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As filed with the Securities and Exchange Commission on November 29, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HOLLINGER INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
95-3518892
(I.R.S. employer identification number)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
HOLLINGER INTERNATIONAL PUBLISHING INC.
(Exact name of registrant as specified in its charter)
51-0370603
(I.R.S. employer identification number)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
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401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
(312) 321-2999
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
KENNETH L. SEROTA, ESQ.
VICE PRESIDENT--LAW AND FINANCE AND SECRETARY
HOLLINGER INTERNATIONAL INC.
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
(312) 321-2999
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
MICHAEL C. MCLEAN
KIRKPATRICK & LOCKHART LLP
1500 OLIVER BUILDING
PITTSBURGH, PENNSYLVANIA 15222-2312
(412) 355-6458
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Approximate date of commencement of proposed sale to public: FROM TIME TO
TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER UNIT(2)(3) PRICE(1)(2)(3) FEE(4)
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<S> <C> <C> <C> <C>
Debt Securities(5)............................
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Convertible Securities(5).....................
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Guarantee(6)..................................
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Total....................................... $500,000,000 100% $500,000,000 $151,516
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(1) The aggregate initial offering price of the above-referenced securities
(collectively, the "Securities") registered hereby will not exceed
$500,000,000. Such amount represents the principal amount of any Debt
Securities issued at their principal amount, the issue price rather than the
principal amount of any Debt Securities issued at an original issue discount
and the issue price of any Convertible Securities.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended (the
"Securities Act").
(3) No separate consideration will be received for any Debt Securities or other
securities of Hollinger International Inc. or its affiliates that may be
issuable upon conversion of or in exchange for convertible or exchangeable
Debt Securities or Convertible Securities (including any securities issuable
upon stock splits or similar transactions pursuant to Rule 416).
(4) Calculated pursuant to Rule 457, based upon a bona fide estimate as of the
date hereof of the maximum offering price.
(5) Includes such indeterminate amount of Debt Securities of the Company, such
indeterminate amount of Convertible Securities and such indeterminate
principal amount of Debt Securities, or number of shares of other securities
of the Company or its affiliates, as may be issued upon conversion of, or in
exchange for, or upon exercise of, convertible or exchangeable Debt
Securities or Convertible Securities of the Company (including any
securities issuable upon stock splits and similar transactions pursuant to
Rule 416).
(6) The Debt Securities and Convertible Securities will be unconditionally
guaranteed by Hollinger International Inc. on a senior subordinated basis.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 29, 1996
PROSPECTUS
HOLLINGER INTERNATIONAL PUBLISHING INC.
SECURITIES
UNCONDITIONALLY GUARANTEED BY
LOGO
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This Prospectus relates to the offering of securities described herein of
Hollinger International Publishing Inc. ("Publishing"), a wholly owned
subsidiary of Hollinger International Inc. (the "Company"). Publishing may offer
from time to time (i) debt securities ("Debt Securities"), which may be any of
senior debt securities ("Senior Debt Securities"), senior subordinated debt
securities ("Senior Subordinated Debt Securities") or subordinated debt
securities ("Subordinated Debt Securities"), in each case consisting of
debentures, notes and/or other secured or unsecured evidences of indebtedness,
and (ii) convertible securities ("Convertible Securities"), which are
exchangeable or convertible into shares of or other securities of the Company or
its affiliates. The Debt Securities and the Convertible Securities are
collectively referred to as the "Securities" and will have an aggregate initial
offering price of up to $500.0 million. The Securities will be unconditionally
guaranteed by the Company. The Securities may be offered separately or together
(in any combination) and as separate series, in any case in amounts, at prices
and on terms to be determined at the time of sale.
The form in which the Securities are to be issued, their specific
designation, aggregate principal amount or aggregate initial offering price,
maturity, if any, rate and times of payment of interest or dividends, if any,
redemption, conversion, exchange and sinking fund terms, if any, voting or other
rights, if any, exercise price and detachability, if any, and other specific
terms will be set forth in a Prospectus Supplement (including any related term
sheet) relating to such Securities (the "Prospectus Supplement"), together with
the terms of offering of such Securities. If so specified in the applicable
Prospectus Supplement, Debt Securities of a series may be issued in whole or in
part in the form of one or more temporary or permanent global securities. The
Prospectus Supplement will also contain information, as applicable, about
certain material United States Federal income tax considerations relating to the
particular Securities offered hereby. The Prospectus Supplement will also
contain information, where applicable, as to any listing on a national
securities exchange of the Securities covered by such Prospectus Supplement.
FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE SECURITIES OFFERED HEREBY, SEE "RISK
FACTORS" BEGINNING ON PAGE 5.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The Securities may be sold directly, through agents designated from time to
time or to or through underwriters or dealers. See "Plan of Distribution." If
any agents of the issuer or any underwriters are involved in the sale of any
Securities in respect of which this Prospectus is being delivered, the names of
such agents or underwriters and applicable commissions or discounts will be set
forth in a Prospectus Supplement. The net proceeds to the issuer from such sale
also will be set forth in a Prospectus Supplement.
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The date of this Prospectus is , .
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMPANY'S CLASS
A COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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As used in this Prospectus, unless the context otherwise requires, (i) the
"Company" refers to Hollinger International Inc. and its consolidated
subsidiaries and affiliated companies; (ii) "Publishing Holdings" refers to
Hollinger International Publishing Holdings Inc.; (iii) "Publishing" refers to
Hollinger International Publishing Inc. and its consolidated subsidiaries and
affiliated companies; (iv) "Chicago Sun-Times" refers to The Sun-Times Company
and its consolidated subsidiaries; (v) "Jerusalem Post" refers to the
subsidiaries of the Company which publish The Jerusalem Post; (vi) "The
Telegraph" refers to Telegraph Group Limited (formerly The Telegraph plc) and
its consolidated subsidiaries and affiliated companies; (vii) "DTH" refers to DT
Holdings Limited; (viii) "FDTH" refers to First DT Holdings Limited; (ix) "HTH"
refers to Hollinger-Telegraph Holdings Inc.; (x) "Hollinger Inc." refers to
Hollinger Inc. and its consolidated subsidiaries; (xi) "Southam" refers to
Southam Inc. and its consolidated subsidiaries; and (xii) "Fairfax" refers to
John Fairfax Holdings Limited and its consolidated subsidiaries.
Unless otherwise indicated, all circulation information contained in this
Prospectus represents approximate current or average daily or non-daily
circulation, as the case may be, derived from the following sources: (a) for the
Company's United States community newspapers, Chicago-area suburban newspapers
and Jerusalem Post, from the Company's unaudited internal records for the month
of September 1996; (b) for the Chicago Sun-Times, the Daily Southtown and the
Tribune-Democrat in Johnstown, Pennsylvania, from unaudited circulation
statements furnished to the Audit Bureau of Circulations ("ABC") in the United
States for the six month period April to September 1996; (c) for The Daily
Telegraph and The Sunday Telegraph, from audited circulation reports furnished
to ABC in the United Kingdom for the six month period April to September 1996;
(d) for Fairfax, from audited circulation reports furnished to ABC in Australia
for the six month period January to June 1996; and (e) for Southam, from
unaudited internal records.
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THE COMPANY
OVERVIEW
The Company, through subsidiaries and affiliated companies, is a leading
publisher of English-language newspapers in the United States, the United
Kingdom, Australia, Canada and Israel. Included among the 145 paid daily
newspapers which the Company owns or has an interest in are the Chicago
Sun-Times and The Daily Telegraph. These 145 newspapers have a world-wide daily
combined circulation of approximately 4,530,000 (including 2,230,000
attributable to the publications in which the Company has a minority equity
interest). In addition, the Company owns or has an interest in 405 non-daily
newspapers as well as magazines and other publications. The Company's strategy
is to achieve growth through acquisitions and improvements in the cash flow and
profitability of its newspapers, principally through cost reductions. Since the
Company's formation in 1986, the existing senior management team has acquired
over 404 newspapers and related publications (net of dispositions) in the United
States, The Telegraph in the United Kingdom and Jerusalem Post in Israel, and
has made significant investments in newspapers in Australia and Canada.
Publishing is a wholly owned subsidiary of the Company which holds all
shares in the Company's operating subsidiaries. Publishing will be the issuer of
the Securities. Payment of the principal of, premium, if any, and interest on
the Securities will be guaranteed by the Company pursuant to its guarantee.
The operations of the Company consist of its United States Newspaper Group
and its International Newspaper Group, which accounted for 58.0% and 42.0%,
respectively, of the Company's total operating revenues of $965.0 million for
the year ended December 31, 1995. The Company also owns equity investments in
newspaper publishing companies in Canada and Australia which contributed
approximately $16.5 million to the Company's earnings before taxes in 1995.
UNITED STATES NEWSPAPER GROUP. The Company is the largest newspaper
publishing group in the United States, as measured by paid daily newspapers
owned and operated, and one of the twelve largest in terms of daily circulation.
The Company's United States operations consist of its Chicago Group, led by the
Chicago Sun-Times, the eighth largest circulation metropolitan daily newspaper
in the United States, and its Community Newspaper Group, consisting of 329
newspapers and related publications. As of October 1, 1996, the Company
published a total of 404 newspapers and related publications in the United
States consisting of 104 daily newspapers with a total paid circulation of
approximately 1,200,000, 142 paid non-daily newspapers with a combined paid
circulation of approximately 1,223,000, and 158 free circulation publications
with a combined circulation of approximately 2,236,000, and a total combined
circulation of approximately 4,658,000. The Community Newspaper Group also
includes, for accounting and management purposes, the Company's wholly-owned
subsidiary which publishes The Jerusalem Post, Israel's only English-language
daily newspaper, with a paid daily circulation of approximately 18,000. The
related weekend edition of The Jerusalem Post and English and French-language
international weekly editions have paid circulations of approximately 37,200,
47,000 and 4,300, respectively.
INTERNATIONAL NEWSPAPER GROUP. The Company's International Newspaper Group
consists of its wholly owned subsidiary, The Telegraph, and minority equity
investments in Southam, a publicly traded Canadian newspaper publisher, and
Fairfax, a publicly traded Australian newspaper and magazine publisher.
THE TELEGRAPH. The Telegraph publishes The Daily Telegraph, the leading
quality (or broadsheet) newspaper in the United Kingdom. The Telegraph also
publishes The Sunday Telegraph, The Weekly Telegraph, the Electronic Telegraph
and The Spectator magazine. The Daily Telegraph is the largest circulation
quality daily newspaper in the United Kingdom with an average daily circulation
of approximately 1,057,000 representing a 38.4% share of the quality daily
newspaper market. The Daily Telegraph's Saturday edition has the highest average
daily circulation (approximately 1,212,000) among quality daily newspapers in
the United Kingdom. The Sunday Telegraph is the second largest circulation
quality Sunday newspaper in the United Kingdom with an average Sunday
circulation of approximately 697,000.
SOUTHAM. Southam is a publicly held Canadian corporation with continuing
operations in two principal business segments: newspaper publishing and business
communications (which contributed 83% and 17% of Southam's consolidated revenue,
respectively, of Cdn. $1,022.3 million ($744.6 million) in 1995). Southam is
Canada's largest publisher of daily newspapers with 30 daily newspapers and 59
non-daily newspapers with a
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total daily circulation of approximately 1,572,000. Southam's principal
publications include The Gazette (Montreal), The Ottawa Citizen, the Calgary
Herald, The Vancouver Sun, The Province (Vancouver) and The Edmonton Journal. In
addition, the Southam Magazine and Information Group publishes Canadian and
United States business magazines and tabloids for the automotive, trucking,
construction, national resources, manufacturing and other industries. Recently,
Southam has sold or announced the sale of various non-newspaper assets and has
announced that it intends to sell the balance of its business communications
division.
The Company, through The Telegraph and FDTH, has an approximate 19.5%
interest in Southam and Hollinger Eastern Publishing Inc. ("Hollinger Eastern"),
a Canadian holding corporation owned jointly by the Company and Hollinger Inc.,
the parent corporation of the Company, currently owns an approximate 21.5%
interest in Southam, providing Hollinger Inc. and the Company with a combined
approximate 41% interest in Southam. 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 shaes 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 FDTH to acquire an
additional 9.2% interest in Southam. On November 28, 1996, the Company and
Hollinger Inc. announced that the wholly owned subsidiary of FDTH would acquire
8,000,000 common shares at a price of Cdn.$20.00 per share on December 11, 1996,
which would increase the combined holdings of Hollinger Inc. and the Company to
over 50% of Southam's 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, after completing the acquisition of a
majority interest in Southam, it will consolidate the financial results of
Southam with the Company.
FAIRFAX. Fairfax is one of Australia's largest newspaper publishing
companies with nine daily newspapers (with a total paid circulation of
approximately 689,000), 39 non-daily newspapers and 29 magazines. Fiscal 1995
revenues were A$944.5 million ($698.0 million). Fairfax's principal publications
are the leading quality newspapers in Australia's two largest cities, The Sydney
Morning Herald (circulation approximately 263,000) and The Age
(Melbourne--circulation approximately 232,000), and Australia's only business
newspaper, The Australian Financial Review (national--circulation approximately
84,000). The Telegraph currently has an approximate 24.7% equity interest in
Fairfax and is the largest shareholder of Fairfax.
GENERAL. The Company was incorporated in the State of Delaware on December
28, 1990. Publishing was incorporated in the State of Delaware on December 12,
1995. The Company's and Publishing's executive offices are located at 401 North
Wabash Avenue, Chicago, Illinois 60611, telephone number (312) 321-2299.
FINANCING PLANS
The Company, through International and its subsidiaries, including
Publishing and FDTH, has incurred substantial indebtedness principally to fund
its newspaper acquisitions and capital expenditures. As of September 30, 1996,
the Company had outstanding approximately $1.0 billion of total consolidated
debt, of which approximately $587.3 million was short-term debt, principally
consisting of (i) $155.9 million outstanding under the credit agreement dated as
of November 15, 1996 (the "Southam Facility") among International, Hollinger
Inc. and its Canadian subsidiaries, and two Canadian chartered banks, the
proceeds of which were used to finance the acquisition in May 1996 of an
approximate 21.5% interest in Southam, with a maturity date of February 28,
1997, subject to earlier prepayment in specified circumstances, (ii) $130.0
million outstanding under the amended and restated credit agreement dated May
30, 1996, as amended (the "Publishing Credit Facility"), among Publishing and
certain lenders, with a maturity date of February 7, 1997, and (iii) $306.9
million outstanding under the credit agreement dated May 30, 1996, as amended
(the "FDTH Credit Facility") among FDTH and certain lenders, also with a
maturity date of February 7, 1997. In connection with the announced purchase of
8,000,000 common shares of Southam pursuant to the pending circular takeover
offer (the "Southam Offer") on December 11, 1996, additional bank financing of
approximately L33.7 million will be incurred by FDTH under an amendment to the
FDTH Credit Facility. In addition, redeemable preference shares issued by DTH
and FDTH, English subsidiaries of Publishing, which are held by persons other
than the Company or its affiliates, with an aggregate redemption amount of
approximately $221.2 million (as of September 30, 1996), are redeemable at the
option of the holders or DTH
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or FDTH, on the fifth anniversary of their issuance (May or June 1997,
respectively), and at other prescribed times and in prescribed circumstances.
