Cash crisis looming for Hollinger

HOLLINGER Inc, the Canadian holding company for Conrad Black's newspaper empire, has admitted a looming cash crisis may force it to default on some of its debts and sell off assets.

Hollinger Inc lodged corporate documents with Canadian regulators yesterday that said: 'If the company does not receive support payments of between $14.7m (£8.5m) and $16.7m for the 12 months ending 30 September 2004, or about $4m a quarter, then it will be required to dispose of assets or seek financing.'

The first payment for the half year is due next March.

Hollinger Inc may also default on $120m of loan notes if it is forced to repay $16.6m it received as part of the disputed 'non-competition' payments made to Black and his associates, which are now under investigation by the Hollinger International board.

A total of $32m was paid by International to Black and several others without the board's authorisation, and may eventually have to be returned to the company.

The Hollinger documents reveal how the complex and fragile web of interconnections between Black's companies could undermine the entire group.

The Toronto-based firm has hit problems because it has not been receiving dividends and fees from Hollinger International, the publishing company in which it owns 30% of the equity but controls 73% of the votes. It said it expects the funding shortfall to continue.

This leaves Hollinger Inc dependent on the financial support of Ravelston Corp, a private holding company controlled by Black, which in turn owns most of Hollinger Inc's shares, to stave off its cash crisis.

Most of Ravelston's income comes from fees paid to it by Hollinger International under a management contract which expires on 1 June next year, following Black's resignation as chief executive of Hollinger International.

This, says the filing, 'adversely-impacts' on Ravelston's ability to make the support payments, throwing Hollinger Inc into crisis.

The company has also seen revenue decline. For the nine months to 30 September, Hollinger Inc made a profit of C$17m (£7.6m) compared with a restated loss of C$32.3m at the same time last year. Revenues declined to C$1.14bn from C$1.21bn.

Spectator sell-off touted

POTENTIAL buyers of the Telegraph Group are reportedly already touting the political weekly The Spectator around for sale.

City sources say Keith Harris, chairman of stockbroker Seymour Pierce, has asked Michael Spencer, chief executive of interdealer broker Icap, if he would like the right-wing journal - but was turned down.

Algy Cluff, chairman of the Spectator and the eponymous mining company, wants to see a management buy-out.

Analysts say the small but profitable magazine could fetch around £15m. Harris advised Richard Desmond on his takeover of Express Newspapers.

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