Amendment to General Statement of Beneficial Ownership — Schedule 13D
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 13D/A Amendment to General Statement of Beneficial 20 62K
Ownership
2: EX-5 Opinion re: Legality 4 14K
3: EX-6 Opinion re: Discount on Capital Shares 4 14K
4: EX-12 Statement re: Computation of Ratios 10 31K
5: EX-13 Annual or Quarterly Report to Security Holders 10 31K
SC 13D/A — Amendment to General Statement of Beneficial Ownership
Document Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)
Hollinger International Inc.
(Name of Issuer)
Class A Common Stock, par value $.01 per share
(Title of Class of Securities)
435569 10 8
--------------------------------------
(CUSIP Number)
Charles G. Cowan, Q.C.
Vice-President and Secretary
Hollinger Inc.
10 Toronto Street
Toronto, Ontario
Canada M5C 2B7
(416) 363-8721
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
August 7, 1996
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box [ ] .
Check the following box if a fee is being paid with this
statement [ ]. (A fee is not required only if the filing person:
(1) has a previous statement on file reporting beneficial
ownership of more than five percent of the class of securities
described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7).
NOTE: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter the disclosures provided
in a prior cover page.
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D/A
CUSIP No. 435569 10 8
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON
Hollinger Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A
GROUP*
a [ ]
b [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
7 SOLE VOTING POWER
NUMBER OF 54,391,797
SHARES
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY
9 SOLE DISPOSITIVE POWER
EACH
54,391,797
REPORTING
10 SHARED DISPOSITIVE POWER
PERSON
0
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
54,391,797
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [X]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW
(11)
60.2%
14 TYPE OF REPORTING PERSON*
HC (Hollinger Inc. is a parent holding
company. See Item 5.)
SCHEDULE 13D/A
CUSIP No. 435569 10 8
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON
The Ravelston Corporation Limited
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A
GROUP*
a [ ]
b [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
7 SOLE VOTING POWER
NUMBER OF 54,391,797
SHARES
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY
9 SOLE DISPOSITIVE POWER
EACH
54,391,797
REPORTING
10 SHARED DISPOSITIVE POWER
PERSON
0
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
54,391,797
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [X]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW
(11)
60.2%
14 TYPE OF REPORTING PERSON*
HC (The Ravelston Corporation Limited is a
parent holding company. See Item 4.)
SCHEDULE 13D/A
CUSIP No. 435569 10 8
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON
Conrad M. Black
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
a [ ]
b [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
7 SOLE VOTING POWER
54,546,397
NUMBER OF
8 SHARED VOTING POWER
SHARES
0
BENEFICIALLY
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 54,546,397
REPORTING
10 SHARED DISPOSITIVE POWER
PERSON
0
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
54,546,397
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW
(11)
60.3%
14 TYPE OF REPORTING PERSON*
IN
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 13D/A
(Amendment No. 4)
This Schedule 13D/A, Amendment No. 4 (the "Amendment"),
relates to the Class A Common Stock, par value $.01 per share
(CUSIP Number: 435569 10 8) ("Class A Common Stock"), of
Hollinger International Inc., a Delaware corporation (the
"Issuer"). On August 7, 1996 the Issuer completed a public
offering of 10,000,000 shares of its Class A Common Stock. The
underwriters' over-allotment option was exercised in full,
resulting in the issuance of an additional 1,500,000 shares of
Class A Common Stock on August 14, 1996. As a result, there are
69,565,754 shares of Class A Common Stock outstanding. This
Amendment restates in their entirety Items 4, 5, 6 and 7 of the
Schedule 13D of the filing persons dated October 20, 1995, as
amended by Amendment No. 1 thereto dated February 7, 1996,
Amendment No. 2 thereto dated March 7, 1996 and Amendment No. 3
thereto dated June 17, 1996 (collectively, the "Amended Schedule
13D"). No other Items of the Amended Schedule 13D are being
amended at this time. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the
Amended Schedule 13D.
Item 4. Purpose of Transaction.
