Sun-Times Media reacts to shareholder's claim of board entrenchment

By Lisa Kerner

Charlotte, N.C., Jan. 7 - Sun-Times Media Group, Inc. continued to pressure its stockholders to reject Davidson Kempner Capital Management LLC's "ill-conceived" efforts to replace the company's board of directors.

Davidson Kempner wants to reduce the Chicago-based newspaper company's board to five directors from seven and put forth its own slate of director nominees.

In a Jan. 7 letter to stockholders, Sun-Times reacted to Davidson Kempner's claim that the board is seeking to entrench itself by delaying the planned departure of three directors.

The directors have agreed to stay on "only so that the board can be properly restructured one way or the other," Sun-Times' letter said.

Davidson Kempner denied Sun-Times' claim that the recruitment of new directors has been hampered by Davidson Kempner's consent solicitation process.

Rather, the shareholder said the delay in recruiting new directors has "everything to do with the dismal track record of the current directors who do not possess the necessary publishing and restructuring credentials," it was reported previously.

According to Sun-Times, Davidson Kempner has:

• Rejected reasonable compromise proposals;

• Refused to permit the nominating and governance committee to meet with or collect information from the shareholder's nominees; and

• Failed to offer concrete proposals for addressing the challenges facing Sun-Times.

Davidson Kempner said previously that it wants a reconstituted board to arrest cash burn, resolve an Internal Revenue Services claim and strategically reposition Sun-Times.

Sun-Times said it has an "ambitious and concrete plan" to reduce costs by more than $50 million and achieve cash flow neutrality in the next 12 to 24 months.

In addition to current independent director Robert B. Poile, Davidson Kempner said it is nominating:

• Jeremy L. Halbreich, former president and general manager of the Dallas Morning News;

• Robert A. Schmitz, a partner at Quest Turnaround Advisors; and

• Michael E. Katzenstein, founder and principal of CXO, LLC, a restructuring and turnaround management firm.

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