-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KJaztw1+L6phE4R3gH5V8Hjl2KwfE0WdbrszJEevDbfluotloTendFyUx631nrQs lf36+VTjxOFHBBfPGfbvyA== 0000914121-07-002068.txt : 20070910 0000914121-07-002068.hdr.sgml : 20070910 20070910124218 ACCESSION NUMBER: 0000914121-07-002068 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20070910 DATE AS OF CHANGE: 20070910 GROUP MEMBERS: ABNER KURTIN GROUP MEMBERS: HARWICH CAPITAL PARTNERS, LLC GROUP MEMBERS: K CAPITAL CIP, L.P. GROUP MEMBERS: K CAPITAL MANAGEMENT, LLC GROUP MEMBERS: K CAPITAL PARTNERS, LLC GROUP MEMBERS: K CAPITAL STRUCTURE ARBITRAGE OFFSHORE, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SUN-TIMES MEDIA GROUP INC CENTRAL INDEX KEY: 0000868512 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 953518892 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43563 FILM NUMBER: 071108128 BUSINESS ADDRESS: STREET 1: 350 NORTH ORLEANS ST STREET 2: FLOOR 10 SOUTH CITY: CHICAGO STATE: IL ZIP: 60654-1771 BUSINESS PHONE: 3123212299 MAIL ADDRESS: STREET 1: 350 NORTH ORLEANS ST STREET 2: FLOOR 10 SOUTH CITY: CHICAGO STATE: IL ZIP: 60654-1771 FORMER COMPANY: FORMER CONFORMED NAME: HOLLINGER INTERNATIONAL INC DATE OF NAME CHANGE: 19951020 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN PUBLISHING COMPANY DATE OF NAME CHANGE: 19940204 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: K CAPITAL OFFSHORE MASTER FUND US DOLLAR LP CENTRAL INDEX KEY: 0001264218 IRS NUMBER: 980208800 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O K CAPITAL PARTNERS LLC STREET 2: 75 PARK PLAZA CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6176467700 MAIL ADDRESS: STREET 1: C/O K CAPITAL PARTNERS LLC STREET 2: 75 PARK PLAZA CITY: BOSTON STATE: MA ZIP: 02116 SC 13D/A 1 kc10171371-13da1.txt AMENDMENT NO. 1 TO SCHEDULE 13D ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------ SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 1) ------------ Sun-Times Media Group, Inc. (Name of Issuer) Class A Common Stock Par Value $0.01 Per Share (Title of Class of Securities) 86688Q100 (CUSIP Number of Class of Securities) Robert T. Needham K Capital Partners, LLC 75 Park Plaza Boston, MA 02116 (617) 646-7728 (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications) ------------ September 7, 2007 (Date of Event which required Filing of this Statement) ------------ If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box |X| Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See 240.13d-7 (b)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 disclosures provided in a prior cover page. The information required on 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). ================================================================================ CUSIP No. 86688Q100 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON K Capital Structure Arbitrage Offshore, L.P. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [_] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF SHARES 5,663,517 shares -------------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER 0 OWNED BY EACH -------------------------------------------------------- 9. SOLE DISPOSITIVE POWER REPORTING PERSON 5,663,517 shares -------------------------------------------------------- WITH 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,663,517 shares - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.7% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON: PN - -------------------------------------------------------------------------------- 2 CUSIP No. 86688Q100 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON K Capital Offshore Master Fund (U.S. Dollar), L.P. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [_] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF SHARES 654,493 shares -------------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER 0 OWNED BY EACH -------------------------------------------------------- 9. SOLE DISPOSITIVE POWER REPORTING PERSON 654,493 shares -------------------------------------------------------- WITH 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 654,493 shares - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.0% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON: PN - -------------------------------------------------------------------------------- CUSIP No. 86688Q100 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON K Capital CIP, L.P. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [_] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF SHARES 108,400 shares -------------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER 0 OWNED BY EACH -------------------------------------------------------- 9. SOLE DISPOSITIVE POWER REPORTING PERSON 108,400 shares -------------------------------------------------------- WITH 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 108,400 shares - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.2% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON: PN - -------------------------------------------------------------------------------- CUSIP No. 86688Q100 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON K Capital Management, LLC - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [_] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Massachusetts - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF SHARES 6,426,410 shares -------------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER 0 OWNED BY EACH -------------------------------------------------------- 9. SOLE DISPOSITIVE POWER REPORTING PERSON 6,426,410 shares -------------------------------------------------------- WITH 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,426,410 shares - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON: IA/OO - -------------------------------------------------------------------------------- CUSIP No. 86688Q100 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON K Capital Partners, LLC - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [_] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF SHARES 6,426,410 shares -------------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER 0 OWNED BY EACH -------------------------------------------------------- 9. SOLE DISPOSITIVE POWER REPORTING PERSON 6,426,410 shares -------------------------------------------------------- WITH 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,426,410 shares - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON: OO - -------------------------------------------------------------------------------- CUSIP No. 86688Q100 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Harwich Capital Partners, LLC - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [_] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF SHARES 6,426,410 shares -------------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER 0 OWNED BY EACH -------------------------------------------------------- 9. SOLE DISPOSITIVE POWER REPORTING PERSON 6,426,410 shares -------------------------------------------------------- WITH 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,426,410 shares - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON: OO - -------------------------------------------------------------------------------- CUSIP No. 86688Q100 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Abner Kurtin - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [_] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S. Citizen - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF SHARES 6,426,410 shares -------------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER 0 OWNED BY EACH -------------------------------------------------------- 9. SOLE DISPOSITIVE POWER REPORTING PERSON 6,426,410 shares -------------------------------------------------------- WITH 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,426,410 shares - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON: IN - -------------------------------------------------------------------------------- This Amendment No. 1 amends and supplements the statement on Schedule 13D (the "Schedule 13D") originally filed with the Securities and Exchange Commission on August 30, 2007 by K Capital Structure Arbitrage Offshore, L.P., K Capital Offshore Master Fund (U.S. Dollar), L.P., K Capital CIP, L.P., K Capital Management, LLC, K Capital Partners, LLC, Harwich Capital Partners, LLC and Abner Kurtin (collectively, the "Reporting Persons") with respect to the Class A Common Stock, $0.01 par value per share (the "Common Stock"), of Sun-Times Media Group, Inc., a Delaware corporation (the "Company"). Unless otherwise indicated, each capitalized term used but not defined herein shall have the meaning assigned to such term in the Schedule 13D. From and after the date hereof, all references in the Schedule 13D to the Schedule 13D or terms of similar import shall be deemed to refer to the Schedule 13D as amended and supplemented hereby. The Reporting Persons have entered into a Joint Filing Agreement, a copy of which is filed herewith as Exhibit A to the Schedule 13D, and which is incorporated herein by reference. Neither the fact of this filing nor anything contained herein shall be deemed an admission by the Reporting Persons that they constitute a "group" as such term is used in Section 13(d)(1)(k) of the rules and regulations under the Securities Exchange Act of 1934, as amended. Items 4, 6 and 7 are hereby amended and supplemented as follows: ITEM 4. PURPOSE OF TRANSACTION On September 7, 2007, K Capital Partners, LLC ("K Capital") submitted a letter to the Company. In the letter, K Capital expressed its views regarding any potential resolution of outstanding issues between the Issuer and Hollinger Inc. and called for certain corporate governance changes at the Issuer. A copy of the letter is filed as an exhibit to this Schedule 13D filing and is incorporated herein by reference. The foregoing and subsequent references to, and descriptions of, the letter, are qualified in their entirety by reference to such letter. The Reporting Persons do not have any present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth in the Schedule 13D as amended or supplemented, or such as would occur in connection with any of the proposals discussed in the Schedule 13D as amended or supplemented. The Reporting Persons intend to review their investment in the Company on a continuing basis. Depending on various factors including, without limitation, the Company's financial position and strategic direction, the Company's response to the actions suggested by the Reporting Persons, price levels of the Common Stock, conditions in the securities market and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Company as they deem appropriate including, but not limited to, purchasing additional Common Stock or other securities of the Company or selling some or all of their Common Stock, communicating with the Company or other investors or conducting a proxy solicitation with respect to the election of directors of the Company. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. In addition to beneficially holding the Common Stock, the Partnerships are parties to the following equity swap arrangements: SAO has entered into equity swap agreements with certain securities brokers under which such brokers agreed to pay SAO an amount equal to any increase at maturity or termination, and SAO agreed to pay such brokers an amount equal to any decrease at maturity or termination, in the official market price of 7,382,252 shares of the Common Stock above or below an initial reference price per share. The brokers will pay to SAO an amount equal to any dividends paid on the shares during the term of the equity swap agreement. All balances will be cash-settled, and neither party acquires any voting or similar rights, or dispositive power over the shares. Offshore has entered into equity swap agreements with certain securities brokers under which such brokers agreed to pay Offshore an amount equal to any increase at maturity or termination, and Offshore agreed to pay such brokers an amount equal to any decrease at maturity or termination, in the official market price of 271,850 shares of the Common Stock above or below an initial reference price per share. The brokers will pay to Offshore an amount equal to any dividends paid on the shares during the term of the equity swap agreement. All balances will be cash-settled, and neither party acquires any voting or similar rights, or dispositive power over the shares. Except as described in Item 4 above and in this Item 6, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between or among any of the Reporting Persons and any other person with respect to any securities of the Issuer other than the governing documents of the Partnerships. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit B Letter of K Capital Partners, LLC to Sun-Times Media Group, Inc., sent September 7, 2007 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. Dated: September 10, 2007 K CAPITAL MANAGEMENT, LLC By: /s/ Robert T. Needham -------------------------------- By: Robert T. Needham Its: Chief Administrative Officer K CAPITAL PARTNERS, LLC By: /s/ Robert T. Needham -------------------------------- By: Harwich Capital Partners, LLC Its: Managing Member By: Robert T. Needham Its: Chief Administrative Officer HARWICH CAPITAL PARTNERS, LLC By: /s/ Robert T. Needham -------------------------------- By: Robert T. Needham Its: Chief Administrative Officer K CAPITAL OFFSHORE MASTER FUND (U.S. DOLLAR), L.P. By: /s/ Robert T. Needham -------------------------------- By: K Capital Partners, LLC, General Partner By: Harwich Capital Partners LLC Its: Managing Member By: Robert T. Needham Its: Chief Administrative Officer K CAPITAL STRUCTURE ARBITRAGE OFFSHORE, L.P. By: /s/ Robert T. Needham -------------------------------- By: K Capital Partners, LLC, General Partner By: Harwich Capital Partners LLC Its: Managing Member By: Robert T. Needham Its: Chief Administrative Officer K CAPITAL CIP, L.P. By: /s/ Robert T. Needham -------------------------------- By: K Capital Partners, LLC, General Partner By: Harwich Capital Partners LLC Its: Managing Member By: Robert T. Needham Its: Chief Administrative Officer ABNER KURTIN By: /s/ Abner Kurtin -------------------------------- Exhibit B Dear Mr. Cyrus Freidheim Jr.: Based on recent public information, we understand that Sun-Times Media Group ("Sun-Times") and Hollinger Inc. have been directed by the Ontario Superior Court of Justice to conduct good-faith settlement negotiations relating to the Hollinger Inc. reorganization proceedings in Canada. We view this as a positive development. While we are very supportive of a resolution of the outstanding issues between Sun-Times and Hollinger Inc., it is critical that any such resolution be value enhancing to all Sun-Times shareholders. We believe that any settlement which includes materially better terms then those described below would be preferential to the Class B holders and materially damaging to Class A shareholders. 1. Sun-Times should pay no more than seven-million dollars as consideration for any agreement by Hollinger to convert its Sun-Times Class B shares to Class A shares. This represents a 15% premium to the market value of Class A shares. Any such consideration should be paid in cash only. No shares, warrants, or other equity-linked securities should be issued to the Class B shares. Upon any sale of the Company, both Class A shares and Class B shares should be entitled to the same consideration. 2. K Capital strongly supports an exchange offer to purchase the Sun-Times Class B shares for debt or preferred shares. Such a transaction would represent a repurchase of fifteen million shares of stock, which is highly attractive given the current stock price, which we believe to be at a significant discount to intrinsic value. However, if the exchange offer is consummated at a significant premium to the current share price of the Company's Class A shares, the exchange offer should be offered to all of the Company's shareholders, including Class A shareholders. In summary, we do not believe that more than fifty-one million dollars (i.e., current market value plus a 15% premium) should be paid for the Hollinger Inc. position in Sun-Times and that no equity securities should be issued for the retirement of those shares. 3. K Capital believes the thirty-four million dollar subordinated claim that Sun-Times has in Hollinger Inc. should not be forgiven without fair compensation. Sun-Times should be entitled to cash consideration or contingent cash consideration in exchange for canceling the subordinate claim in Hollinger Inc. 4. K Capital believes that Sun-Times' litigation claims against Hollinger Inc. are of equal or greater merit than Hollinger Inc.'s litigation claims against Sun-Times. Thus, absolutely no monetary payments should be made by Sun-Times to Hollinger Inc. in exchange for both parties' release of litigation claims against each other. 5. We believe certain corporate governance changes should also be made at Sun-Times. o Sun-Times should amend its bylaws to allow any 10% or greater shareholder to call a special meeting of shareholders. o The Company's poison pill should be redeemed. o The board is too large for a company of this size and should be reduced. New directors should be added to the board who represent shareholders owning stock in the company We have previously called for institutional shareholder representation on the Sun-Times Board. It is the lack of such representation that gives us concern, among other things, regarding the matters above and necessitates our sending this letter. Sincerely, /s/ Abner Kurtin - ------------------------------ Abner Kurtin Portfolio Manager CC: Sun-Times Media Group Board of Directors -----END PRIVACY-ENHANCED MESSAGE-----