Hollinger securities law breach settlement accepted by SEC; share registration to be revoked

By Caroline Salls

Pittsburgh, March 25 - Hollinger Inc. said the Securities and Exchange Commission has accepted its $21.28 million settlement offer related to a securities law breach suit filed by the SEC on Nov. 15, 2004 against Hollinger, Conrad Black and David Radler, according to a company news release.

Hollinger said the settlement offer has also received court approval in connection with its Companies' Creditors Arrangement Act and Chapter 15 bankruptcy cases.

According to the release, the SEC alleged that Hollinger breached U.S. federal securities laws from 1999 to 2002 by fraudulently receiving $16.55 million in payments from Sun-Times Media Group, Inc. for non-compete agreements associated with sales transactions.

The SEC also alleged that Hollinger failed to file its 2003 20-F; falsified reports, books, records and accounts that were subject to U.S. federal securities laws; and circumvented or failed to implement a system of internal accounting controls.

Under Hollinger's settlement offer, the company has agreed to the disgorgement of $21.28 million, including $16.55 million in alleged non-competition payments received by the company, plus interest.

The amount already paid to Sun-Times under a Delaware Court of Chancery judgment against Hollinger and Black will be credited against the settlement payment, according to the release.

Also under the settlement, Hollinger will consent to the issuance of an SEC judgment revoking the registration of its common shares and series II preference shares under the U.S. federal securities laws.

The company will also be permanently enjoined from future violations of federal securities laws.

"This settlement represents one further step forward in Hollinger's efforts to resolve its outstanding regulatory and compliance issues, and allows Hollinger to continue to focus on its primary objective of maximizing the value of its assets for the benefit of all stakeholders," chief executive officer G. Wesley Voorheis said in the release.

Toronto-based Hollinger's principal asset is Hollinger International, which is a newspaper publisher that owns the Chicago Sun-Times. Hollinger filed its CCAA proceedings and Chapter 15 bankruptcy on Aug. 1, 2007. Its Chapter 15 case number in the U.S. Bankruptcy Court for the District of Delaware is 07-11029.

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