Hollinger fights Black's sell-off

Lord Black's deal with the Barclay brothers is now in doubt.

Hollinger International, owner of the UK's Telegraph newspaper group, has decided to fight Lord Black's agreement to sell out to the Barclay brothers.

It said directors had approved a shareholder rights plan, or "poison pill", designed to stop the deal.

The company also filed a suit in a US court seeking to block the sale.

Hollinger was committed to representing all its shareholders "not just one with a minority stake that has controlling votes", the company said.

Blocking move

The Hollinger International board is opposed to Lord Black's decision to hand control of his 30% stake and 73% voting rights in Hollinger International to the billionaire Barclay twins.

Hollinger International publishes the UK's Telegraph titles, which include Britain's top-selling broadsheet, as well as the Chicago Sun-Times and the Jerusalem Post.

Under a complex ownership structure, it is controlled by Hollinger Inc, which is itself controlled by Lord Black's holding company Ravelston.

It is Ravelston's stake in Hollinger Inc that Lord Black has agreed to sell to the Barclay brothers.

Hollinger International said a committee formed of its independent directors and interim chief executive Gordon Paris had filed the lawsuit in Delaware Chancery Court.

They did so because Lord Black was attempting to sell his controlling stake "at a time when both Hollinger Inc and Lord Black's liabilities to the company are under investigation and in dispute", it said.

Punitive pill

The committee has devised a "poison pill" which would give Hollinger International shareholders the right to buy its shares at a 50% mark-down if anyone acquired 20% or more of the firm's shares.

Shareholders would also get the right to snap up the new owner's shares at the same 50% discount.

The poison pill also slashes the Barclay brothers' voting power should they succeed in buying Hollinger International, denying them control of the firm.

Instead of multi-vote B shares they would get single vote A shares, giving them 30% of the voting rights instead of 73%.

The committee has also asked the court to block a legal move of Lord Black's disbanding it.

Regulator investigates

Lord Black sold his controlling stake after being ousted as Hollinger chairman amid allegations of financial irregularities, which he denies.

The action by Hollinger's Corporate Review Committee is not the only lawsuit flying around Hollinger to prevent Lord Black selling off his stake.

The US Securities and Exchange Commission has also filed a suit while it investigates the firm's financial dealings.

Hollinger International is also thought to be looking for alternative buyers for the newspaper titles through Lazards, the investment bankers, as it believes they could be worth more than £260m.