| Conrad Black
London/New York, Nov. 17 (Reuters): Press baron Conrad Black is stepping down as chief executive of publisher Hollinger International after the discovery of $32 million in unauthorised payments to him and other top executives.
Part or all of Black’s publishing empire — which includes London’s Daily Telegraph, the Chicago Sun-Times and the Jerusalem Post — could be put up for sale, with Lazard LLC hired to evaluate strategic alternatives, the company said today.
Black, who renounced his Canadian citizenship to join the British House of Lords, has grappled with investors angry about his company’s Byzantine ownership structure and business deals with companies controlled by its own executives.
He has fiercely defended his practices and denied reports that the business is short of funds. However, several recent discussions with private equity groups over a possible cash investment have come to naught.
Also resigning from Hollinger are president and chief operating officer David Radler and corporate counsel Mark Kipnis. The company said the employment of J.A. Boultbee, an executive vice-president, had been terminated after the firm failed to reach agreement with him on several matters.
The company was not available for further comment.
Black controls more than three-quarters of Toronto-based Hollinger Inc through his privately held Ravelston Corp holding company. Hollinger Inc., in turn, owns only 30 per cent of the equity of Hollinger International, but controls the media company through special class B voting shares.
Hollinger International pays large management fees to Ravelston which have been at the centre of criticism by shareholders. Ravelston uses some of those fees to maintain payments on Hollinger Inc’s large debt.
Hollinger said today the management fees will be terminated as of June 2004, which would leave the Hollinger Inc debt payments in doubt. Black could be forced to sell one of his newspapers or the company’s 50 per cent stake in West Ferry Printers, Europe’s largest news-printing operation. The company described the unauthorised payments to Black and others as “non-competition” payments in connection with sales of US community newspaper properties.”
About $7.2 million in unauthorised or unaccounted-for payments went to both Black and Radler in 2000 and 2001. Black, Radler and another executive have agreed to repay Hollinger the full amount of the unauthorised payments they received, together with interest.