Hollinger faces collapse over default

By RICHARD THOMSON
Updated:

 

LORD Black's Canadian company Hollinger Inc is heading for possible collapse if it fails to produce audited accounts within 11 days.

Failure to file by 15 March would breach a covenant in a $120m (£65.5m) bond and could set off default proceedings.

Black, the company's embattled major shareholder, is likely to struggle to meet the deadline as Hollinger Inc has not had an auditor since KPMG quit last December.

A default on the bond could complicate the situation surrounding Hollinger Inc by transferring ownership of its holding in Hollinger International to the bondholders.

The bond is secured by almost all of Hollinger Inc's shares in Hollinger International, owner of the Telegraph titles and other media assets, which it is trying to sell. While Hollinger Inc owns a stake of about 30% in Hollinger International, it has voting power of more than 70%.

Hollinger Inc failed to meet a $7.4m interest payment on the bonds earlier this week. It has 30 days' grace to come up with the money.

But even if Black manages to make that payment, he stands to lose control of his company to the bondholders if he fails to file the audited accounts in time. The bondholders are mainly specialist investors based in the US.

Black had intended to pay the Hollinger Inc bond interest from the proceeds of his sale of the company to the Barclay brothers. That deal was blocked by a Delaware court last week and the Barclays have formally withdrawn.

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