David and Frederick Barclay, who own London's Ritz hotel and the Scotsman newspaper, agreed to buy Conrad Black's majority stake in Hollinger Inc for 423.8 million Canadian dollars (US$326 million) to gain control of a unit that publishes the UK's Daily Telegraph.
The twin brothers would pay C$8.44 for each common share of Toronto-based Hollinger Inc, more than double the stock's closing price on Friday, and assume C$181.7 million of debt. That would give the Barclays control over Hollinger's 30 percent stake in Hollinger International, whose titles also include the Chicago Sun-Times and Jerusalem Post, and its rights to 73 percent of the unit's votes.
PHOTO: AP
The sale agreement, which Black has been seeking for at least two months, may spark a legal battle over Hollinger International and its US$2 billion in assets. The US Securities and Exchange Commission on Friday won a federal court order protecting a company investigation of Black's pay and insider dealings from a change of control, and Hollinger International has named Black and Hollinger Inc in a US$200 million lawsuit.
"The company and the board intend to review the offer for Hollinger Inc. and its implications for Hollinger International," Chicago-based Hollinger International said in a statement today.
The investigation, by a special committee of Hollinger International's board, uncovered US$32 million in unauthorized payments in November, prompting Black to step down as chief executive.
As part of his resignation, Black agreed not to pursue a transaction that could undermine Hollinger International's own efforts to find a buyer for all or part of the company.
Black previously agreed to return his US$7.2 million share of the unauthorized payments and his US$850,000 first installment is due today.
The Barclays, through Press Holdings International Ltd., said they have an agreement with Ravelston Corp. to acquire its 78 percent of Hollinger Inc. and plan to buy out minority shareholders later. They agreed to buy Ravelston's Series II Preference Shares of Hollinger Inc. for C$9.53 apiece, 49 percent more than Friday's close, and C$10 for its Series III shares, representing a 25 percent premium.
"The financial strength and direction that we can bring will allow the group to flourish," David Barclay said an e-mailed statement. In addition to the Scotsman, the Barclays own The Business, a business weekly based in London, and the Edinburgh Evening News.
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