Revealed: Black's secret deal

A SECRET deal to help Telegraph owner Conrad Black retain maximum control over his Hollinger publishing empire was struck just one hour before last week's dramatic shareholders' meeting.

The media mogul unveiled a series of moves to placate angry shareholders that appeared to loosen his control over Hollinger International - publisher of the Chicago Sun-Times and Jerusalem Post as well as the Telegraph titles in Britain.

He agreed that within five years all shares in the company should have equal voting rights, unravelling the current system under which B shares have ten votes and A shares only one. The current arrangement allows Black to retain control over Hollinger, though he owns only a minority.

A further key part of the package of measures was a deal under which Southeastern Asset Management, the biggest non-Black investor in Hollinger International, will buy up to tenm shares from Black's holding company, Hollinger Inc. It will also be given three seats on the board. The twin initiatives mean that Black's voting power will fall to about 42% of the empire from more than 72% at present.

But it has emerged that during frantic horse-trading before last Thursday's meeting, Black managed to extract a crucial pledge from Southeastern. The asset management group's chairman, Mason Hawkins, agreed to back Hollinger's current management for at least three years.

After the meeting, Black acknowledged that there was a 'support agreement' with Southeastern, but refused to elaborate.

The deal means that as the power of Black's high-voting B shares is eroded, his position will be bolstered by the support of Southeastern's 22%-plus stake.

Andy McCarroll, in charge of legal affairs for Southeastern, said the deal between Black and Hawkins was struck 'only about an hour before the meeting'. It was agreement in principle, he said. 'They then ask us to work out the details.'

US fund manager shareholder Tweedie, Browne has challenged Hollinger International's board to justify more than $200m (£120m) paid to Black, his companies and associates over the past three years. Christopher Browne, a managing director at Tweedie, Browne, was sceptical about the moves unveiled by Black at the meeting. 'Until I understand the terms of the agreement, I'm not going to have an opinion,' he said.