-----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, NmzmrPAzEU1U0HOP0e+IMEjoK6ivkeWpo//IHvmKAy5lQTKiLgFESvpX+0Aumpaw FQj97dJAZ0ugn0cpvyNSPw== 0000950135-03-003218.txt : 20030520 0000950135-03-003218.hdr.sgml : 20030520 20030520145453 ACCESSION NUMBER: 0000950135-03-003218 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20030520 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HOLLINGER INTERNATIONAL 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 SEC ACT: 1934 Act SEC FILE NUMBER: 005-46196 FILM NUMBER: 03712220 BUSINESS ADDRESS: STREET 1: 401 N WABASH AVE STREET 2: STE 740 CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 3123212299 MAIL ADDRESS: STREET 1: 401 NORTH WABASH AVE STREET 2: SUITE 740 CITY: CHICAGO STATE: IL ZIP: 60611 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN PUBLISHING COMPANY DATE OF NAME CHANGE: 19940204 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TWEEDY BROWNE CO LLC// CENTRAL INDEX KEY: 0000732905 IRS NUMBER: 133381587 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 350 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2129160600 MAIL ADDRESS: STREET 1: 350 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: TWEEDY BROWNE CO L P DATE OF NAME CHANGE: 19950926 SC 13D 1 b46762hisc13d.txt TWEEDY, BROWNE COMPANY LLC SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Amendment No. )* of Tweedy, Browne Company LLC Under the Securities Exchange Act of 1934 HOLLINGER INTERNATIONAL INC. (Name of Issuer) Class A - Common Stock, Par Value $.01 per share (Title of Class of Securities) 435569108 (CUSIP Number) Christopher H. Browne 350 Park Avenue New York, New York 10022 (212) 916-0600 (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications) May 19, 2003 (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 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 [X]. Check the following box if a fee is paid with the statement [ ]. (A fee is not required only if the reporting 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.) * 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 the provisions of the Act (however, see the Notes). CUSIP No. 435569108 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons Tweedy, Browne Company LLC ("TBC") - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member of a Group (See Instructions) (a)[ ] (b)[x] - -------------------------------------------------------------------------------- (3) SEC Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (See Instructions) 00 - -------------------------------------------------------------------------------- (5) Check 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 TBC has sole voting power with respect to 13,152,795 shares held in certain TBC accounts (as hereinafter defined). Additionally, certain of the members of TBC may be deemed to have sole power to vote certain Shares as more fully set forth herein. Number of Shares --------------------------------------------------------- Beneficially (8) Shared Voting Power Owned by Each Reporting Person 0 shares With --------------------------------------------------------- (9) Sole Dispositive Power 0 shares, except that certain of the members of TBC may be deemed to have sole power to vote certain shares as more fully set forth herein. --------------------------------------------------------- (10) Shared Dispositive Power 13,203,505 shares held in accounts of TBC (as hereinafter defined). - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 13,203,505 shares - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [x] - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 17.72% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) BD, IA & 00 - -------------------------------------------------------------------------------- PRELIMINARY NOTE This Statement on Schedule 13D is being filed by Tweedy, Browne Company LLC ("TBC"), which may be deemed to be the beneficial owner in the aggregate of in excess of 5% of the Class A - Common Stock of Hollinger International Inc. However, the filing of this Schedule 13D should not be deemed an admission that TBC comprises a group within the meaning of Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended (the"Act"). This Statement on Schedule 13D amends an Amendment No. 2 to a Statement on Schedule 13G filed by TBC and dated January 23, 2003. ITEM 1. SECURITY AND ISSUER This Schedule 13D relates to the Class A - Common Stock, $.01 par value (the "Common Stock"), of Hollinger International Inc. (the "Company"), which, to the best knowledge of the person filing this Schedule 13D, is a company organized under the laws of Delaware, with its principal executive offices located at 401 North Wabash Avenue, Suite 740, Chicago, Illinois 60611. ITEM 2. IDENTITY AND BACKGROUND (a) The person filing this Schedule 13D is Tweedy, Browne Company LLC ("TBC"), a Delaware limited liability company. The filing of this Schedule 13D should not be deemed an admission that TBC comprises a group within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Act"). This Schedule 13D contains information regarding shares of Common Stock that may be deemed to be beneficially owned by TBC. Such shares are held in the accounts of various customers of TBC, with respect to which accounts TBC has investment discretion (the "TBC Accounts"), and with respect to some of which it has obtained sole or shared voting power. The members of TBC are Christopher H. Browne, William H. Browne, John D. Spears, Thomas H. Shrager, Robert Q. Wyckoff, Jr. (the "Members") and AMG/TBC Holdings, Inc. ("Holdings"). Messrs. Christopher H. Browne, William H. Browne and John D. Spears are members of the management committee that operates TBC on a daily basis including making investment decisions (the "TBC Committee"). By reason of their positions as such, the members of TBC may be deemed to control TBC. (b) The business address of TBC is 350 Park Avenue, New York, NY 10022. The business address of Holdings is 600 Hale Street, Prides Crossings, MA 01965. (c) TBC is engaged primarily in the business of a securities broker and dealer and investment adviser, is registered as a broker-dealer and investment adviser with the Securities and Exchange Commission, and is a member of the National Association of Securities Dealers, Inc. The present principal occupation of the Members of TBC is serving as such. Holdings is wholly owned by Affiliated Managers Group, Inc., a Massachusetts - -based holding company which makes equity investments in investment management firms, in which management personnel retain a significant interest in the profits of the business. The principal business address of each of TBC and Holdings is set forth above. (d) None of TBC, Holdings nor any Member of TBC has, during the last five years, been convicted in any criminal proceeding (excluding traffic violations and similar misdemeanors). (e) None of TBC, Holdings, or any Member has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which proceeding it or he was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect thereto. (f) TBC is a Delaware limited liability company. Each of the Members is a citizen of the United States of America, with the exception of Holdings, which is a Delaware corporation. ITEM 3. