Q. I can’t figure out what Conrad Black sold and what David and Frederick Barclay, two multimillionaire twins, bought.
A. Black’s financial empire is complicated. He owns a controlling stake in a Canadian company named Hollinger Inc. But the public owns shares in it too. Similarly, Hollinger Inc. owns a controlling stake in Hollinger International Inc., which is based in Chicago and is the actual owner of the Chicago Sun-Times and other newspapers. Other investors also own minority stakes in Hollinger International. Black agreed to sell his shares in the Canadian company.
Q. So these British twins are getting ownership of a Canadian company that doesn’t even own the Sun-Times?
A. The Canadian company controls the Chicago company, which owns the Sun-Times. It’s like this: The Canadian company owns only about 30 percent of the shares of Hollinger International, but it holds a class of “supervoting” shares that gave Black, and now the Barclay brothers, a controlling 73 percent voting stake.
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Q. So the brothers are buying control of a company that trades on the New York Stock Exchange by buying up a Canadian holding company that owns only 30 percent of its shares?
A. Yes.
Q. Is that legal?
A. Sure. Lots of companies have supervoting shares that keep minority owners in power, especially media companies such as Dow Jones & Co., publisher of the Wall Street Journal; McClatchy newspapers, publisher of the Star Tribune in Minneapolis; and Playboy Enterprises, publisher of Playboy magazine. Black’s version is just a bit more complicated.
And even though Hollinger International directors threw Black out as chief executive and chairman after claiming that he and other top execs had accepted improper payments, he’s still the owner of his shares. He believes he ought to be able to sell them if he likes.
Q. That’s simple.
A. Not really. Hollinger International directors have filed a lawsuit against Black and others, seeking the return of a couple hundred million dollars that the board claims rightfully belongs to the company. Black says the suit is groundless. But if Black sells his investment, as he plans, that might make it harder for Hollinger International to reclaim the money it wants.
Q. What happens to other holders of Hollinger Inc. stock?
A. The Barclays will make a “tender offer” to all Hollinger Inc. stockholders on the same terms that Black is getting.
Altogether, the buyout is worth about $326 million. It will take six weeks at least before it closes.
Q. I see where Hollinger Inc.’s stock nearly doubled Monday in trading on the Toronto Stock Exchange but still isn’t at the price agreed to in the sale between Black and the Barclays. What does that mean?
A. In the investing world, a wide “spread” between the offering price and the stock’s trading price means investors aren’t totally convinced that a deal will go through.
Q. Is that related to the fact that the Hollinger International board has been huffing and puffing about maybe trying to block the sale?
A. Probably.
Q. I thought Lazard, the investment banker, was supposed to find possible buyers for Hollinger International’s papers. What does Black’s sale do to that?
A. Lazard is proceeding with its effort. A breakup of Hollinger International’s assets still could happen.