TORONTO - Conrad Black quit yesterday as chairman and chief executive officer of Hollinger Inc., the company that controls the publisher of the Chicago Sun-Times, pre-empting a court decision that might have ousted him.
Judge Colin Campbell of Ontario Superior Court was scheduled to consider a shareholder demand to remove Black, his wife and allies as directors of the company. Catalyst Fund General Partner I Inc., the investor pursuing the case, said Black's departure is a maneuver to buy time while he retains control with 78 percent of the company's common shares.
"At any point in time, Lord Black can go back to that board," Catalyst lawyer David Moore said during yesterday's hearing.
By quitting, Black clears the way for the board to consider a proposal he made last week to take the company private and end the legal battle in Canada. In the United States, Black still faces a lawsuit from Hollinger International Inc., the Chicago-based newspaper subsidiary of Hollinger Inc., that accuses him of helping to loot the company of more than $400 million.
Black denies any wrongdoing, 18 months after minority investors accused him of using his network of holdings to enrich himself and his associates. Hollinger International's board ousted him in January.
Hollinger Inc. announced Black's resignation in a one-sentence statement. He remains the company's controlling shareholder through his private investment vehicle, Ravelston Corp.
The company had said Black would retire last week, when Ravelston offered to buy the Hollinger Inc. shares it doesn't own at a price to be determined later. Shareholders who tender their stock may lose the right to pursue claims against the company.
A committee of Hollinger Inc.'s independent directors will review the proposal to take the company private. The plan is subject to approval by a majority of the company's minority shareholders.
Catalyst holds 37 percent of the company's Series II preferred shares. The fund claims Hollinger Inc. transferred C$1.1 million ($902,000) to Ravelston without board approval.
Hollinger shares rose 5 cents to C$6.30 yesterday on the Toronto Stock Exchange.
The legal battle in Canada is just one front on which Black is fighting. In Chicago, he got a federal judge last month to dismiss Hollinger International's $1.25 billion racketeering suit accusing him and associates of self-dealing.
Hollinger International said later that it plans to refile the lawsuit for breach of fiduciary duty and unjust enrichment, without the racketeering claims that could have led to triple damages. A board committee claimed in August that Black and his associates siphoned away 95 percent of the company's net income over seven years.