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION As of the date hereof, the number of shares with respect to which TBC may be deemed to be the beneficial owner is 13,203,505 shares of Common Stock (the "TBC Shares"). The aggregate cost of the TBC Shares, including brokerage commissions, was $149,007,693. The TBC Shares are held in the TBC Accounts, the funds therefore coming from the funds on hand in each individual managed account. In some instances, certain TBC accounts have access to funds that may come from standard margin account borrowings from brokerage accounts maintained at Bear, Stearns Securities Corp. To date, none of the TBC accounts have utilized margin account borrowings relating to their interest in the Common Stock. It is expected that funds used by the TBC Accounts to purchase additional shares of Common Stock, if additional shares are purchased by the TBC Accounts (see Item 4 hereof), will come from the funds on hand for each individual managed account, which funds on hand at any time and from time to time may include, among others, funds borrowed pursuant to margin accounts maintained at Bear, Stearns Securities Corp. Borrowings made by certain TBC Accounts pursuant to such margin accounts are secured by margin securities owned by the respective accounts, including some of the TBC Shares. Interest on outstanding borrowings under such margin accounts ranges from 1/2% to 3 1/4% over the brokers' call rate in effect from time to time at Chase Manhattan Bank, New York, New York, depending upon the amount of outstanding borrowings at any given time. ITEM 4. PURPOSE OF TRANSACTION TBC has acquired the shares of Common Stock owned by it on behalf of the TBC Accounts for investment purposes. TBC may dispose of all or some of the TBC Shares, or may acquire additional shares of Common Stock from time to time depending upon price and market conditions, evaluation of alternative investments and other factors. TBC qualifies as an institution which may file securities ownership reports required by the Securities Exchange Act of 1934 on Schedule 13G and as a routine matter utilizes Schedule 13G for reporting of ownership positions held by TBC's investment advisory clients. This has been the case for previous ownership report filings by TBC regarding the Common Stock. At this time, TBC has elected to convert its filing on Schedule 13G to a filing on Schedule 13D, because TBC has become aware of and is concerned about certain matters relating to transactions and payments between entities and persons affiliated with the Company, as well as executive compensation issues. These concerns are set out in Exhibit A attached hereto. TBC has also made a written demand on the independent members of the Board of Directors of the Company to investigate payments made in relation to non-competition payments received by Executives of the Company under non-competition agreements that arose from certain asset sales by the Company. A copy of the demand is attached hereto as Exhibit B. These matters including the filing of this demand may cause or result in TBC having discussions with third parties, shareholders and management regarding one or more of the actions or transactions described in clause (a) through (j) of Item 4 of the Schedule 13D form. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) As of the date hereof, TBC may be deemed to be the beneficial owner of an aggregate of 13,203,505 shares of Common Stock, which constitutes approximately 17.72% of the 74,498,328 shares of Common Stock which TBC believes to be the total number of shares of Common Stock outstanding. The TBC Shares are held in the TBC Accounts. Also included in the TBC Shares are 905 shares of Common Stock held in a certain TBC Account for a charitable foundation of which Christopher H. Browne is a trustee. Mr. Browne is a Member of the Management Committee of TBC. TBC disclaims that it is the beneficial owner of any of the shares of Common Stock held in the TBC Accounts. The aggregate number of shares of Common Stock with respect to which TBC could be deemed to be the beneficial owner as of the date hereof, is 13,203,505 shares, which constitutes approximately 17.72% of the 74,498,328 shares of Common Stock, which the filing person believes to be the total number of shares of Common Stock outstanding, but nothing contained herein shall be construed as an admission that TBC is the beneficial owner of any of the TBC Shares. The aggregate number of shares and percentage of Common Stock with respect to which each of the Members may be deemed to be the beneficial owner by reason of his being a member of TBC, is 13,203,505 shares, which constitutes approximately 17.72% of the 74,498,328 shares of Common Stock outstanding. Except as described herein, to the best knowledge of TBC, no person who may be deemed to comprise a group with TBC or any other person named in Item 2 hereof, beneficially owns any shares of Common Stock. (b) TBC has investment discretion with respect to 13,203,505 shares of Common Stock held by the TBC Accounts and has sole power to dispose or direct the disposition of all of such shares. Of these shares of Common Stock, TBC has sole power to vote or to direct the voting of 13,152,795 shares of Common Stock held in certain TBC Accounts. Each of the Members of TBC, solely by reason of their positions as such, may be deemed to have (i) shared power to dispose of or to direct the disposition of all of the shares of Common Stock held in the TBC Accounts; and (ii) shared power to vote or direct the vote of 13,152,795 shares of Common Stock held in certain TBC Accounts. (c) Transactions in Common Stock effected by TBC during the sixty-day period ended as of the date hereof are set forth below:
NO OF SHARES PRICE TBC ACCOUNTS PURCHASED SOLD PER SHARE 03/14/03 225 $7.82 03/18/03 2,350 $8.46 03/20/03 1,035 $8.53 03/21/03 4,260 $8.59 03/24/03 785 $8.24 03/31/03 1,065 $8.16 04/01/03 5,000 $8.12 04/04/03 1,470 $8.24 04/08/03 5,000 $8.23 04/09/03 2,100 $8.55 04/11/03 3,200 $8.54 04/17/03 825 $8.73 05/01/03 1,115 $9.30
