Cayman Free Press shareholder sells Telegraph Group for $1.3 billion

Tuesday, June 29, 2004

The media group Hollinger International, which owns a 40 percent interest in Cayman Free Press, said last week it would sell the Telegraph Group, publisher of Britain’s Daily and Sunday Telegraph newspapers, to the Barclay brothers’ Press Acquisitions Limited for some $1.3 billion.

The transaction is scheduled to close on 30 July, Hollinger said in a statement. The purchase price will be paid primarily in British pounds.

“We believe that the sale of the Telegraph Group at this time presents the best opportunity for us to maximize value for our shareholders,” said Gordon Paris, Hollinger interim chairman and chief executive officer.

Hollinger International’s newspapers were put up for sale following an increasingly bitter dispute between the company and its ousted chief executive, Conrad Black, who renounced his Canadian citizenship in 2001 to become a member of Britain’s House of Lords.

The new owners of the Telegraph Group would also seize control of the British weekly Spectator.

Hollinger International also owns the Chicago Sun-Times and the Jerusalem Post.

Jeremy Deedes, deputy chairman and chief executive of the Telegraph Group, welcomed the transaction as a step toward stability.

“I am confident that we have ended up not just in safe hands, but with new owners who have a great track record for nurturing, developing and investing in their acquisitions,” Deedes said in a statement.

Aidan Barclay, chairman of Press Acquisitions Limited, said he was delighted to have reached agreement that has ended the uncertainty surrounding the Telegraph Group’s future.

“We are looking forward to working with the management in running the business,” he said.

But Hollinger International is engaged in open warfare with its Canadian-based parent company controlled by Black, and the flamboyant British lord has not yet said his last word.

Meanwhile, Black’s Canadian holding company Hollinger Inc said Hollinger International needed approval from its shareholders before selling the Telegraph Group to the Barclay brothers.

“A sale of the Telegraph and Hollinger International’s other UK businesses involves the bulk of the company’s assets and therefore clearly requires approval of the company’s shareholders,” said a statement from the holding company, which owns 72.3 percent of the voting shares and 29.7 percent of the capital in Hollinger International.

Black’s holding company said the sale price of some $1.3 billion marked “essentially the same valuation that the Barclays put on these assets back in January,” when Black had tried to sell the Telegraph Group to the British brothers.

“In January, when Hollinger International rebuffed Sir Frederick Barclay’s interest in buying all of the stock of the company at US$18 a share, Hollinger International and its financial advisers assumed an obligation to deliver greater value to shareholders,” it said.

“Their faltering strategic process has failed to do so.”

The billionaire Barclay brothers are expected to take a back seat in the editorial coverage provided by the best-selling British broadsheet.

The Barclay brothers, in their late 60s, are notoriously secretive. Even their exact date of birth is unknown.

But while Canadian-born Black’s forceful personality has dominated his newspapers, the Barclays are known for not imposing their opinions on editors.

In January, when news of the brothers’ interest in buying the Telegraph titles emerged, David Barclay issued a statement stressing that the twins had absolutely no plans to alter the paper’s long-held stance as the voice of the conservative middle classes.

“The Daily Telegraph has a long established editorial position which we respect and with which we do not intend to interfere,” he said then.

Former editors on the twins’ papers agreed that the pair invariably tended to take a hands-off approach to the running of their publications.

“I found them to be long-term players, people who believe in buying an asset, investing in it and giving it time,” said Jeff Randall, a former editor of The Business who now works for the BBC.

“While I was one of their editors, they never interfered with the editorial policy. They were very engaged. They were very enthusiastic. But as far as asking me to write anything or indeed not writing anything, they played it absolutely straight,” he told BBC radio.

The response to the deal from the deputy chairman and chief executive of the Telegraph Group, Jeremy Deedes, was also positive.

Hollinger International also announced last week that it had agreed to sell its 50 percent interest in the prestigious Chicago Trump Tower joint venture to its partners, the Trump Organisation, for $73 million.

The price reflects the value of the site, and the money already invested in the venture by Hollinger International.

The troubled media group will receive $4 million immediately and the balance when the deal closes in September or October, when the staff of Hollinger’s Sun-Times newspaper vacate the current newspaper headquarters and move to new offices outside downtown.

The newspaper building, which sits on prime real estate by the Chicago River, will then be demolished to make way for the Trump International Hotel and Tower, a 90-story, 240,000 square metre (2.6 million square-foot) development encompassing luxury apartments, a hotel and some retail units.

Hollinger International said that the deal would result in a pre-tax gain of approximately $37.5 million.

Trump Organisation is wholly owned by the New York real estate mogul, Donald Trump.

The company embarked on a sell-off of its assets earlier this year after ousting former chairman and chief executive officer Conrad Black and some of his former top aides when it emerged that they pocketed millions of dollars in unauthorised payments.

Back...