Hollinger Inc. beneficially owns shares of both classes
of the Issuer's Common Stock representing approximately 83.6% of
the combined voting power of such classes (without giving effect
to the future issuance of Class A Common Stock in connection with
the Issuer's PRIDES (as defined below) or upon conversion of the
Series A Preferred Shares). As a result, Hollinger Inc. is in a
position to control the outcome of substantially all actions of
the Issuer requiring stockholder approval, including the election
of the entire Board of Directors of the Issuer. Subject to the
fiduciary responsibilities of the directors of the Issuer to all
stockholders and the terms of certain agreements defining the
ongoing relationships between Hollinger Inc. and the Issuer,
Hollinger Inc., through its ability to control the outcome of any
election of directors, is able to direct management policy,
strategic direction and financial decisions of the Issuer.
Ravelston effectively controls Hollinger Inc. through
its direct or indirect control or direction over 46.7% of the
outstanding common shares of Hollinger Inc. This percentage
includes Hollinger Inc. common shares held by the Ravelston Trust
and the following direct and indirect subsidiaries of Ravelston:
Argus Corporation Limited, 176264 Canada Limited, 2753430 Canada
Limited, 176268 Canada Limited and 176295 Canada Limited. The
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Ravelston Trust was formed pursuant to a Trust Agreement dated as
of October 31, 1991 among Ravelston, the Canadian Imperial Bank
of Commerce ("CIBC") and Mr. Black, J. A. Boultbee and R.
Geoffrey Browne, as trustees (the "Trustees"). The Trustees have
granted Ravelston an irrevocable proxy to vote all of the
Hollinger Inc. common shares held by the Ravelston Trust as long
as the Ravelston Trust holds such common shares. As the holder
of 100 units of the Ravelston Trust, Ravelston has the right to
direct the disposition of 100 of the Hollinger Inc. common shares
held by the Ravelston Trust. As the holder of the remaining
5,531,915 units of the Ravelston Trust, CIBC has the right to
direct the disposition of 5,531,915 of the Hollinger Inc. common
shares held by the Ravelston Trust. Conrad Black Capital
Corporation holds 65.3% of the common shares of Ravelston. Mr.
Black is the sole shareholder and Chairman of Conrad Black
Capital Corporation.
As a result of the performance of their duties as
directors and officers of the Issuer, certain directors and
officers of Hollinger Inc. and Ravelston, including Mr. Black,
expect to have continually under consideration various plans or
proposals which may relate to or might result in one or more of
the matters described in paragraphs (a) through (j), inclusive,
of Item 4 of Schedule 13D. Any such plans or proposals would,
however, be subject to consideration and approval by the Board of
Directors of the Issuer.
On May 24, 1996, a wholly owned Canadian subsidiary of
Hollinger Inc. purchased from a subsidiary of Power Corporation
of Canada ("Power") the 16,349,743 common shares (the "Power
Shares") of Southam Inc. ("Southam") held by Power, representing
approximately 21.5% of Southam's outstanding common shares, at a
price of Cdn.$18 per share. This purchase increases the Issuer's
and Hollinger Inc.'s combined holdings in Southam to
approximately 41% of Southam's outstanding common shares,
including 19.5% which is currently held indirectly by the Issuer.
Hollinger Inc. intends to further increase its holdings in
Southam through permissible transactions to or above 50% of
Southam's outstanding common shares and may also, subject to
market and other conditions, seek to acquire all Southam common
shares not owned or controlled by Hollinger Inc. or the Issuer
through an offer of the Issuer's Class A Common Stock or
securities convertible into or exchangeable for such stock.
Hollinger Inc. and the Issuer have agreed to combine their
interests in Southam so that the Issuer will hold indirectly non-
voting common shares and voting preference shares representing
one half of the voting power and all of the common equity of
their combined interests. Hollinger Inc. will hold voting
preference shares representing one half of the voting power and
with a nominal amount of paid-up capital which will not be
entitled to any payments, including dividends, other than a
liquidation preference on the nominal amount. Hollinger Inc. and
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the Issuer expect this transaction to occur promptly following
the July 22, 1996 Southam shareholders' meeting. In addition,
the Issuer intends to seek a ruling from Revenue Canada that
would permit the Issuer to hold indirectly 100% of the common
equity interests in Southam held by the Issuer and Hollinger Inc.
without affecting Southam's status as a Canadian publisher of
newspapers and periodicals. If such ruling is received and
approval is obtained under the Investment Act Canada, the full
ownership of the equity interests in Southam held by Hollinger
Inc. and the Issuer would be transferred to the Issuer. If the
Issuer obtains control of Southam (through share ownership or
otherwise), Southam's results of operation will be consolidated
for accounting purposes.