(d) To the best knowledge of TBC, each of the persons maintaining an account with TBC has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock held in said person's TBC Account. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Except as otherwise described herein, none of TBC, nor, to the best knowledge of TBC, any other person named in Item 2 hereof, has any contract, arrangement, understanding or relationship with respect to any securities of the Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS See Exhibit A attached hereto. See Exhibit B attached hereto. SIGNATURE Tweedy, Browne Company LLC, after reasonable inquiry and to the best of its knowledge and belief, hereby certifies that the information set forth in this Statement is true, complete and correct. TWEEDY, BROWNE COMPANY LLC By: /s/ Christopher H. Browne -------------------------- Christopher H. Browne Member Dated: May 19, 2003 EX-99.1 3 b46762hiexv99w1.txt EXHIBIT A - STATEMENT OF ISSUES EXHIBIT A TO TWEEDY, BROWNE COMPANY LLC 13D DATED MAY 19, 2003 HOLLINGER INTERNATIONAL INC. (HLR) STATEMENT OF ISSUES Ownership Overview Micro Level Issues 1. Ravelston Services Agreements 2. Non-competition agreements 3. Asset sales to affiliated entities and other 1 - -------------------------------------------------------------------------------- THE RAVELSTON CORPORATION LIMITED ("RAVELSTON") Corporation owned by Lord Black Mr. F. David Radler, Mr. Daniel Colson, Mr. J.A. Boultbee, Mr. Peter Atkinson, Mr. Peter White, the estate of Mr. Dixon Chant and Mr. Charles Cowan (all of whom are current or former officers and/or directors of Hollinger Inc. and the Company.) - -------------------------------------------------------------------------------- | The Ravelston Corporation Limited ("Ravelston") | effectively controls Hollinger Inc. through | its direct or indirect control or direction 78% | (including through its subsidiary Argus | Corporation Limited ("Argus")) over 78% of the | outstanding Retractable Shares of Hollinger | Inc. Lord Black indirectly controls Ravelston. - -------------------------------------------------------------------------------- HOLLINGER INC. (TSX: HLG.C) Hollinger Inc., the parent of Hollinger International Inc., is controlled by Lord Black, Chairman of the Board and CEO of Hollinger International Inc. and Hollinger Inc., through his direct and indirect ownership of Hollinger Inc.'s securities, principally through The Ravelston Corporation Limited ("Ravelston"). As of March 24, 2003, there were 32,939,686 outstanding Retractable Shares and 4,580,979 outstanding Series II Shares of Hollinger Inc. As of March 24, 2003, all executive officers and directors of Hollinger International Inc. and other entities controlled by Lord Black beneficially held an aggregate 26,117,242 Retractable Shares and 2,479,456 Series II Shares of Hollinger Inc., or approximately 79.3% of the outstanding Retractable Shares and 54.1% of the outstanding Series II Shares, respectively. - -------------------------------------------------------------------------------- | As of the Record Date (03/24/03), Hollinger | Inc. directly or indirectly owned 100% of the 30.2% (equity interest) | Class B Common Stock (14,990,000 shares) and | 11,488,831 shares of Class A Common Stock, | which in the aggregate represented 72.6% of | the outstanding combined voting power of the | Common Stock. 72.6% (voting interest) | | | - -------------------------------------------------------------------------------- HOLLINGER INTERNATIONAL INC. (NYSE: HLR) As of March 24, 2003, 72,316,328 shares of Class A Common Stock were outstanding and 14,990,000 shares of Class B Common Stock were outstanding. Class A Common Stock is entitled to one vote per share and Class B Common Stock entitled to ten votes per share. - -------------------------------------------------------------------------------- 2 RAVELSTON SERVICES AGREEMENTS Hollinger International Inc. ("HLR") and its subsidiaries have historically entered into Services Agreements with Ravelston and its subsidiaries ("Ravelston Management Inc." or "RMI", Moffat Management and Black-Amiel Management are publicly disclosed subsidiaries of Ravelston) and affiliates (which include Lord Black and Messrs. Radler, Colson, Atkinson, Boultbee, Creasey and Mrs. Black). According to HLR's most recent SEC filings, Ravelston (and its subsidiaries and affiliates) is paid by HLR (and HLR's subsidiaries and affiliates) for the following services under the Services Agreements(1): "RMI and such affiliates provide advisory, consultative, procurement and administrative services to the Company (HLR) and its respective subsidiaries including, among other things, strategic advice, planning and financial services (including advice and assistance with respect to acquisitions, divestitures or joint venture arrangements); consulting services regarding risk management and insurance coverage; and assistance in operational matters." (Source: Proxy Statement filed March 31, 2003) Previous disclosed payments from HLR and its subsidiaries to Ravelston and its subsidiaries and affiliates totaled $202.7 million from 1995 through 2002. The following table details these payments: - -------------------------------------------------------------------------------- 2002 $23.7 MILLION to Ravelston and RMI, plus $1.9 MILLION from subsidiaries of HLR to certain Ravelston subsidiaries and affiliates. - -------------------------------------------------------------------------------- 2001 $29.0 MILLION to Ravelston and RMI, plus $1.7 MILLION from subsidiaries of HLR to certain Ravelston subsidiaries and affiliates. - -------------------------------------------------------------------------------- 2000 $33.6 MILLION to Ravelston and RMI, plus $3.7 MILLION from subsidiaries of HLR to certain Ravelston subsidiaries and affiliates. - -------------------------------------------------------------------------------- 1999 $38.0 MILLION - -------------------------------------------------------------------------------- 1998 $32.0 MILLION - -------------------------------------------------------------------------------- 1997 $26.5 MILLION - -------------------------------------------------------------------------------- 1996 $8.5 MILLION - -------------------------------------------------------------------------------- 1995 $4.1 MILLION - -------------------------------------------------------------------------------- Note that the above mentioned fees paid by HLR, its subsidiaries and affiliates were approved by the Audit Committee as reasonable for the services rendered. Also, the amount of fees payable pursuant to the Services Agreements and separate services agreements for 2003 and future years are determined annually by agreement between RMI and such affiliates and the Audit Committee. The Services Agreements and separate services agreements may be terminated