The Company may, through International or its principal United States
subsidiary, Publishing, issue high yield debt securities or other debt or equity
securities in order to repay outstanding bank indebtedness, redeem preference
shares issued by DTH and FDTH, and for other corporate purposes, including
working capital, capital expenditures and acquisitions.
In order to enhance the Company's flexibility to make offerings as market
conditions and other factors permit, subject to restrictions in existing debt
agreements, International and Publishing have filed universal shelf
registrations statements to permit the issuance of an unspecified number of
debt, convertible and, in the case of International, equity, securities having
aggregate gross proceeds to the issuers of up to $800.0 million and $500.0
million, respectively. The type, amount and terms of any securities that may be
issued have not been determined. The Company does not have any immediate plans
to issue any particular debt or equity securities. Under current debt
agreements, the Company and Publishing are restricted in their ability to incur
additional indebtedness and intend to seek the consent of their respective bank
lenders and the holders of outstanding senior subordinated notes issued by
Publishing and guaranteed by the Company to modifications to the terms of such
debt instruments as may be necessary to permit the issuance of debt or
debt-related securities contemplated by the universal shelf registration
statements.
Under the Southam Facility, the Company is prohibited from issuing
additional debt and its subsidiaries, including Publishing, are also prohibited
from incurring additional debt as long as subsidiary debt is guaranteed by the
Company. The Publishing Credit Facility, the FDTH Credit Facility and the
outstanding 9 1/4% Senior Subordinated Notes due 2006 (the "Notes") of
Publishing are guaranteed by the Company. The Company intends to seek the
consent of its Canadian bank lenders under the Southam Facility to permit the
issuance of debt securities by the Company and the issuance of additional debt
securities by Publishing.
In addition, each of the Publishing Credit Facility and the Indenture dated
as of February 1, 1996 (the "1996 Indenture") between Publishing and Fleet
National Bank of Connecticut, as trustee, pursuant to which $250,000,000
aggregate principal amount of Notes were issued on February 7, 1996, contains
covenants which limit the incurrence of additional debt by Publishing, including
in the case of the 1996 Indenture the 6.0:1.0 Consolidated Cash Flow Ratio (as
defined therein). The Company intends to seek modifications of the 1996
Indenture in order to facilitate the inclusion of certain international
subsidiaries of the Company, principally Southam and The Telegraph, as
Restricted Subsidiaries (as defined in the 1996 Indenture) of Publishing. The
Company currently holds directly and indirectly 100% of the equity interest of
The Telegraph and, as a result of the completion of the Southam Offer, the
Company and Hollinger Inc. will have a combined majority equity interest in
Southam.
RISK FACTORS
Prior to making an investment decision, prospective investors should
consider carefully the following factors, in addition to the other information
and financial data included or incorporated by reference in this Prospectus or
any Prospectus Supplement.
INTERNATIONAL HOLDING COMPANY STRUCTURE
The Company is an international holding company and its assets consist
solely of investments in its subsidiaries and affiliated companies. As a result,
the Company's ability to meet its future financial obligations is dependent upon
the availability of cash flows from its United States and foreign subsidiaries
and affiliated companies (subject to applicable withholding taxes) through
dividends, intercompany advances, management fees and other payments. Similarly,
the Company's ability to pay dividends on its Class A Common Stock, its
Preferred Stock or its Preferred Redeemable Increased Dividend Equity Securities
("PRIDES") will be limited as a result of its dependence upon the distribution
of earnings of its subsidiaries and affiliated companies. The Company's
subsidiaries and affiliated companies are under no obligation to pay dividends
and, in the case of Publishing and its principal United States and foreign
subsidiaries, are or will be subject to statutory restrictions and restrictions
in debt agreements that may limit their ability to pay dividends. See
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"Restrictions in Debt Agreements" below. Substantially all of the shares of the
subsidiaries of the Company have been pledged to lenders of the Company. The
Company's and Hollinger Inc.'s combined interests in Southam are pledged to
lenders of Hollinger Inc. The Company's right to participate in the distribution
of assets of any subsidiary or affiliated company upon its liquidation or
reorganization will be subject to the prior claims of the creditors of such
subsidiary or affiliated company, including trade creditors, except to the
extent that the Company may itself be a creditor with recognized claims against
such subsidiary or affiliated company.
GROWTH STRATEGY
The Company's strategy is to achieve growth through acquisitions and
improvements in the cash flow and profitability of its newspapers, principally
through cost reductions. The Company's growth strategy presents risks inherent
in assessing the value, strengths and weaknesses of acquisition opportunities,
in evaluating the costs of new growth opportunities at existing operations and
in managing the numerous publications it has acquired and improving their
operating efficiency. While the Company believes that there are significant
numbers of potential acquisition candidates, the Company is unable to predict
the number or timing of future acquisition opportunities or whether any such
opportunities will meet the Company's acquisition criteria or, if such
acquisitions occur, whether the Company will be able to achieve improved
operating efficiencies or enhanced profitability. Accordingly, there can be no
assurance that the Company will continue to experience the rate of growth that
it has had in the past. In addition, the Company's acquisition strategy is
largely dependent on the Company's ability to obtain additional debt or other
financing on acceptable terms. See "Restrictions in Debt Agreements," "Other
Restrictive Arrangements" and "Substantial Leverage" below.
RISK OF PRINCIPAL REPAYMENT
Publishing's ability to pay principal when due on the Securities and its
other indebtedness or to refinance such obligations, and the ability of its
subsidiaries to make scheduled principal payments or to refinance their
respective indebtedness, depends on the financial and operating performance of
its subsidiaries as well as, with respect to the Securities and other
indebtedness of Publishing, its subsidiaries' ability to make dividend and other
payments to Publishing. There can be no assurance that Publishing's consolidated
operating results will continue to be sufficient or that future borrowing
facilities will be available for the payment or refinancing of such indebtedness
prior to maturity.
In the event Publishing is unable to make required payments or otherwise
comply with the terms of its indebtedness, including the Securities, the holders
of such indebtedness could accelerate the maturity thereof, which could result
in Publishing and the Company being forced to seek protection under applicable
bankruptcy laws or in an involuntary bankruptcy proceeding being brought against
Publishing or the Company. Under such circumstances, the holders of the
Securities may be adversely affected. See "Subordination of Securities and
Guarantee" below.
SUBORDINATION OF SECURITIES AND GUARANTEE
The payment of principal of, premium, if any, and interest on, and any
other amounts owing in respect of, the Securities and the Company's guarantee of
the Securities (the "guarantee") will be subordinated to the prior payment in
full of all existing and future Senior Indebtedness (as defined herein) of
Publishing and the Company. Therefore, in the event of the bankruptcy,
liquidation, dissolution, reorganization or other winding up of Publishing or
the Company, the assets of Publishing and the Company will be available to pay
obligations on the Securities and the Guarantee only after all Senior
Indebtedness of Publishing or the Company, as applicable, has been paid in full,
and there may not be sufficient assets remaining to pay amounts due on any or
all of the Securities. In addition, Publishing and the Company may not pay
principal of, premium, if any, or interest on, or any other amounts owing in
respect of, the Securities, or purchase, redeem or otherwise retire the
Securities or make any deposit pursuant to defeasance provisions for the
Securities, if any Senior Indebtedness (or in the case of the Company, Senior
Company Indebtedness (as defined herein)) is not paid when due, unless such
default is cured or waived or has ceased to exist or such Senior Indebtedness
(or in the case of the Company, Senior Company Indebtedness) has been repaid in
full. Under certain circumstances, no payments may be made for a specified
period with respect to the principal of, premium, if
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any, and interest on, and any other amounts owing in respect of, the Securities
if a non-payment default exists with respect to certain Senior Indebtedness,
unless such default is cured, waived or has ceased to exist or such indebtedness
has been repaid in full. The Securities will also be effectively subordinated to
all existing and future liabilities of Publishing's subsidiaries.
RESTRICTIONS IN DEBT AGREEMENTS
The instruments governing the terms of the principal indebtedness and
redeemable preferred stock of the Company and its principal subsidiaries contain
various covenants, events of default and other provisions that could limit the
flexibility of the Company. Such provisions include requirements to maintain
compliance with certain financial ratios, limitations on the ability of the
Company and certain of its subsidiaries to make acquisitions or investments
without the consent of the lenders and limitations on the ability of the
Company's principal subsidiaries to incur indebtedness, make dividend and other
payments to the Company and take certain other actions. In addition, such
indebtedness is secured by, among other things, pledges of the stock of the
Company's principal subsidiaries.
The amount available for the payment of dividends by the Company at any
time is a function of (i) restrictions in agreements binding the Company
limiting its ability to pay dividends and (ii) restrictions in agreements
binding the Company's subsidiaries limiting their ability to pay dividends to
the Company. The Company entered into the Southam Facility which, among other
things, limits dividends on the Company's Class A Common Stock and Class B
Common Stock, par value $.01 per share ("Class B Common Stock"), to their
current levels and on the Company's Series A Convertible Redeemable Preferred
Stock, par value $.01 per share ("Series A Preferred Stock"), and PRIDES in
accordance with their existing terms. The Southam Facility replaced a credit
facility established on May 24, 1996 to finance the acquisition of the common
shares of Southam then held by the Power Corporation of Canada (the "Power
Shares") and is secured by, among other things, the Power Shares and a guarantee
by Hollinger Inc. In addition, certain agreements binding subsidiaries of the
Company, including Publishing, American Publishing (1991) Inc. and FDTH, contain
provisions that limit their respective abilities to pay dividends to the
Company.
OTHER RESTRICTIVE ARRANGEMENTS
The Company's equity interests in The Telegraph and Fairfax are held
through intermediate English holding companies, DTH and FDTH, and the Company's
and Hollinger Inc.'s combined equity interests in Southam are currently held
through a new Canadian holding company and The Telegraph. DTH and FDTH have
outstanding preference shares held by persons other than the Company and its
affiliates (the "DTH Preference Shares," the "FDTH Preference Shares," and,
collectively, the "DTH and FDTH Preference Shares") which require the payment of
quarterly dividends with a current effective dividend cost of 5.5% per annum
(after giving effect to certain interest rate and currency exchange agreements).
In addition, DTH owns all 165,000,000 non-cumulative redeemable preference
shares of L1 per share issued by FDTH and 23,801,420 non-cumulative redeemable
preference shares of Cdn.$1 per share issued by FDTH which were transferred by
Hollinger Inc. to DTH pursuant to the HTH/FDTH Share Exchange Agreement dated
July 19, 1995 (the "HTH/FDTH Share Exchange Agreement"). All of the outstanding
DTH Preference Shares are held by unrelated parties and a portion of the
outstanding FDTH Preference Shares are held by unrelated third parties, with an
aggregate redemption price of approximately $221.2 million.
On December 29, 1995, DTH transferred all outstanding FDTH Preference
Shares which it then held (with an aggregate redemption amount of Cdn.$140
million ($102.6 million)) to a wholly owned English subsidiary ("Argsub") of
Argus Corporation Limited ("Argus"), a Canadian corporation all the voting stock
of which is indirectly owned or controlled by Mr. Black, in exchange for newly
issued preference shares (with an aggregate redemption amount of Cdn.$140
million ($102.6 million)) of such English subsidiary. On September 30, 1996,
FDTH issued 600 fourth preference shares, Series 1996 of FDTH (with an aggregate
redemption amount of $300.0 million) to Argsub in exchange for 600 newly issued
second preference shares, Series 1996 of Argsub (with an aggregate redemption
amount of $300.0 million). The preference shares of Argsub have terms
substantially identical to those of the FDTH Preference Shares for which they
were exchanged and constitute the entire issued and outstanding preference share
capital of Argsub. These transactions were structured to eliminate economic gain
or loss to Argus and Argsub on the preference shares.
7
<PAGE> 9
The issuance of additional preference shares by FDTH to Argsub may occur prior
to the redemption or repayment of outstanding FDTH Preference Shares. Argus owns
directly and indirectly approximately 31.3% of the common shares of Hollinger
Inc.
The DTH Preference Shares are redeemable at the option of the holder at any
time on four days' notice at a redemption price discounted in accordance with an
agreed formula, and the FDTH Preference Shares and the DTH Preference Shares are
redeemable by the issuer or the holders on the fifth anniversary of their
issuance (May or June 1997, respectively), each five year anniversary thereafter
and at other prescribed times and in prescribed circumstances, including where
the consolidated debt of Hollinger Inc. is more than two times its consolidated
equity (the "Debt to Equity Ratio"). The Debt to Equity Ratio is affected by,
among other things, Hollinger Inc.'s consolidated results of operations, as well
as changes in the levels of consolidated debt of Hollinger Inc. and its
subsidiaries, including the Company. Accordingly, there can be no assurance that
Hollinger Inc. will be in compliance with the Debt to Equity Ratio as of any
future date. The Company has been informed by Hollinger Inc. that, based on
preliminary calculations as of September 30, 1996, Hollinger Inc. believes that
it is in compliance with the Debt to Equity Ratio at September 30, 1996. There
can be no assurance, however, that Hollinger Inc. will remain in compliance with
the Debt to Equity Ratio or that in the event of non-compliance, that holders of
the DTH or FDTH Preference Shares will not exercise their retraction rights
against DTH or FDTH or Hollinger Inc. pursuant to contractual arrangements with
the holders under which Hollinger Inc. has agreed to purchase the DTH and FDTH
Preference Shares. In the event Hollinger Inc. is required to purchase any DTH
and FDTH Preference Shares under these circumstances, Hollinger Inc. shall have
the right, following written notice, to require the Company to purchase such
shares at the then retraction price.