The purchase of the Power Shares was financed by the
Issuer through a short-term bank credit facility (the "Southam
Facility") in the amount of Cdn.$300 million between the Issuer
and CIBC, which assigned a portion of its interest in the loan to
The Bank of Nova Scotia. Approximately Cdn.$75 million of the
Southam Facility was repaid with net proceeds of the August 1996
Offerings (as defined below). The Southam Facility is guaranteed
by Hollinger Inc. and matures on November 25, 1996. The funds
under the Southam Facility were advanced by the Issuer to a
Canadian subsidiary of Hollinger Inc. as an intercompany loan.
The Hollinger Inc. guarantee of the Southam Facility is secured
by a pledge of the Power Shares, 7,539,028 shares of Class A
Common Stock of the Issuer held by Canada Limited and 14,990,000
shares of the Issuer's Class B Common Stock held by Ontario
Limited. Existing registration rights agreements and security
agreements entered into by Hollinger Inc. and its Canadian
lenders have been amended to reflect the pledges under the
Southam Facility. See Item 6.
On August 7, 1996 the Issuer completed a public
offering of 10,000,000 shares of its Class A Common Stock. The
underwriters' over-allotment option was exercised in full,
resulting in the issuance of an additional 1,500,000 shares of
Class A Common Stock on August 14, 1996. Concurrently, the
issuer completed a public offering of 20,700,000 Preferred
Redeemable Increased Dividend Equity Securities ("PRIDES")
(together with the August 1996 Class A Common Stock offering, the
"August 1996 Offerings"). Proceeds of the August 1996 Offerings
were used to, among other things, finance a portion of the
acquisition of the minority shares of The Telegraph plc by the
Issuer.
In addition, the Issuer has stated that it may, through
a subsidiary or an affiliate, issue high yield debt securities,
or other debt or equity securities, possibly including a security
which would allow the Issuer to monetize its interest in John
Fairfax Holdings Limited; however, no decision has been made as
to whether or not the Issuer will proceed, when to proceed or the
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specific type of instrument that it would use. The Issuer
anticipates that it would apply the net proceeds from any such
offering for one or more of the following: (i) the repayment of
bank indebtedness, (ii) the redemption of the DTH and the FDTH
preference shares, and (iii) other corporate purposes, including
capital expenditures and acquisitions.
In the first quarter of 1996 the Issuer increased its
quarterly dividend to $0.10 per share of Common Stock. As an
international holding company, the Issuer's ability to declare
and pay dividends in the future with respect to its Common Stock
will be dependent, among other factors, upon its results of
operations, financial condition and cash requirements, the
ability of its United States and foreign subsidiaries
(principally The Telegraph plc) to pay dividends and make other
payments to the Issuer under applicable law and subject to
restrictions contained in existing and future loan agreements,
the prior payment of dividends to holders of PRIDES and Series A
Preferred Stock, the preference share terms and other financing
obligations to third parties relating to such United States or
foreign subsidiaries of the Issuer, as well as foreign and United
States tax liabilities with respect to dividends and other
payments from those entities.
As stockholders, the filing persons intend to
periodically review and evaluate the market for the Issuer's
Common Stock, the Issuer's business, prospects and financial
condition, general economic conditions and other opportunities
available to the filing persons. On the basis of such periodic
reviews and evaluations, the filing persons may, subject to
certain restrictions imposed by the Share Exchange Agreement and
the Lock-up Agreements as described in Item 6 hereof, determine
to increase or decrease their investment in the Common Stock
through purchases, sales, gifts, or other means of acquisition or
disposition. Among other things, Hollinger Inc. may sell a
portion of the Class A Shares in a secondary offering or
otherwise. The filing persons do not currently anticipate that
any sales, if made, would reduce their beneficial ownership to
less than 50% of the combined voting power of the Issuer's Class
A and Class B Common Stock.
