Hollinger's filing reveals massive losses

NEWSPAPER publisher Hollinger International, still locked in a bitter battle with fallen Press baron Lord Black, has finally filed its 2003 annual report, restating several years' earnings and showing huge losses.

But the company is to pay out a special dividend from last year's sale of the Telegraph group to David and Frederick Barclay for $1.3bn (£665m). Black, as the largest shareholder, will be a big beneficiary.

The special dividend of $2.50 is worth a total of $500m to be paid in two tranches, the first of $277m. The company-is using the remainder of the proceeds to pay down debt.

Hollinger, which restated earnings for four years from 1999, logged a net loss of $74.3m (£40.4m) in 2003, a $230.6m deficit in 2002 and $326m in 2001. It is still to file results for 2004.

The annual report was delayed as a special committee investigated the company finances amid claims that Black and his cronies siphoned off hundreds of millions of dollars. On top of that, the report reveals that legal battles with Black have so far drained another $56m from company coffers, and warned there will be more to come.

'The potential impact of these disputes, investigations and legal proceedings on the company's financial condition and results of operations cannot currently be estimated,' the company said in its filing with the Securities and Exchange Commission.

Hollinger has been forced to stump up for Black's legal bills after he successfully argued that, as with other directors of the company, he is entitled to money to defend his actions while working on behalf of the company.

Black was forced out as chairman early last year and Hollinger, after its inquiry, branded his reign as a 'corporate kleptocracy'. That probe led to some of the earnings restatements although the company insists others were simply due to accounting error.

Black now faces a $542m federal fraud action although denies any wrongdoing. The scandal led to the sale of the Telegraph group and the Jerusalem Post for $13m last year. Its major newspaper property now is the Chicago Sun-Times.

The company, seeking to put the matter behind it, said the filing was 'an important step toward normalising our activities'.

As part of that process, Gordon Paris, interim chief executive since November 2003, said the company plans to file 2004 quarterly reports as soon as possible although it is likely to miss the extended 16 March deadline and will seek a postponement until the end of March.