Hollinger Inc. has indemnified the holders of the DTH and FDTH Preference
Shares and agreed to purchase these preference shares if DTH or FDTH fails to
pay the full amount of dividends or redemption prices on such shares and in
certain other events. The Company has entered into an agreement to compensate
Hollinger Inc. for any payments made by Hollinger Inc. to holders of the DTH and
FDTH Preference Shares and to purchase any DTH and FDTH Preference Shares which
Hollinger Inc. is required to purchase in accordance with the terms thereof. The
timing of any such payments by the Company to Hollinger Inc. will be determined
by Hollinger Inc.
Substantially all of the Company's indirect 19.5% equity interest in
Southam is currently held through HTH (18.9%), a Canadian corporation which is
jointly owned by FDTH and The Telegraph. The balance of the Company's indirect
interest in Southam is owned directly by FDTH (0.3%) and The Telegraph (0.3%).
The 21.5% equity interest in Southam formerly held by Power Corporation is held
by Hollinger Eastern, a Canadian corporation in which 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, and
Hollinger Inc. holds the remaining one-half of the voting preference shares. The
shares representing FDTH's one-half interest in HTH are subject to a pledge
securing certain Hollinger Inc. debentures in the principal amount of Cdn.$125
million due November 1, 1998 (the "Southam-Linked Debentures"). In the event
Hollinger Inc. does not deliver clear legal title to such HTH shares on or prior
to April 1, 1999, or upon demand by FDTH or the Company, approximately one-half
of the Company's indirect equity interest in Southam would be subject to the
rights of the holders of the Southam-Linked Debentures.
SUBSTANTIAL LEVERAGE
The Company and its subsidiaries have substantial leverage and have
substantial debt service obligations, as well as obligations under the Series A
Preferred Stock, the PRIDES, which each represent one-half share of Series B
Convertible Preferred Stock, par value $.01 per share of the Company ("Series B
Preferred Stock") (which is convertible into shares of Class A Common Stock),
and the redeemable preferred shares of its subsidiaries. The instruments
governing the terms of the principal indebtedness and redeemable preferred stock
of the Company and its principal United States and foreign subsidiaries contain
various covenants, events of default and other provisions that could limit the
financial flexibility of the Company, including the payment of dividends with
respect to outstanding Common Stock and Preferred Stock and the implementation
of its growth strategy. A substantial portion of the obligations of the Company
and its subsidiaries will become due within six months (unless refinanced or
extended). As of September 30, 1996, the Company's
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<PAGE> 10
total short term debt was $587.3 million. Unless extended, the FDTH Credit
Facility matures on February 7, 1997, under which $306.9 million is currently
outstanding, and the Publishing Credit Facility also matures on February 7,
1997, under which $130.0 million is currently outstanding. 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 the Publishing Bank
Facility, which is currently scheduled to mature on February 7, 1997; (ii) one
banking day prior to the maturity date of the FDTH 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.
The substantial leveraged position of the Company could make it vulnerable
to a downturn in the operating performance of its business or a downturn in
economic conditions and could have the following consequences: (i) the Company's
ability to obtain additional debt financing on attractive terms for corporate or
other purposes, including the financing of future acquisitions, may be limited;
(ii) the funds available to the Company for its operations and for dividends on
its Common Stock, its Preferred Stock and its PRIDES may be reduced as a result
of the use of an increased portion of available cash flow to pay debt service;
(iii) certain of the Company's borrowings are and will continue to be at
variable rates of interest, which could result in higher interest expenses in
the event of increases in interest rates; and (iv) such indebtedness and
outstanding redeemable preferred stock contain financial and restrictive
covenants (including certain change of control provisions related to Hollinger
Inc.'s control of the Company), the failure to comply with which may result in
an event of default which, if not cured or waived, could have a material adverse
effect on the Company.
In addition, the instruments governing the terms of the principal
indebtedness of the Company and its principal United States and foreign
subsidiaries contain customary events of default, including, without limitation,
certain "change of control" provisions. Generally, a "change of control" is
defined in the instruments governing the terms of the principal indebtedness of
the Company and its principal United States and foreign subsidiaries to include,
without limitation, any person other than The Hon. Conrad M. Black beneficially
owning voting stock representing more than 50% of the total voting power of the
Company. See "Control by Hollinger Inc. and Disproportionate Voting Rights"
below.
On February 7, 1996, Publishing completed a public offering of $250.0
million principal amount of 9 1/4% senior subordinated notes due February 1,
2006 (the "Notes") priced at par (the "Notes Offering"). Payment of the
principal of, premium, if any, and interest on the Notes is guaranteed by the
Company on an unsecured senior subordinated basis.
CONTROL BY HOLLINGER INC. AND DISPROPORTIONATE VOTING RIGHTS
Hollinger Inc. owns 33,610,754 shares of the Class A Common Stock and all
of the outstanding shares of the Class B Common Stock, constituting (as of
September 30, 1996) approximately 57.4% of the combined equity interest in the
Company and approximately 83.6% of the combined voting power of the Common Stock
(without giving effect to any conversion of Series A Preferred Stock into shares
of Class A Common Stock or any issuance of shares of Class A Common Stock in
connection with the PRIDES), and 46.1% and 76.4%, respectively, upon the
issuance of up to approximately 20,700,000 shares of Class A Common Stock in
connection with PRIDES (without giving effect to the issuance of shares of Class
A Common Stock upon conversion of the Series A Preferred Stock). As a result,
Hollinger Inc. is in a position to control the outcome of substantially all
actions requiring stockholder approval, including the election of the entire
Board of Directors. The retention by Hollinger Inc. of securities representing
more than 50% of the voting power of the Company's outstanding Common Stock will
preclude any acquisition of control of the Company not favored by Hollinger Inc.
Subject to the fiduciary responsibilities of the directors of the Company to all
stockholders and the terms of agreements defining the ongoing relationships
between Hollinger Inc. and the Company, Hollinger Inc., through its ability to
control the outcome of any election of directors, will continue to be able to
direct management policy, strategic direction and financial decisions of the
Company. Hollinger Inc. is effectively controlled by The Hon. Conrad M. Black,
Chairman of the Board and Chief Executive Officer of Hollinger Inc. and the
Company, through his direct and indirect ownership and control of Hollinger
Inc.'s securities. Mr. Black has advised the Company that Hollinger Inc. does
not presently intend to reduce its
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<PAGE> 11
voting power in the Company's outstanding Common Stock to less than 50%.
Furthermore, Mr. Black has advised the Company that he does not presently intend
to reduce his voting control over Hollinger Inc. such that a third party would
be able to exercise effective control over it.
Hollinger Inc. may sell or transfer shares of Class B Common Stock, and
thus potentially voting control of the Company, to an unaffiliated third person
provided such purchaser or transferee offers to purchase all shares of Class A
Common Stock from the holders thereof for an amount per share equal to the
amount per share received by Hollinger Inc. for the Class B Common Stock.
Hollinger Inc. has pledged all shares of Common Stock and Series A Preferred
Stock owned by it to Canadian chartered banks as collateral for outstanding
indebtedness of Hollinger Inc. and the Southam Facility. A default under such
indebtedness could result in a change of control of the Company.
DIVIDEND POLICY
The Company has paid quarterly dividends on its Common Stock since the
third quarter of 1994. The quarterly dividend was previously $0.025 per share of
Common Stock and was increased to $0.10 per share of Common Stock in the first
quarter of 1996. As an international holding company, the Company's ability to
declare and pay dividends in the future with respect to its Common Stock, its
Series A Preferred Stock and the PRIDES, will be dependent, among other factors,
upon its results of operations, financial condition and cash requirements, the
ability of its United States and foreign subsidiaries to pay dividends and make
other payments to the Company under applicable law and subject to restrictions
contained in existing and future loan agreements, the prior payment of dividends
to holders of PRIDES and Series A Preferred Stock and any other stock ranking
senior to the Common Stock or the PRIDES with respect to dividend rights, the
preference share terms and other financing obligations to third parties relating
to such United States or foreign subsidiaries or the Company, as well as foreign
and United States tax liabilities with respect to dividends and other payments
from those entities. See "International Holding Company Structure,"
"Restrictions in Debt Agreements" and "Other Restrictive Agreements" above.
POTENTIAL CONFLICTS OF INTEREST
The Company and Hollinger Inc. have entered into agreements for the purpose
of defining their ongoing relationships, including a Services Agreement (to
which Publishing is also a party) and a Business Opportunities Agreement. These
agreements were developed in the context of a parent-subsidiary relationship
and, therefore, were not the result of arms-length negotiations between
independent parties.
Services Agreement. The Services Agreement governs the provision by
Hollinger Inc. of certain advisory, consultative, procurement and administrative
services to the Company. The Services Agreement also contemplates that the
Company may provide services to Hollinger Inc. The services to be provided
pursuant to the Services Agreement include, among other things, strategic advice
and planning and financial services (including advice and assistance with
respect to acquisitions); assistance in operational matters; participation in
group insurance programs; and guarantees of indebtedness of the Company or other
forms of credit enhancements. The party receiving the services will reimburse
the party rendering the services for its allocable costs in providing those
services, as determined by the provider thereof or, in the case of a guarantee,
for an amount equal to the cost to the party of obtaining a bank letter of
credit in the amount of such guarantee. The party allocating its costs will
consider the salaries or other compensation payable to directors, officers and
employees actually providing services, out-of-pocket costs, the cost of
obtaining substantially equivalent services from a third party and other factors
as may be deemed appropriate. The Services Agreement will be in effect for so
long as Hollinger Inc. holds at least 50% of the voting power of the Company,
subject to termination by either party under certain specified circumstances.
Payments made pursuant to the Services Agreement are subject to the review and
approval of the Audit Committee of the Board of Directors of the Company.
In addition, Hollinger Inc. and The Telegraph are parties to a separate
services agreement under which The Telegraph bears two-thirds of the cost of the
office of the Chairman incurred by Hollinger Inc. as long as Mr. Black remains
Chairman of the Board of The Telegraph, and requires that other services will be
provided at cost, including the arrangement of insurance, assistance in the
arrangement of financing and assistance and advice on acquisitions, dispositions
and joint venture arrangements. Hollinger Inc. has assigned its rights and
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<PAGE> 12
obligations under The Telegraph services agreement to the Company and Publishing
on May 9, 1996 with the consent of The Telegraph.
Business Opportunities. The Business Opportunities Agreement provides that
the Company will be Hollinger Inc.'s principal vehicle for engaging in and
effecting acquisitions in newspaper businesses and in related media businesses
in the United States, Israel and, through The Telegraph, the European Community,
Australia and New Zealand (the "Telegraph Territory"). Hollinger Inc. has
reserved to itself the ability to pursue newspaper and all media acquisition
opportunities outside the United States, Israel and the Telegraph Territory, and
media acquisition opportunities unrelated to the newspaper business in the
United States, Israel and the Telegraph Territory, except that the Company is
permitted to increase its indirect investment in Southam. The Business
Opportunities Agreement does not restrict newspaper companies in which Hollinger
Inc. has a minority investment from acquiring newspaper or media businesses in
the United States, Israel or the Telegraph Territory, nor does it restrict
subsidiaries of Hollinger Inc. from acquiring up to 20% interests in publicly
held newspaper businesses in the United States. The Business Opportunities
Agreement will be in effect for so long as Hollinger Inc. holds at least 50% of
the voting power of the Company, subject to termination by either party under
specified circumstances.
Continuing Agreements Relating to the Reorganization. In connection with
the Company's October 1995 Reorganization, Hollinger Inc. and the Company
entered into the Share Exchange Agreement (the "Share Exchange Agreement").
Under the Share Exchange Agreement, Hollinger Inc. and the Company have agreed
that if the Company proposes to effect a public offering of its equity or
equity-linked securities for cash, or to issue equity-linked securities in any
acquisition by the Company of the stock or assets of an unrelated corporation or
entity, at any time during the 24 months following the closing date of such
agreement, the Company's efforts to raise capital through such offering shall
have priority over any proposal by Hollinger Inc. to effect a public offering or
sale of the Company's equity securities by Hollinger Inc., unless a majority of
the disinterested members of an Independent Committee of the Company's Board of
Directors shall otherwise agree. For these purposes, an "Independent Committee"
means a committee of the Company's Board the majority of the members of which
are not employees or directors of Hollinger Inc. or employees of the Company, or
another committee of the Company's Board whose membership satisfies any more
restrictive requirements of independence of any securities exchange or market in
which the Company's equity securities are traded or listed. If during such
period Hollinger Inc. proposes to sell or otherwise dispose of any shares of
Series A Preferred Stock (other than certain transfers to Hollinger Inc.
subsidiaries or affiliates and pledges) or to offer or sell publicly any shares
of Class A Common Stock held by it or its affiliates, it shall first consult
with the Independent Committee so as not to interfere with any planned capital
market activities of the Company to be undertaken within this period.
The Share Exchange Agreement includes a covenant by Hollinger Inc. to limit
the exercise of its redemption rights as a holder of shares of Series A
Preferred Stock to a number of shares proportionate to the number of HTH shares
or Southam common shares that at the time of such exercise have been delivered
to FDTH free and clear of encumbrances. The Company also agreed that so long as
any of the HTH shares are subject to the pledge under the Southam-Linked
Debentures, the Company will use reasonable commercial efforts not to take any
action, without the consent of Hollinger Inc., which itself would constitute an
event of default by Hollinger Inc. under the trust indenture relating to the
Southam-Linked Debentures. Hollinger Inc. has agreed to deliver to FDTH legal
title to the HTH shares free and clear of pledges, liens or encumbrances other
than certain permitted encumbrances.
Under the agreement between the Company and Hollinger Inc. with respect to
the DTH and FDTH Preference Shares (the "DTH/FDTH Preference Share Agreement"),
the Company has agreed to compensate Hollinger Inc. for any payments made by
Hollinger Inc. to holders of the DTH and FDTH Preference Shares and to purchase
any DTH and FDTH Preference Shares which Hollinger Inc. is required to purchase
in accordance with the terms thereof. The timing of any such payments by the
Company to Hollinger Inc. will be determined by Hollinger Inc.
Registration Rights Agreements. In connection with 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.
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<PAGE> 13
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 all or part of
such securities and the shares of 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 (including those described above) 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 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.
USE OF PROCEEDS
Except as otherwise indicated in the accompanying Prospectus Supplement,
Publishing and the Company intend to use the net proceeds from the sale of the
Securities for general corporate purposes, including working capital, possible
future acquisitions and the repayment or reduction of indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth Publishing and the Company's consolidated
ratio of earnings to fixed charges for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------- --------------
1991 1992 1993 1994 1995 1995 1996
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
(Publishing)............................ N/A N/A N/A N/A 1.84x N/A 1.44x
Ratio of Earnings to Fixed Charges (the
Company)................................ 3.67x 5.09x 3.64x 4.76x 1.82x 1.68x 1.29x
</TABLE>
The ratio of earnings to fixed charges is the sum of earnings before taxes
and minority interest (excluding undistributed earnings of affiliates) plus
interest expense, amortization of deferred financing charges and preferred stock
dividends divided by the sum of interest expense, amortization of deferred
financing charges and preferred stock dividends. No ratio is available for
Publishing for the four years ended December 31, 1994 and the nine months ended
September 30, 1995 as Publishing was not incorporated until the fourth quarter
of 1995.
