Hollinger set for Barclays deal battle

A BITTER split between Lord Black and the company he built was last night threatening to block a deal to pass control of the Daily Telegraph to Sir David and Sir Federick Barclay.

Advisers to Black last night expressed concern that the £260m deal between Black and the Barclays would be 'held hostage' in a legal fight which could hold up the deal for months or even years.

The situation was further complicated when, at an emergency meeting held to discuss the proposed transaction, the board of directors appointed a special committee to review the deal and 'all appropriate actions and alternatives available to the company'.

The options include continuing a formal bidding process for the sale of Hollinger's major assets, which, in addition to the Telegraph, include the Jerusalem Post and the Chicago Sun-Times.

The depth of the rift between Black and Hollinger's board of directors, made up of several of his friends, was evident in a growing dispute over his apparent refusal to honour a promise to repay $7.2m, beginning with a payment of $850,000 due on Sunday.

Black, through spokesmen, has said he will not reimburse the company, claiming that payments to him and colleagues were authorised by the board of directors, which includes Henry Kissinger and US defence expert Richard Perle.

Last night's statement from Hollinger International said the board would insist on the payment promised by Black.

Further, it appointed Gordon Paris, who is known to have had brushes with Black, to replace him as chief executive and interim chairman.

Black has argued that the Barclays deal will remove uncertainty surrounding the Telegraph and the other titles and reassure shareholders that an orderly transition from his control is in place.

Former SEC chairman Richard Breeden, who is investigating allegedly illegal executive payments at the group, could take legal action to try to prevent Black from selling out until the probe is complete. Black sought to pre-empt this, asking a Canadian court to prevent the sale being blocked.