<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
----------
Date of Report (Date of earliest event reported): December 11, 1996
Hollinger International Inc.
(Exact name of registrant as specified in charter)
Delaware 0-24004 95-3518892
(State or other (Commission (IRS employer
jurisdiction of incorp.) file number) identification no.)
401 North Wabash Avenue,
Chicago, Illinois 60611
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (312) 321-2299
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
Southam. As previously reported, on May 24, 1996, Hollinger Inc., the
parent corporation of Hollinger International Inc. (the "Company"), announced
that its wholly owned Canadian subsidiary had purchased from a subsidiary of
Power Corporation of Canada ("Power") the 16,349,743 common shares (the "Power
Shares") of Southam Inc. ("Southam") held by Power representing approximately
21.5% of Southam's outstanding common shares, at a price of Cdn. $18.00 per
share. This purchase increased the Company's and Hollinger Inc.'s combined
holdings in Southam to approximately 41% of Southam's outstanding common
shares, including 19.5% which is currently held indirectly by the Company. The
Company had the right to acquire a substantial equity interest in Hollinger
Eastern Publishing Inc. ("Hollinger Eastern"), the subsidiary company which
purchased the Power Shares. Hollinger Eastern is now owned jointly by the
Company and Hollinger Inc. The Company holds all outstanding non-voting common
shares, one-half of the outstanding voting preference shares and Cdn.$30
million in non-voting preference shares of Hollinger Eastern, and Hollinger
Inc. holds the remaining one-half of the voting preference shares of Hollinger
Eastern.
On October 24, 1996, the Company and Hollinger Inc. announced a cash
offer by a wholly owned Canadian subsidiary of First DT Holdings Limited, an
English subsidiary of the Company ("FDTH"), to acquire an additional 9.2%
interest in Southam. On December 11, 1996, the wholly owned subsidiary of FDTH
acquired 8,000,000 common shares of Southam at a price of Cdn.$20.00 per share,
which increased the aggregate holdings of the Company and Hollinger Inc.
(through Hollinger Eastern) to 51.4% of Southam's currently outstanding common
shares. Hollinger Inc. and the Company have combined their interests in Southam
in a manner that the Company believes maintains Southam's tax status as a
publisher of Canadian newspapers and periodicals. The Company expects that it
will consolidate the financial results of Southam with the Company.
Southam Facility. The purchase of the Power Shares was financed
through a short-term, secured, non-amortizing bank credit facility entered into
on May 24, 1996 (the "Southam Facility") in the amount of Cdn. $300 million
between the Company and a Canadian chartered bank, of which $155.9 million was
outstanding as of December 20, 1996. The funds under the Southam Facility were
advanced by the Company to 3230767 Canada Limited, a Canadian subsidiary of
Hollinger Inc. ("CanHoldco") as an intercompany loan to finance CanHoldco's
purchase of the Power Shares. The Hollinger Inc. guarantee of the Southam
Facility is secured by a pledge of the Power Shares and 7,539,028 shares of
Class A Common Stock and 14,990,000 shares of the Company's Class B Common
Stock, par value
-2-
<PAGE> 3
$.01 per share, held by Hollinger Inc. The Southam Facility matures on February
28, 1997 or earlier upon the occurrence of certain events, namely (i) one
banking day prior to the maturity date of Hollinger International Publishing
Inc.'s bank credit facility, which is currently scheduled to mature on February
7, 1997; (ii) one banking day prior to the maturity date of FDTH's credit
facility, which is currently scheduled to mature on February 7, 1997; or (iii)
the closing date of any equity issue, debt financing, public or private
placement or high yield financing completed by the Company or any of its
subsidiaries or by Hollinger Inc. or certain of its Canadian subsidiaries. All
net proceeds of any financing referred to in (iii) above must be applied as a
permanent prepayment of the Southam Facility.