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<PAGE> 14
DESCRIPTION OF THE DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement
and, the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Debt Securities may be issued, from time to time, in one or more series
and will constitute either Senior Debt Securities, Senior Subordinated Debt
Securities or Subordinated Debt Securities. The Debt Securities may be issued,
under one or more Indentures, dated as of , (the "Indenture"),
between the Company and as trustee (the "Trustee").
A copy of each Indenture (if more than one form is used) is filed as an
exhibit to the Registration Statement. Capitalized terms used in this section
which are not otherwise defined in this Prospectus shall have the meanings set
forth in the Indenture. The following summaries of certain provisions of the
Debt Securities and the Indenture do not purport to be complete and are subject
to and are qualified in their entirety by express reference to, all the
provisions of the Indenture, including the definitions therein of certain terms.
BACKGROUND
On February 7, 1996, Publishing issued $250,000,000 aggregate principal
amount at maturity of its Notes pursuant to the 1996 Indenture. The Notes are
unconditionally guaranteed on an unsecured senior subordinated basis by the
Company. No additional debt securities may be issued under the 1996 Indenture.
The 1996 Indenture contains various covenants, events of default and other
provisions which limit the flexibility of Publishing to incur additional
indebtedness, make dividend and other payments to the Company and its
subsidiaries which are not Restricted Subsidiaries of Publishing and take
certain other actions. A copy of the 1996 Indenture is filed in an exhibit to
the Company's Current Report on Form 8-K dated February 7, 1996. Capitalized
terms used below relating to the 1996 Indenture shall have the meanings set
forth in the 1996 Indenture.
Any issuance of any Debt Securities by Publishing to which any Prospectus
Supplement may relate would be governed by the more restrictive provisions
contained in the 1996 Indenture, including the limitation on indebtedness. The
limitation on indebtedness provides, among other things, that no Indebtedness
(except for Permitted Indebtedness) may be incurred by either Publishing or a
Restricted Subsidiary if Publishing's Consolidated Cash Flow Ratio for the four
most recent fiscal quarters exceeds 6.0:1.0 (after giving pro forma effect to,
among other things, the application of the proceeds of such new Indebtedness to
reduce other Indebtedness and any acquisitions or dispositions by Publishing or
its Restricted Subsidiaries of any assets out of the ordinary course of
business).
The Company intends to seek to modify certain covenants in the 1996
Indenture, including those entitled "Limitation on Indebtedness," "Limitation on
Restricted Payments" and "Limitations on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries," to eliminate the covenant which
restricts the sale of capital stock of Restricted Subsidiaries and to make
certain conforming and other changes primarily to facilitate the inclusion of
certain international subsidiaries of the Company, including principally Southam
and The Telegraph, as Restricted Subsidiaries of Publishing. The Company
believes that the inclusion of Southam and the Telegraph among the Restricted
Subsidiaries of Publishing would enhance its corporate and financing flexibility
and minimize corporate tax inefficiencies. Adoption of any amendments to the
1996 Indenture would require the consent of registered holders of at least a
majority in principal amount of maturity of the Notes outstanding. No assurance
can be given that the requisite consents would be obtained with respect to any
amendments to the 1996 Indenture that might be proposed by the Company. Most of
the changes contemplated in amendments that may be proposed would have no effect
until one or both of Southam and The Telegraph becomes a Restricted Subsidiary.
In the event such modifications to the 1996 Indenture became effective, the
Company intends to make conforming and other changes to the Indenture with
respect to the Debt Securities in order to facilitate the inclusion of Southam
and The Telegraph as Restricted Subsidiaries of Publishing.
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<PAGE> 15
GENERAL
The aggregate amount of Debt Securities that may be authenticated and
delivered under the Indenture is unlimited. The Debt Securities may be issued in
one or more series. The Prospectus Supplement shall set forth among other
matters: (1) the title of the Debt Securities of the series; (2) any limit upon
the aggregate principal amount of the Debt Securities of the series; (3) the
Person to whom any interest on a Debt Security of the series shall be payable,
if other than the Person in whose name that Debt Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest; (4) the date or dates on which the principal of
the Debt Securities of the series is payable; (5) the rate or rates at which the
Debt Securities of the series shall bear interest, if any, the date or dates
from which such interest shall accrue, the Interest Payment Dates on which any
such interest shall be payable and the Regular Record Date for any interest
payable on any Interest Payment Date; (6) the place or places where the
principal of and any premium and interest on Debt Securities of the series shall
be payable; (7) the price or prices at which the Offered Debt Securities will be
issued; (8) the period or periods within which, the price or prices at which and
the terms and conditions upon which Debt Securities of the series may be
redeemed, in whole or in part, at the option of Publishing; (9) the Debt
obligation, if any, of Publishing to redeem or purchase Securities of the series
pursuant to any sinking fund or analogous provisions or at the option of a
Holder thereof and the period or periods within which, the price or prices at
which and the terms and conditions upon which Debt Securities of the series
shall be redeemed or purchased, in whole or in part, pursuant to such
obligation; (10) whether such Offered Debt Securities are convertible or
exchangeable into other debt or equity securities and, if so, the terms and
conditions upon which such conversion or exchange will be effected, including
the initial conversion or exchange price or rate and any adjustments thereto,
the conversion or exchange period and other conversion or exchange provisions);
(11) any terms applicable to such Offered Debt Securities issued at an issue
price below their stated principal amount, including the issue price thereof and
the rate or rates at which such original issue discount will occur; (12) if
other than denominations of $1,000 and any integral multiple thereof, the
denominations in which Debt Securities of the series shall be issuable; (13) the
currency, currencies or currency units in which payment of the principal of and
any premium and interest on any Debt Securities of the series shall be payable
if other than the currency of the United States of America and the manner of
determining the equivalent thereof in the currency of the United states of
America for purposes of the definition of "Outstanding" in the Indenture; (14)
if the amount of payments of principal of or any premium or interest on any Debt
Securities of the series may be determined with reference to an index, the
manner in which such amounts shall be determined; (15) if the principal of or
any premium or interest on any Debt Securities of the series is to be payable,
at the election of Publishing or a Holder thereof, in one or more currencies or
currency units other than that or those in which the Debt Securities are stated
to be payable, the currency, currencies or currency units in which payment of
the principal of and any premium and interest on Debt Securities of the series
as to which such election is made shall be payable, and the periods within which
and the terms and conditions upon which such election is to be made; (16) if
other than the principal amount thereof, the portion of the principal amount of
Debt Securities of the series which shall be payable upon declaration of
acceleration of the Maturity thereof; and (17) any deletions from, modifications
of or additions to the Events of Default or covenants of the Company with
respect to such Offered Debt Securities, whether or not such Events of Default
or covenants are consistent with the Events of Default or covenants set forth
herein; (18) any special United States Federal income tax considerations
applicable to the Offered Debt Securities; and (19) any other terms of the
Offered Debt Securities not inconsistent with the provisions of the Indenture.
The applicable Prospectus Supplement will also describe the following terms of
any series of Subordinated or Senior Debt Securities offered hereby in respect
of which this Prospectus is being delivered: (a) the rights, if any, to defer
payments of interest on the Subordinated or Senior Subordinated Debt Securities
of such series by extending the interest payment period, and the duration of
such extensions; and (b) the subordination terms of the Subordinated or Senior
Subordinated Debt Securities of such series. The foregoing is not intended to be
an exclusive list of the terms that may be applicable to any Offered Debt
Securities and shall not limit in any respect the ability of Publishing to issue
Debt Securities with terms different from or in addition to those described
above or elsewhere in this Prospectus provided that such terms are not
inconsistent with the Indenture. Any such Prospectus Supplement will also
describe any special provisions for the payment of additional amounts with
respect to the Offered Debt Securities.
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The operations of Publishing are conducted through subsidiaries.
Accordingly, the cash flow and the consequent ability to service debt of
Publishing, including the Debt Securities, are dependent upon the earnings of
its subsidiaries and the distribution of those earnings to Publishing whether by
dividends, loans or otherwise. The payment of dividends and the making of loans
and advances to Publishing by its subsidiaries may be subject to statutory or
contractual restrictions, are contingent upon the earnings of those subsidiaries
and are subject to various business considerations. Any right of Publishing to
receive assets of any of its subsidiaries upon their liquidation or
reorganization (and the consequent right of the holders of the Debt Securities
to participate in those assets) will be effectively subordinated to the claim of
that subsidiary's creditors (including trade creditors), except to the extent
that Publishing is itself recognized as a creditor of such subsidiary, in which
case the claims of Publishing would still be subordinate to any security
interests in the assets of such subsidiary and any indebtedness of such
subsidiary senior to that held by Publishing.
Payment of principal of, premium, if any, and interest on the Notes will be
guaranteed by the Guarantor on a senior subordinated basis (the "Hollinger
International Guarantee"). The Guarantor will also guarantee Publishing's
obligations under the New Bank Credit Facility on a senior basis.
Principal of, premium, if any, and interest on the Debt Securities will be
payable, and the Debt Securities will be exchangeable and transferable at the
office or agency of Publishing in the City of New York maintained for such
purposes; provided, however, that payment of interest may be made at the option
of Publishing by check mailed to the Person entitled thereto as shown on the
security register. (Sections 3.01, 3.05, 10.02) The Debt Services will be issued
only in fully registered form without coupons, in denominations of $1,000 and
any integral multiple thereof. (Section 3.02) No service charge will be made for
any registration of transfer, exchange or redemption of Debt Securities, except
in certain circumstances for any tax or other governmental charge that may be
imposed in connection therewith. (Section 3.05)
SUBORDINATION OF NOTES
The payment of the principal of, premium, if any, and interest on the Debt
Securities will be subordinated and subject in right of payment, to the extent
and in the manner set forth in the Indenture, to the prior payment in full of
all Senior Indebtedness of Publishing. (Section 13.01) The Debt Securities will
be senior subordinated indebtedness of Publishing ranking pari passu with all
other future senior subordinated indebtedness of Publishing and senior to all
existing and future Subordinated Indebtedness of Publishing.
Upon the occurrence and continuation of any default in the payment of any
Designated Senior Indebtedness beyond the applicable grace period, no payment or
distribution of any assets of Publishing of any kind or character (excluding
certain permitted equity or subordinated securities) shall be made on account of
the principal of, premium, if any, or interest on, the Debt Securities or on
account of the purchase, redemption, defeasance or other acquisition of or in
respect of the Debt Securities unless and until such default has been cured,
waived or has ceased to exist or such Designated Senior Indebtedness shall have
been discharged or paid in full in cash or Cash Equivalents, or in any other
manner acceptable to the requisite holders of such Designated Senior
Indebtedness. (Section 13.03)
Upon the occurrence and continuation of any nonpayment default with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated (a "Non-payment Default") and after the receipt by the Trustee
from the Agent under the Publishing Credit Facility or, if none, from any other
representative of holders of any Designated Senior Indebtedness of a written
notice of such default, no payment or distribution of any assets of Publishing
of any kind or character (excluding certain permitted equity or subordinated
securities) shall be made by Publishing on account of any principal of, premium,
if any, or interest on, the Notes or on account of the purchase, redemption,
defeasance or other acquisition of or in respect of the Notes for the period
specified below (the "Payment Blockage Period").
The Payment Blockage Period shall commence upon the date of receipt by the
Trustee of such notice of the Non-payment Default by the Trustee from a
representative of the holder of any Designated Senior Indebtedness and (subject
to any blockage then or thereafter in effect as a result of a payment default)
shall end on the earliest to occur of (i) 179 days having elapsed since the
receipt of such written notice by the Trustee (provided that any Designated
Senior Indebtedness as to which notice was given shall not theretofore have been
accelerated), (ii) the date such Non-payment Default and all Non-payment
Defaults as to which
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notice is given after such Payment Blockage Period is initiated is cured or
waived or ceases to exist or the Designated Senior Indebtedness related thereto
is discharged or paid in full or (iii) the date on which such Payment Blockage
Period (and all Non-Payment Defaults as to which notice is given after such
Payment Blockage Period is initiated) shall have been terminated by written
notice to Publishing or the Trustee from the Agent under the Publishing Credit
Facility or such other representative of holders of Designated Senior
Indebtedness, after which, in each such case, Publishing shall resume making any
and all required payments in respect of the Debt Securities, including any
missed payments and accrued interest thereon. In no event will a Payment
Blockage Period extend beyond 179 days from the date of the receipt by the
Trustee of the notice initiating such Payment Blockage Period (such 179-day
period referred to as the "Initial Blockage Period"). Any number of notices of
Non-payment Defaults may be given during the Initial Blockage Period; provided
that during any 365-consecutive-day period only one Payment Blockage Period
during which payment of principal of, premium, if any, or interest on, the Notes
may not be made may commence and the duration of such period may not exceed 179
days. No Non-payment Default with respect to Designated Senior Indebtedness that
existed or was continuing on the date of the commencement of any Payment
Blockage Period will be, or can be, made the basis for the commencement of a
second Payment Blockage Period, whether or not within a period of 365
consecutive days, unless such Non-payment Default has been cured or waived for a
period of not less than 90 consecutive days. (Section 13.03)
If Publishing fails to make any payment on the Debt Securities when due or
within any applicable grace period, whether or not on account of the payment
blockage provisions referred to above, such failure would constitute an Event of
Default under the Indenture and would enable the holders of the Debt Securities
to accelerate the maturity thereof. See "Events of Default" below.
