Legal clash fear hits Hollinger

THE threat of a legal clash over the transfer of control of the Daily Telegraph to the Barclay brothers hit shares in Lord Black's media companies last night.

Even the Barclays themselves appear fearful of legal challenges, having insisted that £33m out of their £260m purchase price for the Telegraph's Canadian parent firm Hollinger Inc is withheld in a special account.

This is to guard against action from US publisher Hollinger International - which owns the Telegraph titles - or from others.

The money will be ring-fenced until end-2005 for use by the Barclays to deal with any legal problems, before it can be released to Black and his minority shareholders.

Shares in Hollinger Inc and Hollinger International fell by as much as 15% below levels reached on Monday when they rose on Black's plan to sell control of his media empire to Sir David and Sir Frederick Barclay.

Investors turned cautious after directors of Hollinger International rejected a personal plea from Black at an emergency board meeting on Tuesday to approve the Barclays' offer quickly.

The dispute between Black and Hollinger International's board threatens to embroil the Barclays in a legal fight which could drag on for months if not years.

Hollinger International has already filed a lawsuit demanding £111m from Black and his associates.