Black avoids default with late sale

LORD Black's Hollinger Incorporated has narrowly avoided defaulting on a $120m (£64.8m) bond issue, raising the money for a late interest payment by selling part of its stake in Hollinger International, owner of the Telegraph titles, Chicago Sun-Times and other newspapers.

Hollinger Inc missed the original deadline to pay $7.4m on 1 March but insisted that it had another 30 days in which to find the money before it was formally in default.

Hollinger International offered to lend the company money to cover the repayment, but the offer was rejected.

Hollinger Inc now says it has raised the funds by selling 275,000 class A shares in Hollinger International, its main asset, at about $17.05 each, according to a filing with the Securities and Exchange Commission.

The sale yielded about $4.7m which, added to other share sales in the past few weeks, covers the bond payment.

The sale still leaves Hollinger Inc with a 30% stake in Hollinger International and 72% voting control-which it holds through class B shares which have not been sold.

The bond payment scotches speculation that Black was playing some kind of devious game that would allow his company to go bust as part of his bitter feud with Hollinger International.

The latter's strategy to sell off its media assets is back on track after a Delaware court ruling earlier this month that blocked an attempt by Black to sell the company to the Barclay brothers, owners of The Scotsman and the Ritz Hotel in London.

Since the court ruling, Black has acquiesced in Hollinger International's auction, but observers believe his is still looking for ways to undermine the sale.

First-round bidding for the Hollinger assets closed yesterday with the Barclays putting in an offer for the Telegraph titles alone, rather than for the company.

Lazard Brothers, the investment bank handling the sale, has not yet said whether it is aiming to sell off the assets piecemeal or find a buyer for the whole company.

Others who had expressed interest before the process was halted by the Delaware trial include Richard Desmond's Northern & Shell, Daily Mail and General Trust, owner of the Daily Mail, the Mail on Sunday, the Evening Standard and This is Money, and private investment companies Apax Partners and 3i Group.

The auction has also attracted interest from abroad, with Axel Springer, the German media group, and Gannett, the US newspaper company, also launching bids. UK stockbroker Collins Stewart Tullett is also interested in putting in an offer in partnership with other investors.