Item 5. Interest in Securities of the Issuer.
Hollinger Inc. and Ravelston
(a) Amount Beneficially Owned: 54,391,797 shares of Class
A Common Stock; 60.2% (calculated pursuant to Rule 13d-
3). Comprised of the following: (i) 10,121,726 shares
of Class A Common Stock held directly by Hollinger
Inc.; (ii) 7,539,028 shares of Class A Common Stock
held by 3184081 Canada Limited ("Canada Limited"), a
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wholly owned subsidiary of Hollinger Inc.; (iii)
15,950,000 shares of Class A Common Stock held by
1159670 Ontario Limited ("Ontario Limited"), an
indirect wholly owned subsidiary of Hollinger Inc.;
(iv) 14,990,000 shares of Class A Common Stock that may
be acquired at any time by the conversion of 14,990,000
shares of Class B Common Stock held by Ontario Limited;
and (v) at an initial conversion price of the Canadian
dollar equivalent of $14.00 per share, 5,791,043 shares
of Class A Common Stock that may be acquired at any
time by the conversion of 739,500 shares of Series A
Preferred Stock held directly by Hollinger Inc. (taking
each share of Series A Preferred Stock at Cdn.$146.625
and assuming an exchange rate of $1.00 per Cdn.$1.3374,
as in effect on October 13, 1995, the date on which
such shares were acquired). The number of shares of
Class A Common Stock into which the Series A Preferred
Shares may be converted will fluctuate from time to
time based on changes in the conversion rate and/or
exchange rate. Through its relationship with Hollinger
Inc. described in Item 4 hereof, Ravelston may be
deemed to beneficially own all of the securities of the
Issuer that are held by Hollinger Inc. and its
subsidiaries.
(b) Voting Power; Dispositive Power: Hollinger Inc. has
the sole power to vote or to direct the vote of and to
dispose of or direct the disposition of 54,391,797
shares of Class A Common Stock. Through its
relationship with Hollinger Inc. described in Item 4
hereof, Ravelston may also be deemed to have the sole
power to vote or to direct the vote of these shares.
(c) Not applicable.
(d) Right to Receive Dividends or Proceeds: Canada Limited
and Ontario Limited have the right to receive the
dividends from or the proceeds from the sale of the
securities which they hold. The shares of Class A
Common Stock held by Canada Limited constitute 10.8% of
the outstanding shares of Class A Common Stock. The
shares of Class A and Class B Common Stock held by
Ontario Limited constitute 36.6% of the outstanding
shares of Class A and Class B Common Stock.
(e) Not applicable.
The amount and percentage of Class A Common Stock
beneficially owned by Hollinger Inc. and Ravelston exclude
154,600 shares of Class A Common Stock beneficially owned by Mr.
Black. Pursuant to Rule 13d-4, Hollinger Inc. and Ravelston
hereby expressly disclaim beneficial ownership of such shares.
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Directors and Executive Officers of Hollinger Inc. and
Ravelston (Other Than Mr. Black):
Except as described below, the directors and executive
officers of Hollinger Inc. and Ravelston (other than Mr. Black)
do not beneficially own any shares of Class A Common Stock.
Barbara Amiel Black, Mr. Black's wife, disclaims beneficial
ownership of any shares of Class A Common Stock beneficially
owned by Mr. Black.
Number of Shares of
Name Class A Common Stock
Beneficially Owned*
J. A. Boultbee 6,000
Dixon S. Chant 17,500
Charles G. Cowan, Q.C. 6,000
F. David Radler 29,600
* Includes shares subject to presently exercisable
options or options exercisable within 60 days of August
7, 1996 under the Issuer's 1994 Stock Option Plan as
follows: Mr. Boultbee, 6,000 shares; Mr. Chant, 10,000
shares; Mr. Cowan, 6,000 shares; and Mr. Radler, 20,000
shares.
