K Capital makes recommendations in Sun-Times settlement with Hollinger

By Lisa Kerner

Charlotte, N.C., Sept. 10 - Sun-Times Media Group, Inc. investors led by K Capital Structure Arbitrage Offshore, LP, encouraged by negotiations between the company and Hollinger, Inc., cautioned that any settlement that includes materially better terms than those described below would be "preferential to the class B holders and materially damaging to class A shareholders":

• Sun-Times should pay no more than $7 million to convert its class B shares to class A shares;

• Sun-Times should hold an exchange offer to purchase the Sun-Times class B shares for debt or preferred shares;

• The $34 million subordinated claim that Sun-Times has in Hollinger should not be forgiven without fair compensation;

• No monetary payment should be made to Hollinger in the litigation claims; and

• Corporate governance changes should be made.

In addition, K Capital would like Sun-Times to amend its bylaws to allow any 10% or greater shareholder to call a special meeting and to also redeem its poison pill.

K Capital shared its views in a Sept. 7 letter to the board signed by Abner Kurtin, portfolio manager, and included in a schedule 13D filing with the Securities and Exchange Commission.

Hollinger and Sun-Times have been directed by the Ontario Superior Court of Justice to conduct good-faith settlement negotiations relating to the Hollinger reorganization proceedings in Canada, the filing stated.

The reporting persons own 6,426,410 shares, or 9.9%, of the Chicago-based newspaper company's outstanding stock.

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