Hollinger board fires Black

Control of Hollinger International Inc. -- owner of the Chicago Sun-Times -- was thrown into chaos late Saturday, with the company's board of directors firing Conrad Black as chairman amid reports he was on the verge of selling his controlling stake.

A committee of Hollinger International directors launched a two-pronged attack on Black that began late Friday, suing him and F. David Radler, the Sun-Times' former publisher, for $200 million they allegedly collected through "improper means." On Saturday night, the company said its executive committee voted to remove Black as chairman.

In November, Black resigned as chief executive, and a reform-minded outside director, New York investment banker Gordon Paris, was named interim CEO.

Meanwhile, London newspapers reported today that the Barclay brothers, Frederick and David -- owners of some of the United Kingdom's elite newspapers -- were close to buying Ravelston Inc., Black's privately held Canadian company through which he controls Hollinger Inc., which in turn controls Hollinger International and the Sun-Times, plus about 100 other Chicago area newspapers. Hollinger International also owns the Daily Telegraph in London and the Jerusalem Post.

Whether any new owners of Hollinger International could exert any control over the newspapers or sell them remained very much in doubt.

Acting on a U.S. Securities and Exchange Commission petition Friday, federal court Judge Robert Gettleman issued an order that would put a "special monitor" in charge of Hollinger if Black tried to fire its outside directors or change the makeup of the board. The order does not bar Black from selling the company, an informed legal source said, but it would bar a new owner from selling off assets like the Sun-Times.

The legal sorties and counter-sorties raise the stakes in a corporate battle that began two months ago. Then, a special committee of Hollinger directors said Black, Radler and others collected $32 million in unauthorized payments from Hollinger International. Friday's lawsuit describes a far broader scheme to take money out of Hollinger International through "abusive" deals.

"This litigation marks a substantial step towards returning to our shareholders the value that was inappropriately taken from this company," said Paris, Hollinger International's interim CEO.

Black faces lawsuits from shareholders, an inevitable suit by the Securities and Exchange Commission and a probe by the U.S. attorney in Chicago. On Friday, the SEC filed suit against Black to halt him from meddling with an ongoing inquiry by outside directors of Hollinger International.

It was not immediately clear whether Black would fight his ouster as chairman of Hollinger International. What is clear is that tensions between Black and the special committee have reached a boiling point.

When he resigned, Black agreed to pay back $7.2 million to the company, with interest. But he missed the deadline for his first payment of $850,000 -- a sum due today, under a subsequent agreement. Black's lawyer now says his client collected the money properly.

"We believe this lawsuit is an attempt by the Special Committee now to divert attention from the fallacy of their earlier claims," said Black's lawyer, John Warden, in a statement Saturday night. Radler declined to comment on the lawsuit.

The suit takes aim at two kinds of deals:

*Non-competition payments.

*Management fees.

It accuses Black and Radler, plus Hollinger Inc., the Canadian parent company of Hollinger International that Black also controls, of illegally funneling $90 million to the executives. The money should have been paid to the company, the suit says.

The suit also says $224 million in "management fees" paid to Hollinger Inc. and Ravelston were "far in excess" of their value to the company.

"There is no reason other than the self-interested actions of defendants Black and Radler that the company did not retain its own management staff," the suit says.

Directors could be added to the suit, including former Illinois Gov. James R. Thompson and former U.S. State Department official Richard Burt, both members of the executive committee that voted Saturday night to remove Black as chairman.

Hollinger Inc. is facing a cash crunch. Black earlier agreed not to sell his interest in it. That agreement expires today. Saturday night Warden, Black's lawyer, said "the special committee is trying to interfere with Lord Black's efforts to engage in a transaction that would benefit Hollinger International."