K Capital considering ways to maximize value for Sun-Times Media shareholders

By Lisa Kerner

Charlotte, N.C., March 27 - Sun-Times Media Group, Inc. investors led by K Capital Partners, LLC are considering their alternatives with respect to their investment in the company and possible means to maximize shareholder value, a schedule 13D filing with the Securities and Exchange Commission stated.

K Capital is working with Imperial Capital, LLC as it considers various strategies including corporate governance changes, a merger or sale of Sun-Times or a going-private transaction, the filing said.

The investors said they are also evaluating their options with respect to proposals they may make at the company's next annual meeting. These proposals could include an alternate slate of nominees for election to the board, a share buyback and/or the elimination of director fees.

K Capital and its affiliates beneficially own 8,121,312 shares, or 12.4%, of the Chicago-based newspaper company,

In January, K Capital called on majority shareholder Hollinger Inc. and special monitor Richard C. Breeden to make changes to the company's 11-member board of directors.

The investor recommended a smaller board with more shareholder representation and said a focus on value creation is needed to lead the company, a prior SEC filing said.

K Capital said that since Hollinger controls the voting stock of Sun-Times, it would need to approve a reconstitution of the board.

Hollinger was urged to request that Sun-Times reduce its board to five members and seek the election of Cyrus Freidheim Jr., Sun-Times chairman and chief executive officer; William Aziz, Hollinger chief financial officer; Graham Savage, Callisto Capital chairman; Gene Fox, Cardinal Capital Management managing director; and Jennifer Wallace, Summit Street Capital portfolio manager.

In December it was reported that K Capital called for certain "value enhancing actions" by Sun-Times including completion of the share repurchase program authorized in May 2006 and development of a detailed 2008 operating plan.

K Capital suggested that the company compensate its chairman, CEO and directors of the board entirely in equity compensation, with no cash compensation, according to a prior news release.

Sun-Times announced in February that it was reviewing strategic alternatives with the assistance of Lazard. The alternatives could include joint ventures, strategic partnerships or a sale of the company, Sun-Times said.

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