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Last Updated: Wednesday, 18 February, 2004, 15:04 GMT
Q&A: What now for the Telegraph?
Lord Black
Lord Black has signed a deal with the Barclay brothers
US newspaper group Hollinger is going to court to prevent the sale of its titles - including the UK's Daily and Sunday Telegraphs - to the Barclay brothers.

The controversial deal was signed last month by former Hollinger boss Lord Black, who resigned late last year amid a row over irregular payments.

BBC News Online takes a closer look.


Isn't the sale of the Telegraph titles to the Barclays a done deal?

Not quite.

Lord Black in fact sold the Barclays a stake in Hollinger Inc., which in turn owns 30% of Hollinger International - the parent company of the Telegraph titles, as well as the Chicago Sun-Times and the Jerusalem Post.

The crucial point is that while Hollinger Inc. owns just 30% of Hollinger International, the company's complex structure means that it controls 70% of Hollinger International's voting rights.

Lord Black claims that as the controlling shareholder, he was perfectly entitled to sell to the Barclay brothers.

But the Hollinger board argues that the deal with the Barclays should nonetheless be declared invalid, as it went against the interests of other shareholders.

So who's going to win?

It's difficult to say.

The court will have to decide is whether a company's board has the right to challenge a controlling shareholder if it believes the shareholder is acting selfishly.

These are uncharted legal waters, and there are sure to be good arguments on either side.

Why is the Hollinger board so opposed to the Barclay deal?

Mainly because it is thought that Hollinger's newspaper assets would fetch a higher price if sold in an open auction.

The 260m reportedly paid by the Barclays to Lord Black implies a price of about $17.50 per Hollinger share.

There has been speculation that an open sale would generate a price "in the low twenties," according to Burt Denton of Providence Capital, which advises some Hollinger shareholders.

It is certainly true that there is no shortage of potential buyers.

The Daily Mail and General Trust, Daily Express owner Richard Desmond's Northern and Shell group, and several venture capital groups are all reported to have expressed an interest.

They will be watching the outcome of Wednesday's court case with close interest.

What happens next?

If the decision goes against Lord Black, the race to buy the Telegraph titles will be back on.

And even if he wins, his deal with the Barclays could yet come unstuck.

Hollinger is at the centre of an investigation by the US financial watchdog, the Securities and Exchange Commission (SEC), which is due to report in March.

The SEC may decide to block any takeover attempt by the Barclays.

But whatever the outcome, this is by no means the last legal confrontation between Lord Black and Hollinger.

In a separate case, Hollinger is suing Lord Black and his associates for more than $200m, accusing them of collecting unjustified management fees.

Not to be outdone, Lord Black has filed a $640m libel lawsuit against some Hollinger directors.

It alleges that they attempted to "destroy Black personally, professionally and financially, and to transform him from a respected owner of a successful media chain into a loathsome laughing stock".


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