by either party upon 180 days prior written notice. - --------------- (1) Services Agreements is a defined term in HLR's SEC filings. The Services Agreements were originally entered into between Ravelston and HLR and certain subsidiaries, which agreements were transferred in July 2002 from Ravelston to its wholly owned subsidiary, Ravelston Management Inc. ("RMI"). The phrase "separate service agreements" relates to management services agreements between HLR and Moffatt Management and Black-Amiel Management, both of which are affiliates of RMI. 3 In HLR's most recent 10-K, the following risk disclosure is made: "All of the Service Agreements were negotiated in the context of a parent-subsidiary relationship and, therefore, were not the result of arm's length negotiations between independent parties. The terms of the Service Agreements may therefore not be as favorable to the Company [HLR] and its subsidiaries as the terms that might be reached through negotiations with non-affiliated third parties." (Source: Form 10-K filed March 31, 2003) Also note that in connection with the offering by Hollinger Inc.(2) of its senior secured notes (on March 10, 2003, Hollinger Inc. completed an offering of $120 million principal amount 11 7/8% senior secured notes due 2011), RMI has pledged as security its rights under the Services Agreements. Specifically, in conjunction with Hollinger Inc.'s senior secured notes offering, Hollinger Inc. has entered into a support agreement with Ravelston Management Inc. ("RMI") requiring minimum annual support payments from RMI. RMI's failure to meet its obligations to Hollinger Inc. under the support agreement could have an adverse impact on Hollinger Inc. and, consequently, on HLR in the event that Hollinger Inc. sought protection from its creditors or a restructuring of its obligations in a Canadian or other court proceeding. In SEC filings, HLR claims that it does not determine the allocation of the "management fee paid to Ravelston among its ultimate recipients." HLR claims that the allocation of the management fee paid to certain individuals is determined by Ravelston. The following table outlines an allocation of the economic interest, direct or indirect through compensation arrangements, shareholdings or otherwise, in the management fee paid by HLR to Ravelston/RMI during the years ended December 31, 2001 and December 31, 2002. Note that the amount below do not include all consideration paid by Ravelston to the named individuals. This chart only details each individuals allocation derived from the Services Agreements between HLR (and subsidiaries) and Ravelston (and subsidiaries). ------------------------------------------------------------- NAME 2001 2002 ------------------------------------------------------------- Lord Black $6,619,256 $6,485,439 ------------------------------------------------------------- F. David Radler $3,102,221 $3,147,922 ------------------------------------------------------------- Daniel W. Colson $1,714,308 $1,770,770 ------------------------------------------------------------- Peter Y. Atkinson $846,063 $876,009 ------------------------------------------------------------- J.A. Boultbee $897,250 $929,395 ------------------------------------------------------------- (SOURCE: PROXY STATEMENT FILED MARCH 31, 2003) - -------------- (2) Hollinger Inc. is the parent of Hollinger International Inc. (HLR) and is controlled by Lord Black, Chairman of the Board and CEO of HLR and Hollinger Inc., through his direct and indirect ownership of Hollinger Inc.'s securities, principally through The Ravelston Corporation Limited ("Ravelston"). As of March 24, 2003, Hollinger Inc. directly or indirectly owned 100% of the Class B Common Stock (14,990,000 shares) of HLR and 11,488,831 shares of Class A Common Stock of HLR, which in the aggregate represented 72.6% of the outstanding combined voting power of HLR and 30.2% of the equity interests in HLR. 4 QUESTIONS AND COMMENTS ABOUT THE RAVELSTON SERVICES AGREEMENTS - Obtain a detailed description of the services actually provided by Ravelston and its subsidiaries under the Services Agreements and separate services agreements for each fiscal year beginning in 1995 and ending in 2002. - Obtain an itemized report which details total consideration paid for each individual service provided by Ravelston and its subsidiaries for each fiscal year beginning in 1995 and ending in 2002. This report should include descriptions of why the total aggregate consideration paid to Ravelston under the Services Agreements fluctuated from year to year. It should also include total consideration paid to individual executives Lord Black and Messrs. Radler, Colson, Atkinson and Boultbee from Ravelston (and its subsidiaries). - When describing the functions of Ralvelston under the Services Agreements, one of the main responsibilities of Ravelston is to provide HLR with "strategic advice, planning and financial services (including advice and assistance with respect to acquisitions, divestitures or joint venture arrangements)." On November 16, 2000, HLR sold Canadian newspapers and related assets to CanWest for total consideration of $1.8 billion, plus closing adjustments. However, we note that during fiscal 2000, the year of a major divestiture for HLR, the payment made to Ravelston from HLR dropped to $33.6 million from $38.0 million during the previous year. Why did the amount of the Services Agreements fee fall in the year of a major divestiture? Also, what did the closing adjustments amount to? - What were the total amount of fees paid to Morgan Stanley for the work they performed in advising HLR on the sales to CanWest? - HLR's proxy statement states that the fees payable pursuant to the Services Agreements and separate services agreements are determined annually by agreement between Ravelston/RMI (and such affiliates) and the Audit Committee. Obtain a description of the steps and processes the Audit Committee has historically undergone to determine on an annual basis that the fees paid under the Services Agreements were reasonable for the services rendered. - With the exception of salaries paid to Lord Black and Mr. Colson by The Telegraph (a subsidiary of HLR), Lord Black and Messrs. Radler, Colson, Atkinson and Boultbee do not receive salaries or bonuses directly from HLR. Ostensibly, this compensation is paid directly by Ravelston (and its subsidiaries and affiliates) to the individuals named above. Therefore, HLR's Compensation Committee does not determine the salary or bonus of the aforementioned HLR executives. However, the Audit Committee does approve of the fees paid under the Services Agreements and separate service 5 agreements from HLR (and subsidiaries and