The Indenture provides that, in the event of (a) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith, relative to
Publishing or its assets, or (b) any liquidation, dissolution or other winding
up of Publishing, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
other marshaling of assets or liabilities of Publishing (except a distribution
in connection with a consolidation of Publishing with, or the merger of
Publishing into, another corporation or the liquidation or dissolution of
Publishing following conveyance, transfer or lease of its properties and assets
substantially as an entirety to another corporation upon the terms and subject
to the conditions of the provisions described in "Consolidation, Merger, Sale of
Assets" below), then and in any such event the holders of Senior Indebtedness
shall be entitled to receive payment in full in cash or Cash Equivalents or in
any other manner acceptable to the requisite holders of Designated Senior
Indebtedness before any payment or distribution (excluding distributions of
certain permitted equity or subordinated securities) is made on account of the
principal of, premium, if any, or interest on the Notes or on account of the
purchase, redemption, defeasance or other acquisition of or in respect of the
Notes (including any payment or other distribution which may be received from
the holders of Subordinated Indebtedness as a result of any payment on such
Subordinated Indebtedness). Accordingly, the holders of the Notes may recover
nothing in the event of such a liquidation, dissolution or other winding up of
Publishing. (Section 13.02)
"Senior Indebtedness" means, with respect to Publishing, the principal of,
premium, if any, and interest in respect of the Publishing Credit Facility and
any other Indebtedness of Publishing (other than as otherwise provided in this
definition), whether outstanding on the date of the Indenture or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Debt Securities. Without limiting the
generality of the foregoing, "Senior Indebtedness" shall include the principal
of, premium, if any, interest and all other obligations owing to the lenders
under the Publishing Credit Facility. Notwithstanding the foregoing, "Senior
Indebtedness" shall not include (i) Indebtedness evidenced by the Debt
Securities; (ii) Indebtedness of Publishing that is subordinate or junior in
right of payment to any other Indebtedness of Publishing; (iii) Indebtedness of
Publishing which, when incurred and without respect to any other election under
Section 1111(b) of Title 11, United States Code, is without recourse to
Publishing; (iv) Indebtedness which is represented by Redeemable Capital Stock;
(v) any liability for foreign, federal, state, local or other taxes owed or
owing by Publishing; (vi) Indebtedness of Publishing to a Restricted Subsidiary
or any other Affiliate of Publishing or any of such
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Affiliate's subsidiaries; (vii) that portion of any Indebtedness which at the
time of Incurrence is issued in violation of the Indenture; and (viii) trade
payables owed or owing by Publishing.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under
the Publishing Credit Facility and (ii) any other Senior Indebtedness which, at
the time of determination, has an aggregate principal amount outstanding of at
least $50,000,000 and is specifically designated by Publishing in the instrument
evidencing such Senior Indebtedness or the agreement under which such Senior
Indebtedness arises as "Designated Senior Indebtedness."
The Debt Securities will be effectively subordinated to all existing and
future liabilities of subsidiaries, including in the case of the Restricted
Subsidiaries, such subsidiaries' guarantees of Publishing's obligations under
the Publishing Credit Facility, except to the extent the Restricted Subsidiaries
may be required to provide guarantees of the Debt Securities, as described
herein, in which case such guarantees will be subordinated in right of payment
to such subsidiaries' guarantees of Publishing's obligations under the
Publishing Credit Facility.
SUBORDINATION OF GUARANTEE
Payments on the Hollinger International Guarantee will be subordinated, as
set forth in the Indenture, in right of payment to the prior payment in full of
all Senior Guarantor Indebtedness. The terms of such subordination will be
substantially similar to the subordination terms applicable to the Debt
Securities. See "Guarantees" below.
"Senior Guarantor Indebtedness" means, with respect to the Guarantor or any
Restricted Subsidiary Guarantor (for the purposes of this definition, each a
"Guarantor"), such Guarantor's guarantee of Publishing's payment obligations in
respect of the Publishing Credit Facility and any other Indebtedness of such
Guarantor (other than as otherwise provided in this definition), whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Guarantees. Notwithstanding the foregoing, "Senior Guarantor
Indebtedness" will not include (i) Indebtedness evidenced by such Guarantor's
Guarantee of the Debt Securities; (ii) Indebtedness of such Guarantor which,
when incurred and without respect to any other election under Section 1111(b) of
Title 11, United States Code, is without recourse to such Guarantor; (iii)
Indebtedness which is represented by Redeemable Capital Stock of such Guarantor;
(iv) any liability for foreign, federal, state, local or other taxes owed or
owing by such Guarantor; (v) Indebtedness of such Guarantor to a Restricted
Subsidiary or any other Affiliate of such Guarantor or any of such Affiliate's
subsidiaries; (vi) that portion of any Indebtedness which at the time of
Incurrence is issued in violation of the Indenture; and (vii) trade payables
owed or owing by such Guarantor.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants, which will
apply to Publishing and the Restricted Subsidiaries and, in certain cases, the
Guarantor:
Limitation on Indebtedness. Publishing will not, and will not permit any
of its Restricted Subsidiaries to, Incur any Indebtedness (including any
Acquired Indebtedness but excluding any Permitted Indebtedness) except for (a)
Indebtedness of Publishing or (b) Indebtedness of a Restricted Subsidiary
constituting Acquired Indebtedness or Permitted Subsidiary Indebtedness;
provided that, in the case of the foregoing clauses (a) and (b), the
Consolidated Cash Flow Ratio for Publishing and the Restricted Subsidiaries for
the four full fiscal quarters immediately preceding the incurrence of such
Indebtedness taken as one period (and after giving pro forma effect to (i) the
Incurrence of such Indebtedness and (if applicable) the application of the net
proceeds therefrom, including to refinance other Indebtedness, as if such
Indebtedness was Incurred, and the application of such proceeds occurred, at the
beginning of such four-quarter period; (ii) the Incurrence, repayment or
retirement of any other Indebtedness by Publishing and its Restricted
Subsidiaries since the first day of such four-quarter period as if such
Indebtedness was Incurred, repaid or retired at the beginning of such
four-quarter period; (iii) in the case of Acquired Indebtedness, the related
acquisition (as if such acquisition had been consummated on the first day of
such four-quarter period); and (iv) any acquisition
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or disposition by Publishing and its Restricted Subsidiaries of any company or
any business or any assets out of the ordinary course of business, whether by
merger, stock purchase or sale or asset purchase or sale or any related
repayment of Indebtedness, in each case since the first day of such four-quarter
period, as if such acquisition or disposition had been consummated on the first
day of such four-quarter period), is not greater than 6.0:1.0. (Section 10.08)
Limitation on Restricted Payments. (a) Publishing will not, and will not
permit any Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend or make any other distribution or
payment on or in respect of Publishing's Capital Stock (including dividends
or distributions of the Capital Stock of any Subsidiary), or make any other
payment to the direct or indirect holders (in their capacities as such) of
Publishing's Capital Stock (other than dividends or distributions payable
in shares of Publishing's Qualified Capital Stock or in options, warrants
or other rights to acquire such Qualified Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any Capital Stock of Publishing or any Capital
Stock of any Affiliate of Publishing (other than Capital Stock of any
Wholly Owned Restricted Subsidiary or Capital Stock of a Person that,
immediately following such repurchase, will become a Wholly Owned
Restricted Subsidiary) or options, warrants or other rights to acquire such
Capital Stock;
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Subordinated Indebtedness;
(iv) declare or pay any dividend or distribution on any Capital Stock
of any Restricted Subsidiary to any Person (other than (x) with respect to
any Capital Stock held by Publishing or any of its Wholly Owned Restricted
Subsidiaries or (y) with respect to Capital Stock held by any other Person
(other than an Affiliate of Publishing or an Affiliate of such Affiliate)
made on a pro rata basis consistent with the ownership interests in such
Capital Stock to the owners of such Capital Stock, except that, in the case
of the Capital Stock of a Restricted Subsidiary that is a Guarantor, (i) no
Default or Event of Default shall have occurred and be continuing; and (ii)
no holders of any other Indebtedness of Publishing or any Restricted
Subsidiary shall have an Acceleration Right);
(v) Incur, create or assume any guarantee of Indebtedness of any
Affiliate of Publishing (other than a Restricted Subsidiary of Publishing)
except as permitted by the "Limitation on Issuances of Guarantees of
Indebtedness" covenant;
(vi) make any Investment in any Person (other than any Permitted
Investments); or
(vii) designate any Restricted Subsidiary as an Unrestricted
Subsidiary;
(any of the payments described in paragraphs (i) through (vii) above, other than
any such action that is a Permitted Payment (as defined below), collectively,
"Restricted Payments") unless at the time of and after giving effect to the
proposed Restricted Payment (the amount of any such Restricted Payment, if other
than cash, as determined by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution), (1) no Default or Event of
Default shall have occurred and be continuing; (2) no holders of any other
Indebtedness of Publishing or any Restricted Subsidiary shall have an
Acceleration Right; (3) immediately before and immediately after giving effect
to such transaction on a pro forma basis, Publishing could incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) under the provisions
described above under "Limitation on Indebtedness"; and (4) the aggregate amount
of all such Restricted Payments declared or made after the date of the Indenture
does not exceed the sum of:
(A) 50% of the sum of (i) the aggregate cumulative Consolidated Net
Income of Publishing and its Restricted Subsidiaries accrued during the
period (treated as a single accounting period) beginning on the first day
of Publishing's fiscal quarter commencing prior to the date of the
Indenture and ending on the last day of Publishing's last fiscal quarter
ending prior to the date of the Restricted Payment (or, if such aggregate
cumulative Consolidated Net Income shall be a loss, 100% of such loss
(treating a loss as a negative number)) and (ii) the aggregate cumulative
Amortization Expense of Publishing and its
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Restricted Subsidiaries accrued during the period (treated as a single
accounting period) beginning on the first day of Publishing's fiscal
quarter commencing prior to the date of the Indenture and ending on the
last day of Publishing's last fiscal quarter ending prior to the date of
the Restricted Payment;
(B) 50% of the aggregate cumulative cash dividends or distributions
received by Publishing and its Consolidated Restricted Subsidiaries from
any of Publishing's Unrestricted Subsidiaries during the period (treated as
a single accounting period) beginning on the first day of Publishing's
fiscal quarter commencing prior to the date of the Indenture and ending on
the last day of Publishing's last fiscal quarter ending prior to the date
of the Restricted Payment; provided, however, that for purposes of this
clause (B), cash dividends and distributions shall not include (x) cash
dividends received by Publishing from Publishing's Unrestricted
Subsidiaries not in excess of the Southam Dividend Amount or (y) cash
dividends or distributions received by Publishing or any Wholly Owned
Restricted Subsidiary in accordance with paragraph (b)(vii) below;
(C) the aggregate Net Cash Proceeds received after the date of the
original issuance of the Debt Securities by Publishing from the issuance or
sale (other than to any of its Restricted Subsidiaries) of its Qualified
Capital Stock or any options, warrants or rights to purchase such Qualified
Capital Stock (except, in each case, to the extent such proceeds are used
to purchase, redeem or otherwise retire Capital Stock, Subordinated
Indebtedness or Pari Passu Indebtedness as set forth below);
(D) the aggregate Net Cash Proceeds received after the date of the
original issuance of the Debt Securities by Publishing (other than from any
of its Restricted Subsidiaries) upon the exercise of any options or
warrants to purchase Qualified Capital Stock of Publishing;
(E) the aggregate Net Cash Proceeds received after the date of the
original issuance of the Debt Securities by Publishing (other than from any
of its Subsidiaries) from cash capital contributions made to Publishing
(other than from the proceeds of the Common Stock Offering);
(F) the aggregate amount by which any Indebtedness (other than
Permitted Indebtedness) of Publishing or any Restricted Subsidiary is
reduced after the date of the Indenture as a result of the conversion or
exchange of debt securities or Redeemable Capital Stock of Publishing that
has been converted into or exchanged for Qualified Capital Stock of
Publishing to the extent such debt securities or Redeemable Capital Stock
were originally sold for cash plus the aggregate Net Cash Proceeds received
by Publishing at the time of any such conversion or exchange; and
(G) $25,000,000.
(b) Notwithstanding the foregoing, and, in the case of clauses (ii) through
(x) below, so long as (1) there is no Default or Event of Default continuing and
(2) no holders of any other Indebtedness of Publishing or any Restricted
Subsidiary have an Acceleration Right, the foregoing provisions will not
prohibit the following actions (clauses (i) through (x) being referred to as
"Permitted Payments"):
(i) the payment of any dividend or distribution within 60 days after
the date of declaration thereof, if at such date of declaration such
payment would be permitted by the provisions of paragraph (a) of this
section and such payment will be deemed to have been paid on such date of
declaration for purposes of the calculation required by paragraph (a) of
this section;
(ii) any repurchase, redemption or other acquisition or retirement of
any shares of Capital Stock of Publishing in exchange for (including any
such exchange pursuant to the exercise of a conversion right or privilege
in connection with which cash is paid in lieu of the issuance of fractional
shares or scrip), or out of the Net Cash Proceeds of a substantially
concurrent issue and sale for cash (other than to a Restricted Subsidiary)
of other Qualified Capital Stock of Publishing; provided that the Net Cash
Proceeds from the issuance of such shares of Qualified Capital Stock are
excluded from clauses 3(D) and (3)(E) of paragraph (a) of this section;
(iii) any repurchase, redemption, defeasance, retirement or
acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or out of the net proceeds of, a
substantially concurrent issuance and sale for cash (other than to any
Restricted Subsidiary of Publishing) of any
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Qualified Capital Stock of Publishing; provided that the Net Cash Proceeds
from the issuance of such Qualified Capital Stock are excluded from clauses
3(D) and (3)(E) of paragraph (a) of this section; and
(iv) the repurchase, redemption, defeasance, retirement, refinancing,
acquisition for value or payment of principal of any Subordinated
Indebtedness (other than Redeemable Capital Stock) or Pari Passu
Indebtedness (a "refinancing") through the issuance of new Subordinated
Indebtedness of Publishing; provided that any such new Subordinated
Indebtedness (1) shall be in a principal amount that does not exceed the
principal amount so refinanced (or, if the Subordinated Indebtedness so
refinanced provides for an amount less than the principal amount thereof to
be due and payable upon a declaration or acceleration thereof, then such
lesser amount as of the date of determination), plus the amount of any
premium required to be paid in connection with such refinancing pursuant to
the terms of such refinanced Indebtedness and any reasonable out-of-pocket
expenses of Publishing incurred in connection with such refinancing; (2)
has an Average Life to Stated Maturity greater than the remaining Average
Life to Stated Maturity of the Notes; (3) has a Stated Maturity for its
final scheduled principal payment later than the Stated Maturity for the
final scheduled principal payment of the Debt Securities; and (4) is
expressly subordinated in right of payment to the Debt Securities at least
to the same extent as the Indebtedness to be refinanced;
(v) dividends paid to the Guarantor after the date of original
issuance of the Notes to the extent not in excess of the Southam Dividend
Amount;
(vi) loans, advances, dividends or distributions to the Guarantor not
exceeding $8.0 million in the aggregate for the purpose and in the amount
not to exceed the amount necessary to pay allocable fees and expenses of
the Guarantor incurred in connection with the Reorganization;
(vii) loans, advances, dividends or distributions by any Restricted
Subsidiary to Publishing or any Wholly Owned Restricted Subsidiary and by
FDTH or, to the extent it has received such funds directly or indirectly
from FDTH, DTH or Publishing, to the Guarantor for the purpose of redeeming
shares of Series A Preferred Stock not exceeding in the aggregate any
payments made by Hollinger Inc. to FDTH pursuant to the provisions of the
HTH/FDTH Share Exchange Agreement;
(viii) loans, advances, dividends or distributions to the Guarantor in
amounts not to exceed to $1 million per year to permit the Guarantor to
repurchase, redeem or otherwise acquire or retire any shares of its Capital
Stock from employees, former employees or their estates upon disability,
death, retirement or termination of employment;
(ix) tax payments pursuant to a Tax Sharing Agreement to the extent
that the aggregate amount of such payments do not exceed the aggregate
amount of the tax payments that Publishing and the Restricted Subsidiaries
would have been required to make if they alone constituted a single
consolidated tax group; and
(x) the transfer by Publishing to an Unrestricted Subsidiary of the
Telegraph Option Shares no later than the date which is three months after
the date of the Indenture (Section 10.09); and
For purposes of the "Limitation on Restricted Payments" covenant, if the
Board of Directors designates a Restricted Subsidiary as an Unrestricted
Subsidiary, a "Restricted Payment" shall be deemed to have been made in an
amount equal to the fair value of the Investment of Publishing and its other
Restricted Subsidiaries in such Restricted Subsidiary as determined by the Board
of Directors with the concurrence of a majority of the Independent Directors
(there being at least one Independent Director), whose good faith determination
shall be conclusive. In addition, if a particular Restricted Payment involves a
non-cash payment, including a distribution of assets, then such Restricted
Payment shall be deemed to be in an amount equal to the fair market value of the
non-cash portion of such Restricted Payment as determined by the Board of
Directors, whose good faith determination shall be conclusive.