Mr. Black
(a) Amount Beneficially Owned: 54,546,397 shares of Class
A Common Stock; 60.3% of class (calculated pursuant to
Rule 13d-3). Comprised of the following: (i)
54,391,797 shares of Class A Common Stock beneficially
owned by Hollinger Inc. and Ravelston; (ii) 9,600
shares of Class A Common Stock held by Conrad Black
Capital Corporation; and (iii) 145,000 shares of Class
A Common Stock that may be acquired by Mr. Black upon
the exercise of all outstanding options held by him,
whether or not presently exercisable or exercisable
within 60 days of August 7, 1996.
(b) Voting Power; Dispositive Power: Through his
relationships with Hollinger Inc., Ravelston and Conrad
Black Capital Corporation described in Item 4 hereof,
and through his personal holdings, Mr. Black may be
deemed to have the sole power to vote or to direct the
vote of and to dispose of or direct the disposition of
54,546,397 shares of Class A Common Stock.
(c) Transactions During Past 60 Days: On August 1, 1996
Mr. Black was granted options to acquire 65,000 shares
of Class A Common Stock under the Issuer's 1994 Stock
Option Plan.
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(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer.
The Issuer's Restated Certificate of Incorporation, as
amended, provides that holders of Class B Common Stock are
entitled to ten votes per share and holders of Class A Common
Stock are entitled to one vote per share. The holders of Class A
Common Stock and Class B Common Stock vote together as a single
class on all matters on which stockholders may vote, except when
class voting is required by applicable law or on a vote to issue
or increase the authorized number of shares of Class B Common
Stock. Dividends must be paid on both the Class A Common Stock
and the Class B Common Stock at any time dividends are paid on
either.
Each share of Class B Common Stock is convertible at
any time at the option of the holder into one share of Class A
Common Stock and is transferable by Hollinger Inc. to a
subsidiary or an affiliate. In addition, each share of Class B
Common Stock is automatically convertible into a share of Class A
Common Stock at the time it is sold, transferred or otherwise
disposed of by Hollinger Inc. or a subsequent permitted
transferee to any third party (other than a subsidiary or an
affiliate of Hollinger Inc. or such subsequent permitted
transferee) unless such purchaser or transferee offers to
purchase all shares of Class A Common Stock from the holders
thereof for an amount per share equal to the amount per share
received by the holder of the Class B Common Stock (a "Permitted
Transaction").
Notwithstanding the foregoing paragraph, any holder of
Class B Common Stock may pledge his or its shares of Class B
Common Stock to a pledgee pursuant to a bona fide pledge of such
shares as collateral security for indebtedness due to the
pledgee, provided that such shares shall not be transferred to or
registered in the name of the pledgee and shall remain subject to
the transfer restrictions described in the foregoing paragraph.
In the event that shares of Class B Common Stock are so pledged,
the pledged shares shall not be converted automatically into
Class A Common Stock. However, if any such pledged shares become
subject to any foreclosure, realization or other similar action
of the pledgee, they shall be converted automatically into shares
of Class A Common Stock unless they are sold in a Permitted
Transaction.
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The Issuer's Restated Certificate of Incorporation, as
amended, also provides that no sale, transfer or other
disposition of the Series A Preferred Shares shall be valid
unless made to a subsidiary or affiliate of Hollinger Inc. or
unless the Issuer, by resolution adopted by its Board of
Directors, shall first have consented to the proposed transfer
and approved the proposed transferee (the "Series A Transfer
Restriction"). Notwithstanding the foregoing sentence, any
holder of Series A Preferred Shares may pledge such shares to a
pledgee pursuant to a bona fide pledge of such shares as
collateral security for indebtedness or other obligations due to
the pledgee, provided that such shares shall remain subject to,
and upon foreclosure, realization or other similar action by the
pledgee, shall be transferred only in accordance with, the Series
A Transfer Restriction.
Pursuant to the terms of the Hypothecation of Specific
Securities dated October 13, 1995 by Hollinger Inc. in favor of
CIBC, a copy of which is attached hereto as Exhibit 3, Hollinger
Inc. has pledged the Class A Shares, the Class B Shares and the
Series A Preferred Shares to CIBC as collateral security for the
obligations of Hollinger Inc. and certain affiliated companies
under a Cdn.$117,000,000 demand operating facility and a
Cdn.$75,000,000 364-day revolving debt facility (together, the
"CIBC Facilities"). The CIBC Facilities require compliance by
Hollinger Inc. with certain financial and other covenants and are
subject to standard default and other provisions.