Registration Rights Agreements. In connection with the October 13,
1995 reorganization of the Company's and Hollinger Inc.'s newspaper interests
(the "Reorganization"), Hollinger Inc. entered into a letter agreement dated
October 13, 1995 with a Canadian bank, as amended on May 24, 1996 in connection
with the Southam Facility, pursuant to which Hollinger Inc. has agreed that, in
the event that Hollinger Inc. or the Company is in default under any present or
future indebtedness and the bank intends to effect foreclosure upon such
securities or to exercise its power of sale rights under any applicable
security documents., Hollinger Inc. will, at the written request of the bank,
use its reasonable best efforts to cause the Company to effect the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of all or
part of such securities and the shares of Class A Common Stock, par value $.01
per share of the Company ("Class A Common Stock"), into which certain of such
securities are convertible (but not less than 5,000,000 shares of Class A
Common Stock), unless certain exemptions from the registration provisions of
the Securities Act are applicable. Hollinger Inc.'s undertakings in such letter
agreement are subject to Hollinger Inc.'s obligations under the share exchange
agreement entered into at the time of the Reorganization, and were modified by
a subsequent registration rights agreement described below.
Hollinger Inc. and certain of its subsidiaries entered into a
registration rights agreement with certain Canadian lenders as of February 29,
1996, as amended on May 24, 1996 in connection with the Southam Facility. In
addition, as of November 15, 1996, the Company, Hollinger Inc. and two of its
Canadian subsidiaries, and three Canadian chartered banks entered into a letter
agreement to clarify and confirm certain rights and obligations of the parties
thereto under the registration rights agreement and letter agreement described
above. Among other things, the November 15, 1996 letter agreement (i) requires
the Company to amend the shelf registration statement filed with the Securities
Exchange
-3-
<PAGE> 4
Commission on May 29, 1996 and use its best efforts to have the registration
statement declared effective by the Commission, (ii) includes the 14,990,000
shares of Class A Common Stock issuable upon conversion of the shares of Class B
Common Stock of the Company pledged in favor of the lenders among the securities
to be registered, and (iii) requires Hollinger Inc. and the Company to pay all
reasonable expenses incurred by the lenders in connection with the pledged
shares, including underwriting fees or commissions.
Fairfax. On December 16, 1996, the Company announced that Daily
Telegraph Holdings BV, a Dutch subsidiary of the Company's subsidiary,
Telegraph Group Limited (the "Telegraph"), had agreed to sell its 25% interest
in Australian newspaper publishing company John Fairfax Holdings Limited
("Fairfax"), to three Australian subsidiaries of Brierley Investments Limited
("BIL"), of New Zealand. The sale will occur in several tranches, with the sale
of the last tranche expected to be completed within sixty days of December 16,
1996. Proceeds from the sale of the 25% interest are anticipated to be
approximately A$553.8 million ($437 million). Shares representing 19.9% of
Fairfax's capital and 7 million non-voting convertible debentures will be
acquired by BIL unconditionally. BIL has announced that it will seek to convene
an extraordinary general meeting of Fairfax shareholders as soon as practicable
to permit it to acquire the Telegraph's remaining 4.99% stake in Fairfax. Under
Australian law, BIL can only acquire a 19.9% shareholding in Fairfax at this
time without being obliged to make a general offer to all shareholders. Fairfax
shareholders will be asked to approve a resolution enabling BIL to acquire the
remainder of the Telegraph's stake. In the event the resolution is not passed
by Fairfax shareholders, BIL can nevertheless acquire additional Fairfax shares
provided it does not acquire more than 3% in any six month period. BIL has
received approval from the Federal Treasurer under the Australian Foreign
Acquisitions and Takeover Act to acquire all of the Telegraph's 25% stake in
Fairfax.
Proceeds from the sale of the Fairfax interest will be used in part to
repay existing indebtedness of the Company's subsidiaries.
-4-
<PAGE> 5
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of businesses acquired. The financial
statements required will be filed within 60 days of the filing
of this report.
(b) Pro forma financial information. The proforma financial
information required will be filed within 60 days of the filing
of this report.
(c) Exhibits.
None.
-5-
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOLLINGER INTERNATIONAL INC.
By: /s/ KENNETH L. SEROTA
-------------------------
Kenneth L. Serota
Title: Vice President --
Law and Finance
Date: December 23, 1996
-6-