Limitation on Transactions with Affiliates. (a) Publishing will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or suffer to exist any transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or lease of assets,
property or services) with any Affiliate of Publishing (other than Publishing or
a Wholly Owned Restricted Subsidiary) unless (a) such transaction or series of
related transactions is on terms that are no less favorable to Publishing
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or such Restricted Subsidiary, as the case may be, than would be available in a
comparable transaction in arm's-length dealings with an unrelated third party
and (b) with respect to any transaction or series of related transactions
involving aggregate payments in excess of $5,000,000, Publishing delivers an
officers' certificate to the Trustee certifying that such transaction or series
of related transactions complies with clause (a) above and such transaction or
series of related transactions has been approved by a majority of the
Independent Directors; provided that any transaction or series of related
transactions otherwise permitted under this paragraph (other than any
transaction or series of related transactions with respect to the making of any
Permitted Investment pursuant to clause (ix) of the definition of "Permitted
Investment" or any Restricted Payment permitted pursuant to the covenant
entitled "Limitation on Restricted Payments" (other than those referred to in
clause (vi) of paragraph (b) thereof) pursuant to which Publishing or any
Restricted Subsidiary shall receive or render value exceeding $15,000,000 shall
not be permitted unless, prior to the consummation of any such transaction or
series of related transactions, Publishing shall have received an opinion, from
an independent nationally recognized investment banking firm or firm experienced
in the appraisal or similar review of similar types of transactions, that such
transaction is fair to Publishing from a financial point of view; provided,
further, that this covenant shall not apply to (i) transactions or agreements as
in effect or securities outstanding on the date of the Indenture (provided that
any amendment to any existing agreement (including the Services Agreement and
the Business Opportunities Agreement), and any transaction pursuant to the
Business Opportunities Agreement, shall require approval pursuant to this
covenant; notwithstanding the foregoing, any amendment to the Services Agreement
or the Business Opportunities Agreement shall require the approval of a majority
of the Independent Directors), (ii) directors' fees approved by the Board of
Directors, (iii) any employee benefit plan or arrangement entered into or made
available to officers or other employees of Publishing or the Restricted
Subsidiaries in the ordinary course of business, (iv) sales by Publishing and
its Restricted Subsidiaries of their products in the ordinary course of business
on arm's-length terms, (v) tax payments pursuant to a Tax Sharing Agreement to
the extent that the aggregate amount of such payments do not exceed the
aggregate amount of the tax payments that Publishing and the Restricted
Subsidiaries would have been required to make if they alone constituted a single
consolidated tax group, (vi) loans, advances, dividends or distributions by
FDTH, DTH or Publishing to the Guarantor in amounts and for the purpose
permitted by clauses (b)(v) and (b)(vii) under "Limitation on Restricted
Payments," (vii) payments made to Hollinger Inc. pursuant to the Services
Agreement that constitute the reimbursement for the fair value (as determined by
a majority of the Independent Directors serving on an Independent Committee) of
services received by Publishing or a Restricted Subsidiary consistent with past
practices, and (viii) the transfer by Publishing to an Unrestricted Subsidiary
of the Telegraph Option Shares no later than the date which is three months
after the date of the Indenture. (Section 10.10)
Limitation on Other Subordinated Indebtedness. Neither Publishing nor any
Restricted Subsidiary Guarantor will Incur or permit to exist any Indebtedness
(other than the Debt Securities or a Guarantee thereof pursuant to the
Indenture, as applicable) that is subordinate in right of payment to any Senior
Indebtedness of Publishing (or such Guarantor) unless such Indebtedness is also
pari passu with, or subordinate in right of payment to, the Debt Securities or
the Guarantee of such Guarantor, as the case may be. For purposes of such
covenant, Indebtedness will be deemed to be pari passu with the Debt Securities
or such Guarantee if it is subordinate to Senior Indebtedness of Publishing or
the relevant Guarantee pursuant to subordination provisions substantially
similar to those described under "Subordination". (Section 10.11)
Limitation on Liens. (a) Publishing will not, and will not permit any
Restricted Subsidiary to Incur, affirm or suffer to exist any Lien of any kind
securing any Pari Passu Indebtedness or Subordinated Indebtedness (including any
assumption, guarantee or other liability with respect thereto by any Restricted
Subsidiary) upon any property or assets (including any intercompany notes) of
Publishing or any Restricted Subsidiary owned on the date of the Indenture or
acquired after the date of the Indenture, or any income or profits therefrom,
unless (i) in the case of any Lien securing Pari Passu Indebtedness, the Debt
Securities are secured by a Lien on such property, assets or proceeds that is
senior in priority to or pari passu with such Lien and (ii) in the case of any
Lien securing Subordinated Indebtedness, the Debt Securities are secured by a
Lien on such property, assets or proceeds that is senior in priority to such
Lien, except for (i) any Lien securing Acquired Indebtedness created prior to
(and not created in connection with, or in contemplation of) the incurrence of
such Pari Passu Indebtedness or Subordinated Indebtedness by Publishing or any
Restricted
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Subsidiary, in each case which Indebtedness is permitted under the provisions of
"Limitation on Indebtedness" (provided that any such Lien only extends to the
assets that were subject to such Lien securing such Acquired Indebtedness prior
to the related acquisition by Publishing or its Restricted Subsidiaries) and
(ii) any Lien securing Indebtedness owing to Publishing or a Wholly Owned
Restricted Subsidiary by a Restricted Subsidiary.
(b) Notwithstanding the foregoing, any security interest granted by
Publishing or any Restricted Subsidiary to secure the Debt Securities created
pursuant to paragraph (a) above shall provide by its terms that such security
interest shall be automatically and unconditionally released and discharged upon
the release by the holders of the Indebtedness of Publishing or any Restricted
Subsidiary described in paragraph (a) above of their security interest
(including any deemed release upon payment in full of all obligations under such
Indebtedness), at a time when (A) no other Pari Passu Indebtedness and
Subordinated Indebtedness of Publishing or any Restricted Subsidiary has been
secured by such property or assets of Publishing or any such Restricted
Subsidiary or (B) the holders of all such other Pari Passu Indebtedness and
Subordinated Indebtedness which is secured by such property or assets of
Publishing or any such Restricted Subsidiary also release their security
interest in such property or assets (including any deemed release upon payment
in full of all obligations under such Indebtedness). (Section 10.12)
Limitation on Issuances of Guarantees of Indebtedness. (a) Publishing will
not permit any Restricted Subsidiary, directly or indirectly, to guarantee,
assume or in any other manner become liable with respect to any Pari Passu
Indebtedness or Subordinated Indebtedness unless such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to the Indenture
providing for a guarantee of the Debt Securities and (A) if the Debt Securities
are subordinated in right of payment to such Indebtedness, the guarantee under
the supplemental indenture shall be subordinated to the same extent as the Debt
Securities are subordinated to such Indebtedness under the Indenture and (B) if
such Indebtedness of Publishing is by its terms expressly subordinated to the
Debt Securities, any such assumption, guarantee or other liability of such
Restricted Subsidiary with respect to such Indebtedness shall be subordinated to
such Restricted Subsidiary's guarantee to the same extent as such Indebtedness
is subordinated to the Debt Securities.
(b) Notwithstanding the foregoing, any guarantee by a Restricted Subsidiary
of the Debt Securities that is provided pursuant to the foregoing paragraph or
under the provisions of the "Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries" may provide by its terms that it shall be automatically
and unconditionally released and discharged (i) upon any sale, exchange or
transfer, to any Person not an Affiliate of Publishing, of all of Publishing's
Capital Stock in, or all or substantially all the assets of, such Restricted
Subsidiary, which sale, exchange or transfer is in compliance with the
Indenture, (ii) if the Restricted Subsidiary issuing such guarantee ceases to be
a Restricted Subsidiary or (iii) upon the release by the holders of the
Indebtedness of Publishing described in paragraph (a) above of their Guarantee
by such Restricted Subsidiary (including any deemed release upon payment in full
of all obligations under such Indebtedness), at a time when (A) no Indebtedness
of Publishing or any Restricted Subsidiary has been guaranteed by such
Restricted Subsidiary or (B) the holders of all such other Indebtedness which is
guaranteed by such Restricted Subsidiary also release their Guarantee by such
Restricted Subsidiary (including any deemed release upon payment in full of all
obligations under such Indebtedness). (Section 10.13)
Limitation on Sale of Assets. (a) Publishing will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, consummate an
Asset Sale unless (i) at least 80% of the proceeds from such Asset Sale are
received in cash (provided that the amount of (A) any Senior Indebtedness (as
shown on Publishing's or such Restricted Subsidiaries' most recent balance sheet
or in the notes thereto) of Publishing or any such Restricted Subsidiary that is
assumed by the transferee of any asset in connection with any Asset Sale and (B)
any deferred payment obligations received by Publishing or any such Restricted
Subsidiary as proceeds of an Asset Sale that are concurrently with the Asset
Sale converted into cash without recourse to Publishing or any of its Restricted
Subsidiaries shall be deemed to be cash for purposes of this provision; provided
further that, for purposes of this clause (i), "cash" shall include any cash
proceeds received from the sale of securities received in an Asset Sale as long
as at the time of such Asset Sale, Publishing or its Restricted Subsidiary, as
applicable, has entered into a legally binding agreement for the sale of such
securities and such securities are sold within 90 days of such Asset Sale; and
provided further that this clause (i) shall
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not apply to (x) Newspapers Businesses received by Publishing or a Restricted
Subsidiary from the transferee as consideration for an Asset Sale (an "Asset
Swap") so long as, immediately before and immediately after giving effect to
such transaction on a pro forma basis, Publishing could incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) under the provisions
described above under "Limitations on Indebtedness"), (y) a CST Real Estate
Transaction or (z) a Permitted Real Estate Sale) and (ii) Publishing or such
Restricted Subsidiary receives consideration at the time of such Asset Sale at
least equal to the fair market value of the shares or assets sold (as determined
by the Board of Directors of Publishing and evidenced by a board resolution).
The value of any properties or assets (other than cash) received pursuant to an
Asset Sale shall be determined by the Board of Directors of Publishing and
evidenced by a Board Resolution; provided that if the value of the asset which
is the subject of the Asset Sale is in excess of $25,000,000, the value of the
properties or assets received shall be determined by an independent nationally
recognized investment banking firm or firm experienced in the appraisal or
similar review of similar types of assets (provided that for purposes of this
sentence, any CST Real Estate Transaction shall be deemed to involve an asset
whose value exceeds $25,000,000).
(b) If all or a portion of the Net Cash Proceeds of any Asset Sale is not
applied to permanently repay or otherwise permanently retire any Senior
Indebtedness then outstanding as permitted or required by the terms thereof, or
if no such Senior Indebtedness is then outstanding, Publishing or a Restricted
Subsidiary, as the case may be, may, within 12 months of the Asset Sale, invest
the Net Cash Proceeds in properties and assets that (as determined by the Board
of Directors) replace the properties and assets that were the subject of the
Asset Sale or in properties and assets that will be used in the businesses of
Publishing or its Restricted Subsidiaries existing on the date of the Indenture
or in businesses reasonably related thereto. The amount of such Net Cash
Proceeds neither used to permanently repay or prepay Senior Indebtedness nor
used or invested as set forth in this paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds
$20,000,000, Publishing will apply the Excess Proceeds to the repayment of the
Debt Securities and any Pari Passu Indebtedness required to be repurchased under
the instrument governing such Pari Passu Indebtedness as follows: (i) Publishing
will make an offer to purchase (an "Offer") from all holders of the Debt
Securities in accordance with the procedures set forth in the Indenture in the
maximum principal amount (expressed as a multiple of $1,000) of Debt Securities
that may be purchased out of an amount (the "Note Amount") equal to the product
of such Excess Proceeds multiplied by a fraction, the numerator of which is the
outstanding principal amount of the Debt Securities, and the denominator of
which is the sum of the outstanding principal amount of the Debt Securities and
such Pari Passu Indebtedness (subject to proration in the event such amount is
less than the aggregate Offered Price (as defined herein) of all Debt Securities
tendered) and (ii) to the extent required by such Pari Passu Indebtedness to
permanently reduce the principal amount of such Pari Passu Indebtedness,
Publishing will make an offer to purchase or otherwise repurchase or redeem Pari
Passu Indebtedness (a "Pari Passu Offer") in an amount (the "Pari Passu Amount")
equal to the excess of the Excess Proceeds over the Note Amount; provided that
in no event will the Pari Passu Debt Amount exceed the principal amount of such
Pari Passu Indebtedness plus the amount of any premium required to be paid to
repurchase such Pari Passu Indebtedness. The offer price shall be payable in
cash in an amount equal to 100% of the principal amount of the Debt Securities
plus accrued and unpaid interest, if any, to the date (the "Purchase Date") such
Offer is consummated (the "Offered Price"), in accordance with the procedures
set forth in the Indenture. To the extent that the aggregate Offered Price of
the Debt Securities tendered pursuant to the Offer is less than the Note Amount
relating thereto or the aggregate amount of Pari Passu Indebtedness that is
purchased is less than the Pari Passu Debt Amount (the amount of such shortfall,
if any, constituting a "Deficiency"), Publishing shall use such Deficiency in
the business of Publishing and its Restricted Subsidiaries. Upon completion of
the purchase of all Debt Securities tendered pursuant to an Offer and repurchase
of the Pari Passu Indebtedness pursuant to a Pari Passu Offer, the amount of
Excess Proceeds, if any, shall be reset at zero.
