Barclays withdraw Hollinger offer
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Black was ousted as Hollinger International CEO.
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LONDON, England (Reuters) -- British tycoons David and Frederick Barclay have withdrawn their offer to buy Conrad Black's Hollinger Inc., exacerbating the cash crunch at the firm, which missed a Monday debt payment.
Toronto-based Hollinger Inc.'s main asset is a controlling voting stake in Chicago-based Hollinger International, owner of newspapers including Britain's Daily Telegraph and the Chicago Sun-Times.
A U.S. court last week stopped Black from selling his majority stake in Hollinger Inc to the brothers, who own the Scotsman newspaper and London's Ritz Hotel.
The ruling made their withdrawal of a tender offer for remaining Hollinger Inc. shares a foregone conclusion. The Barclays also terminated their agreement to fund a buy-back of Hollinger Inc.'s debt.
The company missed a $7.4 million debt payment on Monday and said it was trying to find a way to make the payment within 30 days, after which it would be in default.
Hollinger International and Black, who was forced out as chairman and chief executive after the company accused him of receiving millions of dollars in unauthorized payments.
Hollinger International also cut off management fees to Black and other executives, which they had used to service Hollinger Inc.'s debt.
When the judge blocked the sale to the Barclays, he included a clause saying Hollinger International must offer short-term financing to Hollinger Inc. to help make the interest payment.
The judge, Leo Strine, also said Black, former Hollinger International officer David Radler, and a private company controlled by Black must "live up to their substantial obligations'' to Hollinger Inc.
Hollinger Inc.'s funding crisis takes place as investment bank Lazard is seeking buyers for Hollinger International or its newspapers, which is expected to attract a host of potential bidders including private equity groups and publishers in the United States and Britain.
The Barclays have not publicly ruled out placing a bid through Lazard.
Daily Express publisher Richard Desmond, who is seeking to buy the Telegraph newspapers, this week sold off pornography magazines including "Asian Babes'' and "Readers' Wives'' in an attempt to pre-empt potential concerns of British media regulators.
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Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