On February 29, 1996 Hollinger Inc. transferred
15,950,000 Class A Shares and the Class B Shares, subject to the
pledge to secure the CIBC Facilities, to Ontario Limited.
Pursuant to the terms of a Securities Pledge Agreement dated
February 29, 1996 (the "February Securities Pledge Agreement"), a
copy of which is attached hereto as Exhibit 7, Ontario Limited
has pledged the 15,950,000 Class A Shares held by it as
collateral security for its obligations under a Cdn.$90,000,000
Credit Agreement dated February 29, 1996 (the "Credit Agreement")
among Ontario Limited, Hollinger Inc., CIBC, as agent for the
Lenders, and CIBC, The Toronto-Dominion Bank and The Bank of Nova
Scotia (collectively, the "Lenders"). The obligations of Ontario
Limited under the Credit Agreement are guaranteed by Hollinger
Inc. and certain of its Canadian subsidiaries. The Credit
Agreement requires compliance by Hollinger and Ontario Limited
with certain financial and other covenants and is subject to
standard default and other provisions.
On May 24, 1996 in connection with the guarantee (the
"Guarantee") by Hollinger Inc., Canada Limited and Ontario
Limited of the obligations of the Issuer under the Southam
Facility, Ontario Limited and Canada Limited entered into
securities pledge agreements with CIBC, copies of which are
attached hereto as Exhibits 9 and 10. On July 17, 1996
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supplemental securities pledge agreements, copies of which are
attached hereto as Exhibits 12 and 13, were entered into to
reflect the syndication of the Southam Facility. Pursuant to
these agreements, the 7,539,028 shares of Class A Common Stock
held by Canada Limited and the 14,990,000 shares of Class B
Common Stock held by Ontario Limited are pledged as security for
the guarantee. The Southam Facility contains covenants customary
in such transactions and is subject to standard default and other
provisions.
Certain registration rights agreements, attached hereto
as Exhibits 4, 8 and 11, were entered into in connection with the
above-described pledges. These agreements provide for
registration (either within a certain time period of execution of
the registration rights agreement or upon foreclosure) under the
Securities Act of 1933, as amended, of the pledged shares of
Class A Common Stock and the shares of Class A Common Stock into
which other pledged securities are convertible.
Under the Share Exchange Agreement, Hollinger Inc. and
the Issuer have agreed that if the Issuer proposes to effect a
public offering of its equity or equity-linked securities for
cash, or to issue equity-linked securities in any acquisition by
the Issuer of the stock or assets of an unrelated corporation or
entity, at any time during the 24 months following the closing
date, the Issuer's efforts to raise capital through such offering
shall have priority over any proposal by Hollinger Inc. to effect
a public offering or sale of the Issuer's equity securities by
Hollinger Inc., unless a majority of the disinterested members of
an Independent Committee of the Issuer's Board of Directors shall
otherwise agree. For these purposes, an "Independent Committee"
means a committee of the Issuer's Board the majority of the
members of which are not employees or directors of Hollinger Inc.
or employees of the Issuer, or another committee of the Issuer's
Board whose membership satisfies any more restrictive
requirements of independence of any securities exchange or market
in which the Issuer's equity securities are traded or listed. If
during such period Hollinger Inc. proposes to sell or otherwise
dispose of any shares of Series A Preferred Stock (other than
certain transfers to Hollinger Inc. subsidiaries or affiliates
and pledges) or to offer or sell publicly any shares of Class A
Common Stock held by it or its affiliates, it shall first consult
with the Independent Committee so as not to interfere with any
planned capital market activities of the Issuer to be undertaken
within this period.