(d) Whenever the aggregate amount of Excess Proceeds received by Publishing
exceeds $20,000,000, such Excess Proceeds will, prior to the purchase of Debt
Securities or any Pari Passu Indebtedness described in paragraph (c) above, be
set aside by Publishing in a separate account pending (i) deposit with the
depository or a paying agent of the amount required to purchase the Debt
Securities or Pari Passu
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Indebtedness tendered in an Offer or Pari Passu Offer, (ii) delivery by
Publishing of the Offered Price to the holders of the Debt Securities or Pari
Passu Indebtedness tendered in an Offer or a Pari Passu Offer and (iii)
application, as set forth above, of Excess Proceeds in the business of
Publishing and its Restricted Subsidiaries. Such Excess Proceeds may be invested
in Temporary Cash Investments; provided that the maturity date of any such
investment made after the amount of Excess Proceeds equals or exceeds
$20,000,000 shall not be later than the Purchase Date. Publishing shall be
entitled to any interest or dividends accrued, earned or paid on such Temporary
Cash Investments; provided that Publishing will not be entitled to such interest
and will not withdraw such interest from the separate account if an Event of
Default has occurred and is continuing.
(e) If Publishing becomes obligated to make an Offer pursuant to paragraph
(c) above, the Debt Securities will be purchased by Publishing, at the option of
the holder thereof, in whole or in part in integral multiples of $1,000, on a
date that is not earlier than 30 days and not later than 60 days from the date
the notice is given to holders, or such later date as may be necessary for
Publishing to comply with the requirements under the Exchange Act, subject to
proration in the event the Note Amount is less than the aggregate Offered Price
of all Debt Securities tendered.
(f) Publishing will comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable securities
laws or regulations in connection with an Offer.
(g) Publishing will not, and will not permit any Subsidiary to, create or
permit to exist or become effective any restriction (other than restrictions
existing under (i) Indebtedness as in effect on the date of the Indenture as
such Indebtedness may be refinanced from time to time or (ii) any Senior
Indebtedness existing on the date of the Indenture or thereafter; provided, in
each case, that such restrictions are no less favorable to the holders of Debt
Securities than those existing on the date of the Indenture) that would
expressly impair the ability of Publishing to make an Offer to purchase the Debt
Securities or, if such Offer is made, to pay for the Debt Securities tendered
for purchase. (Section 10.14)
Purchase of Debt Securities upon a Change of Control. If a Change of
Control occurs at any time, each holder of Debt Securities will have the right
to require that Publishing purchase such holder's Debt Securities in whole or in
part in integral multiples of $1,000, at a purchase price (the "Change of
Control Purchase Price") in cash in an amount equal to 101% of the principal
amount of such Debt Securities, plus accrued and unpaid interest, if any, to the
date of purchase (the "Change of Control Purchase Date"), pursuant to the offer
described below (the "Change of Control Offer") and the other procedures set
forth in the Indenture.
Within 30 days following any Change of Control, Publishing shall notify the
Trustee thereof and give written notice of such Change of Control to each holder
of Debt Securities, by first-class mail, postage prepaid, at his address
appearing in the security register, stating, among other things, (i) the
purchase price, (ii) the Change of Control Purchase Date, which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed, or such later date as is necessary to comply with requirements
under the Exchange Act, (iii) that any Debt Securities not tendered will
continue to accrue interest, (iv) that, unless Publishing defaults in the
payment of the purchase price, any Debt Securities accepted for payment pursuant
to the Change of Control Offer will cease to accrue interest after the Change of
Control Purchase Date and (v) certain other procedures that a holder of Debt
Securities must follow to accept a Change of Control Offer or to withdraw such
acceptance. (Section 10.15)
If a Change of Control Offer is made, there can be no assurance that
Publishing will have available funds sufficient to pay the Change of Control
Purchase Price for any or all of the Debt Securities that might be delivered by
holders of the Debt Securities seeking to accept the Change of Control Offer
and, accordingly, none of the holders of the Debt Securities may receive the
Change of Control Purchase Price for their Debt Securities in the event of a
Change of Control. The failure of Publishing to make or consummate the Change of
Control Offer or pay the Change of Control Purchase Price when due will give the
Trustee and the holders of the Debt Securities the rights described under
"Events of Default."
The existence of a holder's right to require Publishing to repurchase such
holder's Debt Securities upon a Change of Control may deter a third party from
acquiring Publishing in a transaction which constitutes a Change of Control.
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The provisions of the Indenture may not afford holders of Debt Securities
the right to require Publishing to repurchase the Debt Securities in the event
of a highly leveraged transaction or certain transactions with Publishing's
management or its Affiliates or the management of the Guarantor or Hollinger
Inc. or their Affiliates, including a reorganization, restructuring, merger or
similar transaction (including, in certain circumstances, an acquisition of
Publishing by its management or affiliates) involving Publishing that may
adversely affect holders of the Debt Securities, if such transaction is not a
transaction defined as a Change of Control. Reference is made to "Certain
Definitions" for the definition of "Change of Control." A transaction involving
Publishing's management or its Affiliates or the management of the Guarantor or
Hollinger Inc. or their Affiliates, or a transaction involving a
recapitalization of Publishing, may result in a Change of Control if it is the
type of transaction specified by such definition.
Publishing will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws or
regulations in connection with a Change of Control Offer.
Publishing shall not, and shall not permit any Subsidiary to, create or
permit to exist or become effective any restriction (other than restrictions
existing under (i) Indebtedness as in effect on the date of this Indenture as
such Indebtedness may be refinanced from time to time or (ii) any Senior
Indebtedness existing on the date of this Indenture or thereafter; provided, in
each case, that such restrictions are no less favorable to the Holders than
those existing on the date of this Indenture) that would expressly impair the
ability of Publishing to make a Change of Control Offer to purchase the Debt
Securities or, if such Change of Control Offer is made, to pay for the Debt
Securities tendered for purchase.
Limitation on Issuance and Sale of Capital Stock of Restricted
Subsidiaries. Publishing will not permit (a) any Restricted Subsidiary to issue
any Capital Stock (other than to Publishing or any Wholly Owned Restricted
Subsidiary) or (b) any Person (other than Publishing or a Wholly Owned
Restricted Subsidiary) to acquire any Capital Stock of any Restricted Subsidiary
from Publishing or any Restricted Subsidiary, except upon the sale of all the
outstanding Capital Stock of such Restricted Subsidiary owned by Publishing;
provided, however, that Publishing or a Restricted Subsidiary may issue or sell
common stock of a Restricted Subsidiary to a Person that is not an Affiliate of
Publishing so long as, upon or prior to the consummation of such issuance or
sale, such Restricted Subsidiary issues and delivers a supplemental indenture to
the Indenture providing for the guarantee of the Debt Securities, which
guarantee may be subordinated in right of payment to any Senior Indebtedness of
such Restricted Subsidiary, on substantially the same terms as the Debt
Securities are subordinated to all Senior Indebtedness of Publishing. (Section
10.16)
Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries. Publishing will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distribution on its
Capital Stock to Publishing or any other Restricted Subsidiary, (b) pay any
Indebtedness owed to Publishing or any Restricted Subsidiary, (c) make any
Investment in Publishing or (d) transfer any of its properties or assets to
Publishing or any Restricted Subsidiary, except (i) any encumbrance or
restriction pursuant to or in connection with the Publishing Credit Facility or
the FDTH Credit Facility each as in effect on the date of the Indenture or any
other agreement in effect on the date of the Indenture (including the AP-91
Senior Notes), (ii) any encumbrance or restriction, with respect to a Restricted
Subsidiary that is not a Restricted Subsidiary of Publishing on the date of the
Indenture, in existence at the time such Person becomes a Restricted Subsidiary
of Publishing and not incurred in connection with, or in contemplation of, such
Person becoming a Restricted Subsidiary, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of
Publishing or any Restricted Subsidiary and (iv) any encumbrance or restriction
existing under any agreement that extends, renews, refinances or replaces the
agreements containing the encumbrances or restrictions in the foregoing clauses
(i) and (ii) (other than the covenants in the AP-91 Senior Notes), provided that
the terms and conditions of any such encumbrances or restrictions are not
materially less favorable to the holders of the Debt Securities than those under
or pursuant to the agreement evidencing the Indebtedness so extended, renewed,
refinanced or replaced. (Section 10.17)
Provision of Financial Statements. Whether or not the Guarantor is subject
to Section 13(a) or 15(d) of the Exchange Act, it will, to the extent permitted
under the Exchange Act, file with the Commission the
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annual reports, quarterly reports and other documents that it would have been
required to file with the Commission pursuant to such Sections 13(a) or 15(d) of
the Exchange Act, including any "summarized information" or other information
relating to Publishing as may be required by Regulation S-X under the Exchange
Act or by the Commission, if it were so subject, such documents to be filed with
the Commission on or prior to the respective dates (the "Required Filing Dates")
by which it would have been required so to file such documents if it were so
subject. The Guarantor will in any event (x) within 15 days of each Required
Filing Date (i) transmit by mail to all holders of Debt Securities, as their
names and addresses appear in the security register, without cost to such
holders of Debt Securities and (ii) file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Guarantor would have
been required to file with the Commission pursuant to Section 13(a) or 15(d) of
the Exchange Act if it were subject to such Sections and (y) if filing such
documents by the Guarantor with the Commission is not permitted under the
Exchange Act, promptly upon written request and payment of the reasonable cost
of duplication and delivery, supply copies of such documents to any prospective
holder of Debt Securities at Publishing's cost. (Section 10.18)
Restricted Subsidiaries. (a) The Board of Directors may designate any
Restricted Subsidiary as an Unrestricted Subsidiary if (i) such action is in
compliance with the "Limitation on Restricted Payments" covenant and (ii) such
action complies with the requirements of the definition of "Unrestricted
Subsidiaries."
(b) The Board of Directors may designate any Unrestricted Subsidiary or any
Person that is to become a Restricted Subsidiary as a Restricted Subsidiary if
immediately after giving effect to such action (and treating any Acquired
Indebtedness as having been incurred at the time of such action), Publishing
could have incurred at least $1.00 of additional Indebtedness pursuant to the
"Limitation on Indebtedness" covenant. (Section 10.21)
Additional Covenants. The Indenture also contains covenants with respect
to the following matters: (i) payment of principal, premium and interest; (ii)
maintenance of an office or agency in The City of New York; (iii) arrangements
regarding the handling of money held in trust; (iv) maintenance of corporate
existence; (v) payment of taxes and other claims; (vi) maintenance of
properties; and (vii) maintenance of insurance.