affiliates) to Ravelston (and subsidiaries and affiliates). Thus, does the Compensation Committee correspond with the Audit Committee before the Audit Committee determines the fees payable pursuant to the Services Agreements and separate service agreements? Does the Compensation Committee correspond with Ravelston before Ravelston decides to pay salaries and bonuses (including all other forms of compensation) to Ravelston employees (who are also executives of HLR)? - Does the Compensation Committee seek to determine, on an annual basis, if the total aggregate dollar amounts (salary, bonus, options, non-competes and all other forms of consideration), paid to Lord Black and Messrs. Radler, Colson, Atkinson and Boultbee is reasonable relative to other publicly traded newspaper companies? (the total aggregate dollar amounts should include consideration paid by HLR, Ravelston, Hollinger Inc. and each of their subsidiaries and affiliates and outside entities which directly paid these executives in transactions which involved HLR, Ravelston and Hollinger Inc. - for example, non-compete payments) - Hollinger Inc. has entered into a support agreement with Ravelston Management Inc. ("RMI") requiring minimum annual support payments from RMI. The annual support payment will be equal to the greater of (a) Hollinger Inc.'s negative net cash flow (as defined) for the relevant period (which does not extend to outlays for retractions or redemptions), determined on a non-consolidated basis, and (b) U.S. $14.0 million per year (subject to adjustment), in either case as reduced by any permanent repayment of debt owing by Ravelston to Hollinger (from Hollinger Inc.'s Form CB filed April 29, 2003). When negotiating the annual Services Agreements and separate services agreements, does the Audit Committee consider the minimum annual support payments that RMI owes Hollinger Inc.? How do these minimum annual support payments from RMI to Hollinger Inc. influence the fees paid under the Services Agreements and separate service agreements between HLR and Ravelston/RMI? - HLR IS EFFECTIVELY SUPPORTING THE DEBT SERVICE REQUIREMENTS OF HOLLINGER INC. THROUGH ITS PAYMENTS UNDER THE SERVICES AGREEMENTS AND SEPARATE SERVICE AGREEMENTS TO RAVELSTON/RMI. DOES THE AUDIT COMMITTEE FEEL IT IS APPROPRIATE FOR HLR TO SUPPORT DEBT SERVICE THAT IT IS NOT RESPONSIBLE FOR? - Describe the likely foreseeable consequences if HLR decided to terminate the Services Agreements and separate service agreements with Ravelston/RMI by delivering 180 days written advanced notice. Is there a break-up fee? Would Ravelston continue to exist? 6 NON-COMPETITION AGREEMENTS On several occasions during the last three years, HLR has sold assets to third parties in the ordinary course of business, and, as a condition precedent to the acquisitions, entered into non-competition agreements with the buyer. In return for agreeing not to compete in a designated geographic area over a specific period of time, the buyer paid negotiated cash consideration. In all of the below mentioned transactions, signatories to the non-competition agreements included: HLR, Ravelston, Hollinger Inc., Lord Black, David Radler, Peter Atkinson and Jack Boultbee. However, even though each of the above mentioned signatories were subject to the non-competition restrictions, the cash consideration was paid directly to Lord Black, David Radler, Peter Atkinson and Jack Boultbee (and in one instance, to Ravelston directly), whereas HLR (and consequently HLR's shareholders) received no direct benefit from entering into these non-competition agreements, even though HLR was the entity which owned and sold the assets. Therefore, it appears that Lord Black, David Radler, Peter Atkinson and Jack Boultbee (and in one instance, Ravelston) disproportionately benefited from these non-competition agreements at the expense of the shareholders of HLR.
- ------------------------------------------------------------------------------------------------------------------- DATE TRANSACTION DESCRIPTIONS AMOUNT OF THE NON-COMPETE - ------------------------------------------------------------------------------------------------------------------- 2000 and 2001 HLR sold most of its remaining U.S. $15,600,000 total in non-compete payments community newspaper properties, for total proceeds of approximately $215 million $7,197,500 paid to Lord Black $7,197,500 paid to Mr. Radler $602,500 paid to Mr. Atkinson $602,500 paid to Mr. Boultbee - ------------------------------------------------------------------------------------------------------------------- July and Two separate transactions, HLR and $5,100,000 total in non-compete payments November 2001 Hollinger L.P. sold Canadian newspapers to Osprey Media Group Inc. ("Osprey") for $2,300,000 paid to Lord Black (approx.) approximately $166.0 million plus closing $2,300,000 paid to Mr. Radler (approx.) adjustments. $243,000 paid to Mr. Atkinson (approx.) $243,000 paid to Mr. Boultbee (approx.) - ------------------------------------------------------------------------------------------------------------------- November 16, HLR sold Canadian newspapers and related $53,000,000 total in non-compete payments 2000 assets to CanWest for total consideration of $1.8 billion, plus closing adjustments. $25,200,000 paid to Ravelston $27,800,000 paid to Lord Black, David Radler, Peter Atkinson and Jack Boultbee (allocation unknown) - -------------------------------------------------------------------------------------------------------------------
QUESTIONS AND COMMENTS ABOUT THE NON-COMPETITION AGREEMENTS - It should be noted that in HLR's Form 10-K filed March 31, 2003, the following risk disclosure is made: "Certain of the Company's [HLR] officers are employed by Ravelston as well as the Company, which could result in conflicts of interest or could limit the time those officers devote to management of the Company. 