Ontario Securities Commission that they should be allowed to intervene in a hearing on the privatization to be held tomorrow and Thursday.
The commissioners have been asked to rule on whether a series of cease-trade orders against insiders of Hollinger Inc. and Hollinger International should be altered, so a shareholder vote on the privatization can take place on March 31.
Several shareholders asked for status to participate in the hearing, as did Hollinger International and the independent directors of Hollinger Inc. Late yesterday the commissioners ruled that the independent directors get full intervenor status, as do two common shareholder groups. Hollinger International and preferred shareholder Catalyst Fund General Partner I Inc. received limited rights to participate.
Hollinger International, which removed Lord Black as chairman and chief executive officer more than a year ago, is "the true target of the going-private transaction," the firm's lawyer Robert Staley told the panel of three OSC commissioners, in arguing for his client's participation.
If Lord Black gets full control of Hollinger Inc., he might try to amend the bylaws of Hollinger International, and replace its board, Mr. Staley said.
Lord Black also wants to "shut down those who would hold him accountable," Mr. Staley said.
Chris Paliare, a lawyer for a group of Hollinger Inc. common shareholders who oppose the vote, told the panel Lord Black "is ungovernable. He is lawless . . . He is someone who is manipulative and whose information cannot be trusted."
The shareholders represented by Mr. Paliare want the privatization vote stopped because they say there is not enough up-to-date financial information available for them to make a proper decision. Hollinger Inc. is behind in its financial filings, and a report from an inspector looking into related-party transactions is not completed.
Lord Black's lawyer Alan Mark accused the shareholder group and Hollinger International of trying to turn the OSC deliberations into a "sanction hearing."
It would be unfair for the OSC panel to pass judgment on Lord Black's "alleged misdeeds," when there are plenty of other lawsuits and regulatory hearings to deal with those allegations, he said.
It would also be a "travesty" to have masses of documents from various other court hearings introduced to the OSC panel, which is supposed to be dealing with the narrow issue of the cease trade orders, Mr. Mark said.
Mr. Mark also disputed the Hollinger International argument that Lord Black wants to regain control of that company. Lord Black already controls Hollinger Inc. through his 78-per-cent shareholding, he said, and there will be little difference when he holds 100 per cent, after privatization.
Stephen Halperin, a lawyer for the independent directors of Hollinger Inc., said the case is not about Lord Black, but rather about providing a way for minority shareholders to get out of a "dysfunctional" situation.
While the independent directors have had battles with Lord Black, they think the vote should go ahead because, for shareholders, "this may be their last chance to exit in a premium transaction."
But Lord Black's $7.60 per common share offering price is questionable, said David Moore, a lawyer for Catalyst.
Catalyst filed with the commissioners a letter from BMO Nesbitt Burns that questioned the work of GMP Securities Ltd., an investment adviser that calculated Hollinger Inc. common shares are worth between $7.21 and $7.57.
Mr. Moore said Catalyst was key in getting an Ontario court to appoint an inspector to look into transactions at Hollinger Inc. Catalyst, which holds about 80 per cent of Hollinger Inc.'s preferred shares, will cast its shares against the privatization if the vote takes place on March 31, Mr. Moore said. Consequently, even if Lord Black takes up all common shares, the preferreds will still be in the public domain.
© The Globe and Mail
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