The Share Exchange Agreement also provides that, until
the second anniversary of the closing date, Hollinger Inc. shall
not, without the prior approval of the Independent Committee,
purchase outstanding shares of Class A Common Stock in the market
from time to time except in conformity with applicable rules and
regulations of the Securities and Exchange Commission or propose
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or undertake (or enter into an agreement or commitment to propose
or undertake) any transaction or series of transactions that
would constitute a Rule 13e-3 transaction (as such term is
defined in Rule 13e-3(a)(3) promulgated under the Securities
Exchange Act of 1934, as amended) with respect to the Issuer (a
"Going Private Transaction") unless Hollinger Inc., as a
condition to the consummation of such Going Private Transaction,
provides that a majority of the disinterested members of the
Independent Committee shall have (i) approved the terms and
conditions of the Going Private Transaction and shall have
recommended that the Issuer's stockholders vote in favor or
accept the terms thereof and (ii) received from its financial
advisor a written fairness opinion for inclusion in the proxy or
information statement (or other similar disclosure documents) to
be delivered to stockholders of the Issuer in connection with the
Going Private Transaction.
As a preliminary step to the Reorganization described
in Item 3 hereof, the HTH Shares (as defined below) were acquired
by FDTH. The HTH Shares are currently pledged by Hollinger Inc.
in connection with Cdn.$125 million of debentures issued by
Hollinger Inc. which mature on November 1, 1998. Pursuant to the
Share Exchange Agreement, Hollinger Inc. has agreed that its
redemption rights as a holder of the Series A Preferred Shares
(and the redemption rights of any subsequent transferee) are
conditional upon its delivery to FDTH of clear title to the HTH
Shares or common shares of Southam Inc., free of liens, pledges,
charges and encumbrances, subject to certain exceptions. For
these purposes, "HTH Shares" means FDTH's one-half ownership
interest in Hollinger-Telegraph Holdings Inc., a joint venture
company through which the Issuer and The Telegraph plc own
14,290,000 Southam common shares (18.9%). With respect to the
Series A Preferred Shares, the Share Exchange Agreement also
provides that so long as any of the Series A Preferred Shares are
held by Hollinger Inc. or any of its affiliates, the Issuer will
not with respect to such shares take any action to effect or
approve any reduction in the conversion price, redeem such shares
or amend or modify the terms of such shares, unless such action
has been approved by a majority of the disinterested members of
the Independent Committee.
In connection with the August 1996 Offerings, Hollinger
Inc., the Issuer and certain of the directors and officers of the
Issuer, including Mr. Black, entered into contractual lock-up
agreements (the Lock-Up Agreements") providing that they will not
sell, contract to sell or grant any option or warrant to purchase
or otherwise dispose of any shares of Class A Common Stock or
PRIDES or any securities convertible into or exercisable or
exchangeable for Class A Common Stock or PRIDES for a period of
90 days after August 1, 1996, without the prior written consent
of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), other than the shares of Common Stock and PRIDES that
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were sold by the Issuer in the August 1996 Offerings and that are
issuable in connection with the PRIDES, the shares under a shelf
registration statement relating to the shares of Class A Common
Stock of the Issuer owned by Hollinger Inc. and pledged to
certain lenders, the issuance of securities in connection with
the formation of the entity that will hold Hollinger Inc.'s and
the Issuer's combined interests in Southam and related
intercompany transactions, and options to purchase shares under
the Issuer's 1994 Stock Option Plan.
Item 7. Materials to Be Filed as Exhibits.
Exhibit No. Description
1 Joint Filing Agreement dated October 20, 1995,
among Hollinger Inc., The Ravelston
Corporation Limited and The Hon. Conrad M.
Black, P.C., O.C. (individually and on behalf
of Conrad Black Capital Corporation).
2 Share Exchange Agreement dated as of July 19,
1995 between American Publishing Company and
Hollinger Inc. (incorporated by reference to
the definitive proxy statement of the Issuer
dated September 28, 1995).
3 Hypothecation of Specific Securities dated
October 13, 1995 by Hollinger Inc. in favor of
the Canadian Imperial Bank of Commerce.
4 Letter agreement dated October 13, 1995
between Hollinger Inc. and the Canadian
Imperial Bank of Commerce.
5 Letter agreements dated August 1, 1996 between
Hollinger Inc. and certain underwriters.
6 Letter agreements dated August 1, 1996 between
The Hon. Conrad M. Black, P.C., O.C. and
certain underwriters.
7 Securities Pledge Agreement dated February 29,
1996 by 1159670 Ontario Limited in favor of
the Canadian Imperial Bank of Commerce, as
agent for certain lenders.