7 Lord Black, the Company's Chairman and Chief Executive Officer, Mr. Radler, the Company's Deputy Chairman and Chief Operating Officer, Mr. Colson, Vice Chairman, Mr. Atkinson, Executive Vice President, and Mr. Boultbee, Executive Vice President, each holds senior management positions with Ravelston as well as the Company. These officers spend a portion of their professional time and effort on behalf of Ravelston. In certain instances, their efforts for Ravelston will relate to activities which are unrelated to the interests of the Company. The Company has not established any minimum time requirements for these officers." - Independent of where their compensation is derived from, Lord Black, Mr. Radler, Mr. Colson and Mr. Boultbee are employees and executive officers of HLR, a publicly traded NYSE company. In each of the aforementioned transactions which involved non-compete payments, HLR (and Lord Black, Mr. Radler, Mr. Colson and Mr. Boultbee) came to the conclusion that it was in the best interest of HLR's shareholders to sell certain newspaper assets and to re-deploy the proceeds in some other fashion. In return for selling the assets, HLR (along with other named parties) gave up the ability to compete in certain geographic markets for a specified period of time. However, in return for this concession, HLR received zero direct consideration while other named signatories to the non-competition agreements received direct cash consideration for agreeing to abide by the non-competition restrictions. It is Lord Black's, Mr. Radler's, Mr. Colson's and Mr. Boultbee's employment with HLR that may entitle them to direct cash consideration paid to abide by the non-competition agreements, if any. Therefore, how can HLR, the entity which gave rise to the transactions and non-competition agreements in question through its decision to sell assets, and which was also subject to the non-competition restrictions, receive zero direct consideration? - How did the Audit Committee reach the conclusion that cash paid in consideration for non-competition agreements, in which HLR was a signatory, should be paid directly to any other party other than HLR? - How does the Audit Committee deal with the potential conflict of interests which arise between HLR's shareholders and HLR's executives with respect to the non-competition payments? (Specifically, the potential conflict that HLR's executives have a personal incentive to divest of assets owned by HLR's shareholders and disproportionately benefit from such transactions.) - Could HLR have received greater proceeds, above and beyond what was actually received, from the sale of these assets had Lord Black, Mr. Radler, Mr. Colson and Mr. Boultbee been subject to the restrictions of the non-competition agreements due to their employment as executives of HLR? - In connection with the Osprey transactions and the US Community newspaper transactions, did HLR pay investment banking fees to an outside advisor? 8 - It should be noted that the CanWest transaction closed on November 16, 2000. The non-competition agreements relating to CanWest were disclosed in the TRANSACTION AGREEMENT dated July 30, 2000 (specifically, PURCHASE PRICE, Section 3.1). The TRANSACTION AGREEMENT can be found in the 8-K filed December 1, 2000. The consideration paid for the non-competition agreements was $53 MM USD or (CDN $80 MM). Ravelston, Hollinger Inc., Hollinger International Inc., Conrad Black, David Radler, Jack Boultbee and Peter Atkinson were signatories to the non-competition agreements. In the TRANSACTION AGREEMENT, no disclosure was made as to how the $53 MM USD was to be allocated between the signatories. The non-competition agreements (relating to CanWest) were not disclosed in the next 10-K filed April 2, 2001 or in the 14A filed March 27, 2001. Why were the CanWest non-competition agreements left out of these two documents (specifically, disclosure relating to who actually received the non-competition money)? The non-competition agreements were disclosed in the following year's 10-K filed April 1, 2002. In the 10-K filed April 1, 2002, we first learn that of the $53 MM USD (CDN $80 MM) total non-competition payments, $25.2 MM (Cdn. $38 MM) was paid to Ravelston and $27.8 MM (Cdn. $42 MM) was paid to Lord Black and the three senior executives (break-up not disclosed). Before this disclosure, it was unclear what person or entities actually received the non-competition payments. - Should Lord Black have been entitled to any of the non-competition money paid by CanWest given that he ultimately renounced his Canadian citizenship in May of 2001 which prevented him from competing in Canada? (Note that Canadian law restricts foreign ownership of media assets). 9 ASSET SALES TO AFFILIATED ENTITIES AND OTHER Horizon Publications Inc. During 1999, Horizon Publications Inc., a company which is controlled by certain officers and members of the Board of Directors of HLR, acquired 33 U.S. community newspapers for $43.7 million resulting in a pre-tax gain of approximately $20.7 million, from HLR. In connection with aforementioned Horizon purchase, HLR loaned money to Horizon to finance the purchase price. At December 31, 2002, there was a balance owed on that loan of $4.9 million. The loan, due in 2007, is unsecured and bears interest at the lower of 8% per annum and LIBOR plus 2%. [Later, during 2001, HLR disclosed that it transferred two publications to Horizon Publications Inc. in exchange for net working capital.] QUESTIONS AND COMMENTS - What portion of the 1999 total purchase price of $43.7 million was financed by HLR? Is it appropriate for HLR to sell an asset to an entity (Horizon Publications Inc.) which at the time was controlled by certain officers and members of the Board of Directors of HLR and then have HLR finance at least a portion of the purchase price? - Which specific individuals negotiated the purchase price on behalf of Horizon? Which specific individuals negotiated the purchase price on behalf of HLR? - How does the Audit Committee ensure that the purchase price represented a fair price for HLR's shareholders? What steps were taken by the Audit Committee to mitigate the fact that persons affiliated with HLR acted as buyer, seller and financier in the aforementioned transaction? - To the author's knowledge, the first time HLR disclosed that the 1999 transaction with Horizon Publications Inc. was at least partially financed by HLR was in HLR's Form 10-K filed March 31, 2003 and Form 14A filed March 31, 2003. - In connection with the above mentioned transaction, did HLR pay investment banking fees to an outside advisor? 10 Bradford Publishing Company Effective July 20, 2000, HLR sold four properties of HLR's U.S. community newspaper group for an aggregate consideration of approximately $38 million to Bradford Publishing Company, a company formed by a former Director and Vice President of American Publishing (subsidiary of HLR?). The initial disclosure (Form 14A filed March 27, 2001) stated, "Certain members of the Board of Directors of the Company [HLR] are shareholders of such company [Bradford Publishing Company]." A later disclosure (Form 10-K filed March 31, 2003) referring to the identical transaction stated, "Bradford Publishing Company, a company in which certain of the Company's [HLR] officers are SIGNIFICANT shareholders..." (emphasis added). It was also disclosed that Bradford Publishing Company owes HLR $4.1 million as of December 31, 2002, representing the present value of the remaining amounts owing under a non-interest bearing note receivable granted to HLR in connection with a non-compete agreement entered into on the sale of certain operations to Bradford Publishing Company during 2000. The note receivable is unsecured and due over the period to 2010, and subordinated to Bradford's lenders. QUESTIONS AND COMMENTS - How much of the July 20, 2000 total purchase price was financed by HLR? Is it appropriate for HLR to sell an asset to an entity (Bradford Publishing Company) which was at the time at least partially owned by certain members of the Board of Directors of HLR and then have HLR finance at least a portion of the purchase price? - To the author's knowledge, the first time HLR disclosed that the July 20, 2000 transaction with Bradford Publishing Company was at least partially financed by HLR was in HLR's Form 10-K filed March 31, 2003 and Form 14A filed March 31, 2003. - Which specific individuals negotiated the purchase price on behalf of Bradford? On behalf of HLR? - How does the Audit Committee ensure that the purchase price represented a fair price for HLR's shareholders? What steps were taken by the Audit Committee to mitigate the fact that persons affiliated with HLR acted as buyer, seller and financier in the aforementioned transaction? - In connection with the above mentioned transaction, did HLR pay investment banking fees to an outside advisor? 11 CanWest Transaction-Management Services Agreement with Ravelston On November 16, 2000, HLR sold Canadian newspapers and related assets to CanWest for total consideration of $2.1 billion, plus closing adjustments. In connection with the sale to CanWest, and in addition to the non-competition agreement fee received by Ralveston (of the total $53,000,000 non-competition agreement paid in the CanWest transaction, $25,200,000 was paid to Ravelston), Ravelston entered into a management services agreement with CanWest and National Post pursuant to which it agreed to continue to provide management services to the Canadian businesses sold to CanWest in consideration for an annual fee of $4 million payable by CanWest. Furthermore, CanWest agreed to pay Ravelston a termination fee of Cdn. $45 million in the event that CanWest chooses to terminate the management services agreement or Cdn. $22.5 million in the event that Ravelston chooses to terminate the agreement. In a press release first announcing the CanWest transaction dated July 31, 2000, Hollinger International Inc. stated the following: "Through its [HLR's] 15% shareholding in CanWest, its 50% direct interest in the National Post and as continuing manager of these assets, Hollinger [HLR] will continue to participate in the future growth and exploitation of the franchise value of the assets in conjunction with CanWest's television, cable channel, radio and other Canadian and international media assets." This sentence is either factually wrong or it was envisioned at the time that the management services contract was going to be between CanWest and HLR (instead of CanWest and Ravelston). In the 10-Q filed August 14, 2000, the following disclosure is made: "With respect to the other newspaper assets being sold to CanWest, Mr. Black and his associates will enter into a management services agreement for at least 17 months in order to ensure operating continuity and to facilitate a smooth transition to the new arrangements." This disclosure, inconsistent with the previous press release, makes it clear that HLR will not benefit from the management services agreement with CanWest. In fact, it is Lord Black and his associates at Ravelston that derive the benefit of the management services agreement with CanWest. Also note that on November 16, 2000, in press release issued by HLR announcing the closing of the CanWest transaction, the following disclosure is made: "The aggregate sale price of these properties was approximately CDN $3.2 billion (US $2.1 billion), plus interest and subject to adjustments. The 12 sale and a related transaction resulted in the Hollinger group receiving approximately CDN $1.8 billion (US $1.2 billion) cash..." Then, in the 10-K filed April 2, 2001, the following disclosure is made: "The sale resulted in the Hollinger Group receiving approximately Cdn. $1.7 billion ($1.1 billion) cash..." Suspiciously, somehow between the date of closing (Nov. 16, 2000) and the date the 10-K was filed (April 2, 2001), total cash received by HLR was reduced by $100 MM (note that post closing adjustments amounted to $40.7 MM, which, when combined with rounding, might be the explanation). QUESTIONS AND COMMENTS - In the above referenced transaction, it is clear that Ravelston directly benefited from HLR's asset sale to CanWest. Was the management services agreement with CanWest ever envisioned to benefit HLR (as per the July 31, 2000 HLR press release)? - Who at HLR negotiated the CanWest transaction? Who at HLR negotiated Ravelston's management services agreement with CanWest? Did any of the same individuals from HLR negotiate both the CanWest transaction terms with HLR and the CanWest/Ravelston management services agreement? - What was the economic basis for the negotiated terms relating to the CanWest/Ravelston management services agreement? What specific services does Ravelston provide to CanWest on an annual basis? Could CanWest purchase similar services from an unrelated third-party on more favorable terms or carry out the services internally? - Did the Audit Committee of HLR review the terms of the CanWest/Ravelston management services agreement? Did the CanWest management services agreement affect in any way HLR's Services Agreements and separate services agreements with Ravelston/RMI? - Is it possible that the purchase price paid by CanWest to HLR would have been greater had CanWest not entered the management services agreement with Ravelston? (Said another way, is it possible that HLR did not receive the maximum amount it could have obtained in a completely independent transaction because a portion of the purchase price was diverted to Ravelston under the CanWest/Ravelston management services agreement?) 13 - In connection with the above mentioned transaction, did HLR pay investment banking fees to an outside advisor? 14 OTHER IN THE JEFFERIES' RESEARCH REPORT DATED APRIL 25, 2003, JEFFERIES ESTIMATES THAT THE ANNUAL COSTS FOR OPERATING HLR'S TWO AIRPLANES IS $8 TO $10 MILLION. QUESTIONS AND COMMENTS - GIVEN THAT HLR'S MAJOR OPERATIONS ARE IN CHICAGO AND LONDON, TWO CITIES SERVED BY AMPLE COMMERCIAL AIRCRAFT, WHY DOES HLR OWN/LEASE TWO AIRPLANES? - ARE THE TWO AIRPLANES BEING USED FOR PERSONAL REASONS IN ADDITION TO BUSINESS REASONS? - AT WHAT RATE IS HLR BEING REIMBURSED FOR PERSONAL USE OF THE TWO AIRPLANES? 