8 Registration Rights Agreement dated February
29, 1996 among Hollinger Inc., 1159670 Ontario
Limited and certain lenders.
- 16 -
9 Securities Pledge Agreement dated May 24, 1996
by 1159670 Ontario Limited in favor of the
Canadian Imperial Bank of Commerce.
10 Securities Pledge Agreement dated May 24, 1996
by 3184081 Canada Limited in favor of the
Canadian Imperial Bank of Commerce.
11 Letter agreement dated May 24, 1996 among
Hollinger Inc., Hollinger International Inc.,
1159670 Ontario Limited, 3184081 Canada
Limited and the Canadian Imperial Bank of
Commerce (omitting Schedules A and B).
12 Securities Pledge Agreement dated July 17,
1996 by 1159670 Ontario Limited in favor of
Canadian Imperial Bank of Commerce as agent
for certain lenders.
13 Securities Pledge Agreement dated July 17,
1996 by 3184081 Canada Limited in favor of the
Canadian Imperial Bank of Commerce as agent
for certain lenders.
- 17 -
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this statement is true, complete and correct.
Date: August 28, 1996
HOLLINGER INC.
By: /s/ C.G. Cowan
---------------------------
Charles G. Cowan, Q.C.
Title: Vice-President and Secretary
THE RAVELSTON CORPORATION LIMITED
By: /s/ C.G. Cowan
---------------------------
Charles G. Cowan, Q.C.
Title: Vice-President and Secretary
By: /s/ Conrad M. Black
--------------------------
The Hon. Conrad M. Black, P.C.,
O.C., individually and on behalf of
Conrad Black Capital Corporation
Title: Chairman of Conrad Black
Capital Corporation
- 18 -
EXHIBIT INDEX
Exhibit Description
No.
1 Joint Filing Agreement dated October 20,
1995, among Hollinger Inc., The
Ravelston Corporation Limited and The
Hon. Conrad M. Black, P.C., O.C.
(individually and on behalf of Conrad
Black Capital Corporation) (previously
filed).
2 Share Exchange Agreement dated as of
July 19, 1995 between American
Publishing Company and Hollinger Inc.
(incorporated by reference to the
definitive proxy statement of the Issuer
dated September 28, 1995).
3 Hypothecation of Specific Securities
dated October 13, 1995 by Hollinger Inc.
in favor of the Canadian Imperial Bank
of Commerce (previously filed).
4 Letter agreement dated October 13, 1995
between Hollinger Inc. and the Canadian
Imperial Bank of Commerce (previously
filed).
5 Letter agreements dated August 1, 1996
between Hollinger Inc. and certain
underwriters (filed herewith).
6 Letter agreements dated August 1, 1996
between The Hon. Conrad M. Black, P.C.,
O.C. and certain underwriters (filed
herewith).
7 Securities Pledge Agreement dated
February 29, 1996 by 1159670 Ontario
Limited in favor of the Canadian
Imperial Bank of Commerce, as agent for
certain lenders (previously filed).
8 Registration Rights Agreement dated
February 29, 1996 among Hollinger Inc.,
1159670 Ontario Limited and certain
lenders (previously filed).
- 19 -
9 Securities Pledge Agreement dated May
24, 1996 by 1159670 Ontario Limited in
favor of the Canadian Imperial Bank of
Commerce (previously filed).
10 Securities Pledge Agreement dated May
24, 1996 by 3184081 Canada Limited in
favor of the Canadian Imperial Bank of
Commerce (previously filed).
11 Letter agreement dated May 24, 1996
among Hollinger Inc., Hollinger
International Inc., 1159670 Ontario
Limited, 3184081 Canada Limited and the
Canadian Imperial Bank of Commerce
(omitting Schedules A and B) (previously
filed).
12 Securities Pledge Agreement dated July
17, 1996 by 1159670 Ontario Limited in
favor of Canadian Imperial Bank of
Commerce as agent for certain lenders.
13 Securities Pledge Agreement dated July
17, 1996 by 3184081 Canada Limited in
favor of the Canadian Imperial Bank of
Commerce as agent for certain lenders.
- 20 -
Dates Referenced Herein and Documents Incorporated by Reference
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