15 RECENT TRANSACTIONS SUBORDINATION IN HLR'S MOST RECENT 10-Q FILED MAY 15, 2003, HLR DISCLOSES IN NOTE 9 THAT AS OF MARCH 10, 2003, A HOLLINGER INC. SUBSIDIARY OWES HLR APPROXIMATELY $20.4 MILLION IN DEBT (DOWN FROM $45.8 MILLION AS OF DECEMBER 31, 2002). THIS DEBT OWED TO HLR IS CLASSIFIED AS AN ASSET ENTITLED "LOAN TO AFFILIATE" ON HLR'S CONSOLIDATED BALANCE SHEET. THIS REMAINING DEBT BEARS INTEREST AT 14.25% OR, IF PAID IN ADDITIONAL NOTES, 16.5% AND IS SUBORDINATED TO THE HOLLINGER INC. NOTES ($120,000,000 AGGREGATE PRINCIPAL AMOUNT OF 11 7/8% SENIOR SECURED NOTES DUE 2011). THE 10-Q THEN STATES THE FOLLOWING: "FOLLOWING A REVIEW BY A SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY, COMPRISED ENTIRELY OF INDEPENDENT DIRECTORS, OF ALL ASPECTS OF THE TRANSACTION RELATING TO THE CHANGES IN THE DEBT ARRANGEMENTS WITH HOLLINGER INC. AND THE SUBORDINATION OF THIS REMAINING DEBT, THE SPECIAL COMMITTEE APPROVED THE NEW DEBT ARRANGEMENTS, INCLUDING THE SUBORDINATION." QUESTIONS AND COMMENTS - WHICH BOARD MEMBERS COMPRISED THE "SPECIAL COMMITTEE" REFERRED TO ABOVE? - WHAT BENEFIT DID HLR RECEIVE FOR BECOMING SUBORDINATED TO HOLLINGER INC.'S SENIOR SECURED NOTES REFERRED TO ABOVE? IN HLR'S MOST RECENT 10-Q FILED MAY 15, 2003, HLR DISCLOSES IN NOTE 10 THE FOLLOWING: "AT THE TIME OF THE COMPANY'S [HLR'S] REPURCHASE AND REDEMPTION OF SHARES AS DESCRIBED IN NOTE 9, THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS REFERRED TO IN NOTE 9 ALSO AGREED TO THE PARTIAL OFFSET OF THE REMAINING $20.4 MILLION OF DEBT OWED BY A SUBSIDIARY OF HOLLINGER INC. TO THE COMPANY AGAINST AMOUNTS OWED BY THE COMPANY TO RAVELSTON MANAGEMENT INC. ("RMI"). ON APRIL 30, 2003, $15.7 MILLION OF THAT DEBT WAS TRANSFERRED TO RMI LEAVING A BALANCE OF $4.7 MILLION DUE TO THE COMPANY BEARING INTEREST AT 14.25% OR, IF PAID IN ADDITIONAL NOTES, 16.25%." 16 QUESTIONS AND COMMENTS - THE "PARTIAL OFFSET" REFERRED TO ABOVE OCCURRED APRIL 30TH, 2003, ONE DAY AFTER A DIALOGUE HAD BEEN FORMED BETWEEN LORD BLACK AND CERTAIN OF HLR'S LARGEST SHAREHOLDERS REGARDING HISTORICAL QUESTIONABLE TRANSACTIONS. - IN THE TRANSACTION REFERRED TO ABOVE, FOR WHAT PURPOSE DID HLR OWE RAVELSTON $15.7 MILLION? VENTURE CAPITAL INVESTMENT IN HLR'S MOST RECENT 10-Q FILED MAY 15, 2003, HLR DISCLOSES THE FOLLOWING: "DURING THE QUARTER, THE COMPANY (HLR) MADE A VENTURE CAPITAL INVESTMENT OF $2.5 MILLION IN A FUND IN WHICH A DIRECTOR OF THE COMPANY HAS A MINORITY INTEREST." QUESTIONS AND COMMENTS - WHICH DIRECTOR OF HLR HAS A MINORITY INTEREST IN THE VENTURE CAPITAL FUND DESCRIBED ABOVE? - DID THE AUDIT COMMITTEE APPROVE OF THIS INVESTMENT? - WHAT IS THE SIZE OF THE TOTAL VENTURE CAPITAL FUND BEFORE AN AFTER THE HLR INVESTMENT? - WHAT STRATEGIC BENEFIT DOES HLR RECEIVE FOR MAKING AN INVESTMENT IN THIS PARTICULAR VENTURE CAPITAL FUND? 17 EX-99.2 4 b46762hiexv99w2.txt EXHIBIT B - KIRBY MCINERNEY & SQUIRE LLP LETTER EXHIBIT B TO TWEEDY, BROWNE COMPANY LLC 13D DATED MAY 19, 2003 KIRBY MCINERNEY & SQUIRE LLP 830 Third Avenue New York, NY 10022 VIA FEDERAL EXPRESS May 19, 2003 The Board of Directors Hollinger International Inc. c/o Corporation Service Company 2711 Centerville Road, Suite 400 Wilmington, DE 19808 Ladies and Gentlemen: Our client, Tweedy Browne Company, LLC ("TBC"), by virtue of its investment and voting power over shares held by its clients, controls approximately 13.2 million shares of Class A common stock of Hollinger International Inc. (the "Company"). TBC has held certain of such shares on behalf of its clients since September 3, 1999. In the Company's filings with the Securities and Exchange Commission over the past several years, it has been publicly reported that over $73 million was paid to Conrad Black, the Chief Executive Officer and Chairman of the Board of Directors of the Company and other senior executives of the Company including David Radler, Peter Atkinson and J.A. Boultbee (collectively, the "Executives") and received by the Executives since January 1, 2000 either directly, or indirectly through The Ravelston Corporation Limited and its subsidiaries and affiliates, under non-competition agreements (collectively the "Agreements"). The Agreements were reported to have arisen from three asset sales by the Company resulting in over $2 billion in proceeds. On behalf of our client, we write to demand that the Board of Directors of the Company investigate and take corrective action respecting the payments made to the Executives under the Agreements. We demand you take all action necessary, including litigation, to recover from the Executives (a) the disgorgement of payments made under the Agreements, together with interest thereon, and (b) any other damages to the Company for having lost the opportunity to profit itself from such Agreements. The Board of Directors Page 2 May 19, 2003 The acceptance of payment under the Agreements by the Executives instead of the Company constitutes a usurpation of a corporate opportunity belonging to the Company. It also constitutes a breach of the fiduciary duty and the duty of loyalty that each of the Executives owes to the Company and all of its shareholders. We are sending this demand letter because we have analyzed the composition of the Board of Directors of the Company and have determined, based on public information, that the Board should be able to impartially and independently consider this demand and seek redress from the Executives on behalf of the Company. Failure to take the action demanded in this letter, however, would constitute a failure to act independently, and indeed participation in the diversion of a corporate opportunity to the Executives. The claim of misappropriation of corporate opportunity is derivative in nature under the law of Delaware, the state in which the Company is incorporated. This derivative claim is separate and distinct from any federal securities law claim or other claim that may have been or may be alleged relating to the acceptance of payments under the Agreements by the Executives. Because the subject matter of this demand is derivative in nature, and because the Board of Directors of the Company should be capable of responding to this demand independently, final resolution of this matter may only be conducted with a stockholder that has submitted a formal demand to the Board of Directors that the Board initiate suit. We look forward to hearing from you regarding your investigation and resolution of this matter. If we can be of further assistance, please let me know. If we do not receive a definitive response to this demand within 45 days, we will regard that as a failure to act independently within a reasonable period of time. Very truly yours, Robert E. Curry cc (Via Federal Express): The Board of Directors Joel E. Friedlander, Esq. -----END PRIVACY-ENHANCED MESSAGE-----