CONSOLIDATION, MERGER, SALE OF ASSETS
Publishing will not, in a single transaction or a series of related
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of its properties and assets to any Person or group of affiliated Persons, or
permit any of its Restricted Subsidiaries to enter into any such transaction or
transactions (other than, in the case of a Restricted Subsidiary, such a
consolidation, merger or transfer with one or more wholly owned Restricted
Subsidiaries) if such transaction or transactions, in the aggregate, would
result in a sale, assignment, conveyance, transfer, lease or disposition of all
or substantially all of the properties and assets of Publishing and its
Restricted Subsidiaries on a Consolidated basis to any other Person or group of
affiliated Persons, unless at the time and after giving effect thereto (a)
either (i) Publishing shall be the continuing corporation or (ii) the Person (if
other than Publishing) formed by such consolidation or into which Publishing is
merged or the Person which acquires by sale, assignment, conveyance, transfer,
lease or disposition all or substantially all of the properties and assets of
Publishing and its Restricted Subsidiaries on a Consolidated basis (the
"Surviving Entity") will be a corporation duly organized and validly existing
under the laws of the United States of America, any state thereof or the
District of Columbia and such Person assumes by a supplemental indenture in form
and substance reasonably satisfactory to the Trustee, all the obligations of
Publishing under the Debt Securities and the Indenture, and the Indenture will
remain in full force and effect; (b) immediately before and immediately after
giving effect to such transaction on a pro forma basis, no Default or Event of
Default shall have occurred and be continuing; (c) immediately after giving
effect to the transaction on a pro forma basis, the Consolidated Net Worth of
the Surviving Entity is not less than the Consolidated Net Worth of Publishing
and the Restricted Subsidiaries immediately prior to the transaction; (d)
immediately before and immediately after giving effect to such transaction on a
pro forma basis (on the assumption that the transaction occurred on the first
day of the four-quarter period immediately prior to the consummation of such
transaction with the appropriate adjustments with respect to the transaction
being included in such pro forma calculation),
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Publishing (or the Surviving Entity if Publishing is not the continuing obligor
under the Indenture) could incur $1.00 of additional Indebtedness under the
provisions of "Certain Covenants--Limitation on Indebtedness" (other than
Permitted Indebtedness); (e) if any of the property or assets of Publishing or
any of its Restricted Subsidiaries would thereupon become subject to any Lien,
the provisions of "Certain Covenants-- Limitations on Liens" are complied with;
and (f) Publishing or the Surviving Entity shall have delivered, or caused to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an officers' certificate and an opinion of counsel, each to the effect
that such consolidation, merger, transfer, sale, assignment, lease or other
transaction and the supplemental indenture in respect thereto comply with the
provisions described herein and that all conditions precedent herein provided
for relating to such transaction have been complied with. (Section 8.01)
Neither the Guarantor nor any Restricted Subsidiary Guarantor shall, and
Publishing will not permit a Restricted Subsidiary Guarantor to, in a single
transaction or series of related transactions, consolidate with or merge with or
into any other Person (other than Publishing, the Guarantor or any other
Restricted Subsidiary Guarantor), or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets on a
Consolidated basis to any Person (other than Publishing, the Guarantor or any
other Restricted Subsidiary Guarantor) if such transaction or transactions, in
the aggregate, would result in a sale, assignment, conveyance, transfer, lease
or disposition of all or substantially all of the properties and assets of such
Guarantor to any other Person or group of affiliated Persons, unless at the time
and after giving effect thereto: (a) either (i) the Guarantor or such Restricted
Subsidiary Guarantor shall be the continuing corporation or (ii) the Person (if
other than the Guarantor or such Restricted Subsidiary Guarantor) formed by such
consolidation or into which the Guarantor or such Restricted Subsidiary
Guarantor, as the case may be, is merged or the entity which acquires by sale,
assignment, conveyance, transfer, lease or disposition of all or substantially
all the properties and assets of the Guarantor or such Restricted Subsidiary
Guarantor shall be a corporation duly organized and validly existing under the
laws of the United States, any state thereof or the District of Columbia and
shall expressly assume by a supplemental indenture, executed and delivered to
the Trustee, in a form and substance reasonably satisfactory to the Trustee, all
the obligations of the Guarantor or such Restricted Subsidiary Guarantor, as the
case may be, under the Debt Securities and the Indenture; (b) immediately before
and immediately after giving effect to such transaction on a pro forma basis, no
Default or Event of Default shall have occurred and be continuing; and (c) the
Guarantor or such Restricted Subsidiary Guarantor, as the case may be, shall
have delivered or caused to be delivered to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an officers' certificate and an opinion
of counsel, each stating that such consolidation, merger, sale, assignment,
conveyance, transfer, lease or disposition and such supplemental indenture
comply with the Indenture. (Section 8.01)
In the event of any transaction described in and complying with the
conditions listed in the immediately preceding paragraphs in which Publishing,
the Guarantor or any Restricted Subsidiary Guarantor is not the continuing
corporation, the successor Person formed or remaining shall succeed to, and be
substituted for, and may exercise every right and power of, Publishing, the
Guarantor or such Restricted Subsidiary Guarantor, as the case may be, and
Publishing, the Guarantor or such Restricted Subsidiary Guarantor, as the case
may be, would be discharged from all obligations and covenants under the
Indenture, the Debt Securities and such Guarantee; provided that in the case of
a transfer by lease, the predecessor shall not be released from the payment of
principal and interest on the Debt Securities or such Guarantee, as the case may
be. (Section 8.02)
EVENTS OF DEFAULT
An Event of Default will occur under the Indenture if:
(i) there shall be a default in the payment of any interest on any
Debt Securities when it becomes due and payable, and such default shall
continue for a period of 30 days;
(ii) there shall be a default in the payment of the principal of (or
premium, if any, on) any Debt Securities when and as the same shall become
due and payable at its Maturity (upon acceleration, optional or mandatory
redemption, required repurchase or otherwise);
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(iii) (a) there shall be a default in the performance, or breach, of
any covenant or agreement of Publishing under the Indenture (other than a
default in the performance, or breach, of a covenant or agreement which is
specifically dealt with in paragraphs (i) or (ii) or in clauses (b) and (c)
of this paragraph (iii)) and such default or breach shall continue for a
period of 30 days after written notice has been given, by certified mail,
(x) to Publishing by the Trustee or (y) to Publishing and the Trustee by
the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities; (b) there shall be a default in the
performance or breach of the provisions described in "Consolidation,
Merger, Sale of Assets;" or (c) Publishing shall have failed to make or
consummate a Change of Control Offer in accordance with the provisions of
"Certain Covenants--Purchase of Debt Securities Upon a Change of Control;"
(iv) one or more defaults shall have occurred under any agreements,
indentures or instruments under which Publishing, the Guarantor or any
Restricted Subsidiary then has outstanding Indebtedness in excess of
$5,000,000 in the aggregate and, if not already matured at its final
maturity in accordance with its terms, such Indebtedness shall have been
accelerated;
(v) any Guarantee shall for any reason cease to be, or be asserted in
writing by any Guarantor or Publishing not to be, in full force and effect,
enforceable in accordance with its terms, except to the extent contemplated
by the Indenture and any such Guarantee;
(vi) one or more final judgments, orders or decrees for the payment of
money in excess of $5,000,000, either individually or in the aggregate,
shall be entered against Publishing, the Guarantor or any Restricted
Subsidiary or any of their respective properties and shall not be
discharged and either (a) enforcement proceedings shall have been commenced
upon such judgment, order or decree or (b) there shall have been a period
of 60 consecutive days during which a stay of enforcement of such judgment
or order, by reason of an appeal or otherwise, shall not be in effect;
(vii) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of Publishing,
any Guarantor or any Material Restricted Subsidiary in an involuntary case
or proceeding under any applicable Bankruptcy Law or (b) a decree or order
adjudging Publishing, any Guarantor or any Material Restricted Subsidiary
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment
or composition of or in respect of Publishing, any Guarantor or any
Material Restricted Subsidiary under any applicable federal or state law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of Publishing, any Guarantor or any
Material Restricted Subsidiary or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and any such
decree or order for relief shall continue to be in effect, or any such
other decree or order shall be unstayed and in effect, for a period of 60
consecutive days; or
(viii) (a) Publishing, any Guarantor or any Material Restricted
Subsidiary shall commence a voluntary case or proceeding under any
applicable Bankruptcy Law or any other case or proceeding to be adjudicated
bankrupt or insolvent, (b) Publishing, any Guarantor or any Material
Restricted Subsidiary consents to the entry of a decree or order for relief
in respect of Publishing, such Guarantor or such Material Restricted
Subsidiary in an involuntary case or proceeding under any applicable
Bankruptcy Law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, (c) Publishing, any Guarantor or any Material
Restricted Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, (d)
Publishing, any Guarantor or any Material Restricted Subsidiary (x)
consents to the filing of such petition or the appointment of, or taking
possession by, a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of Publishing, such Guarantor or such
Material Restricted Subsidiary or of any substantial part of its property,
(y) makes an assignment for the benefit of creditors or (z) admits in
writing its inability to pay its debts generally as they become due or (e)
Publishing, any Guarantor or any Material Restricted Subsidiary takes any
corporate action in furtherance of any such actions in this paragraph
(viii). (Section 5.01)
If an Event of Default (other than as specified in paragraphs (vii) and
(viii) of the prior paragraph with respect to Publishing) occurs and is
continuing, the Trustee or the holders of not less than 25% in aggregate
principal amount of the Debt Securities then outstanding may declare all the
Debt Securities to be due and
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payable immediately in an amount equal to the principal amount of the Debt
Securities, together with accrued and unpaid interest, if any, to the date the
Debt Securities shall have become due and payable, by a notice in writing to
Publishing (and to the Trustee if given by the holders of the Debt Securities)
and, if the New Bank Credit Facility is in effect, to the agent under the New
Bank Credit Facility, and upon any such declaration such amount shall become
immediately due and payable; and thereupon the Trustee may, at its discretion,
proceed to protect and enforce the rights of the holders of Debt Securities. If
an Event of Default specified in clause (vii) or (viii) of the prior paragraph
occurs with respect to Publishing and is continuing, then all the Debt
Securities shall ipso facto become and be immediately due and payable, in an
amount equal to the principal amount of the Debt Securities, together with
accrued and unpaid interest, if any, to the date the Debt Securities become due
and payable, without any declaration or other action on the part of the Trustee
or any holder.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of Debt Securities outstanding, by
written notice to Publishing and the Trustee, may rescind and annul such
declaration and its consequences if (a) Publishing has paid or irrevocably
deposited with the Trustee a sum sufficient to pay (i) all sums paid or advanced
by the Trustee under the Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, (ii) all
overdue interest on all Debt Securities, (iii) the principal of and premium, if
any, on any Debt Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne by the notes
and (iv) to the extent that payment of such interest is lawful, interest upon
overdue interest at the rate borne by the Debt Securities; and (b) all Events of
Default, other than the nonpayment of principal of the Debt Securities which
have become due solely by such declaration of acceleration, have been cured or
waived. (Section 5.02)
The holders of not less than a majority in aggregate principal amount of
the Debt Securities outstanding may on behalf of the holders of all the Debt
Securities Notes waive any past defaults under the Indenture and its
consequences, except a default in the payment of the principal of, premium, if
any, or interest on any Debt Securities, or in respect of a covenant or
provision which under the Indenture cannot be modified or amended without the
consent of the holder of Debt Securities outstanding. (Section 5.13)
Publishing is also required to notify the Trustee within five business days
of the occurrence of any Default.
The Trust Indenture Act of 1939 contains limitations on the rights of the
Trustee, should it become a creditor of Publishing or any Guarantor, to obtain
payment of claims in certain cases or to realize on certain property received by
it in respect of any such claims, as security or otherwise. The Trustee is
permitted to engage in other transactions; provided that if it acquires any
conflicting interest it must eliminate such conflict upon the occurrence of an
Event of Default or else resign.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
Publishing may, at its option and at any time (provided, that Publishing
obtains all legal opinions and complies with all other requirements under the
Indenture), elect to have the obligations of Publishing and any Guarantor
discharged with respect to the outstanding Debt Securities ("defeasance"). Such
defeasance means that Publishing and any Guarantor shall be deemed to have paid
and discharged the entire indebtedness represented by the outstanding Debt
Securities, except for (i) the rights of holders of outstanding Debt Securities
to receive payments in respect of the principal of, premium, if any, and
interest on such Debt Securities when such payments are due, (ii) Publishing's
obligations with respect to the Debt Securities concerning issuing temporary
Debt Securities, registration of Debt Securities, mutilated, destroyed, lost or
stolen Debt Securities, and the maintenance of an office or agency for payment
and money for security payments held in trust, (iii) the rights, powers, trusts,
duties and immunities of the Trustee and (iv) the defeasance provisions of the
Indenture. In addition, Publishing may, at its option and at any time, elect to
have the obligations of Publishing released with respect to certain covenants
(provided that Publishing's obligations to pay interest, premium, if any, and
principal on the Debt Securities under the Indenture shall remain in full force
and effect as long as the Debt Securities are outstanding), that are described
in the Indenture ("covenant defeasance") and any omission to comply with such
obligations shall not constitute a Default or
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an Event of Default with respect to the Debt Securities. In the event covenant
defeasance occurs, certain events (not including non-payment, bankruptcy and
insolvency events) described under "Events of Default" will no longer constitute
an Event of Default with respect to the Debt Securities. (Sections 4.02, 4.03
and 4.04)
In order to exercise either defeasance or covenant defeasance, (i)
Publishing must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the Debt Securities, cash in United States dollars, U.S.
Government Obligations (as defined in the Indenture), or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay and discharge the principal of,
premium, if any, and interest on the outstanding Debt Securities on the Stated
Maturity of such principal or installment of principal (or on any date after the
first date on which the Debt Securities of such series could be redeemed by
Publishing, if any (such date being referred to as the "Defeasance Redemption
Date"), if when exercising either defeasance or covenant defeasance, Publishing
has delivered to the Trustee irrevocable notice to redeem all of the outstanding
Debt Securities on the Defeasance Redemption Date); (ii) in case of defeasance,
Publishing shall have delivered to the Trustee an opinion of independent counsel
in the United States stating that (A) Publishing has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the date
of the Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that the holders of the outstanding Debt
Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred; (iii) in the case of covenant
defeasance, Publishing shall have delivered to the Trustee an opinion of
independent counsel in the United States to the effect that the holders of the
outstanding Debt Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such covenant defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be continuing on the
date of such deposit or insofar as clause (vii) or (viii) under the first
paragraph under "Events of Default" above are concerned, at any time during the
period ending on the 121st day after the date of deposit; (v) such defeasance or
covenant defeasance shall not cause the Trustee for the Debt Securities to have
a conflicting interest with respect to any securities of Publishing; (vi) such
defeasance or covenant defeasance shall not result in a breach or violation of,
or constitute a Default under, the Indenture or a breach or violation of any
provision of any agreement relating to any Senior Indebtedness; (vii) Publishing
shall have delivered to the Trustee an opinion of independent counsel in the
United States to the effect that (A) the trust funds will not be subject to any
rights of holders of Senior Indebtedness, including, without limitation, those
arising under the Indenture and (B) after the 121st day following the deposit,
the trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (viii) Publishing shall have delivered to the Trustee an officers'
certificate stating that the deposit was not made by Publishing with the intent
of preferring the holders of the Debt Securities over the other creditors of
Publishing with the intent of defeating, hindering, delaying or defrauding
creditors of Publishing or others; (ix) no event or condition shall exist that
would prevent Publishing from making payments of the principal of, premium, if
any, and interest on the Debt Securities on the date of such deposit or at any
time ending on the 121st day after the date of such deposit; and (x) Publishing
shall have delivered to the Trustee an officers' certificate and an opinion of
independent counsel, each stating that all conditions precedent provided for
relating to either the defeasance or the covenant defeasance, as the case may
be, have been complied with. (Section 4.05)
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of the Debt Securities, as
expressly provided for in the Indenture) as to all outstanding Debt Securities
when (i) either (a) all the Debt Securities theretofore authenticated and
delivered (except lost, stolen or destroyed Debt Securities which have been
replaced or paid and Debt Securities for whose payment funds have been deposited
in trust by Publishing and thereafter repaid to Publishing or discharged from
such trust) have been delivered to the Trustee for cancellation or (b) all Debt
Securities not theretofore delivered
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to the Trustee for cancellation (x) have become due and payable, (y) will become
due and payable at their Stated Maturity within one year or (z) are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption by the Trustee in the name, and at the
expense, of Publishing, and Publishing has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust an amount sufficient to pay
and discharge the entire indebtedness on the Debt Securities not theretofore
delivered to the Trustee for cancellation, including principal of, premium, if
any, and accrued interest on such Debt Securities, at such Maturity, Stated
Maturity or redemption date; (ii) Publishing has paid or caused to be paid all
other sums payable under the indenture by Publishing; and (iii) Publishing has
delivered to the Trustee an officers' certificate and an opinion of counsel in
the United States each stating that all conditions precedent under the Indenture
relating to the satisfaction and discharge of the Indenture have been complied
with, and that such satisfaction and discharge will not result in a breach or
violation of, or constitute a Default under, the Indenture or a breach or
violation of any provision of any agreement relating to any Senior Indebtedness.
(Section 13.01)
MODIFICATIONS AND AMENDMENTS
Modifications and amendments of the Indenture may be made by Publishing,
the Guarantor, any Restricted Subsidiary Guarantor and the Trustee with the
consent of greater than 50% of the holders in aggregate outstanding principal
amount of the Debt Securities; provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding Debt
Security affected thereby: (i) change the Stated Maturity of the principal of,
or any installment of principal of or interest on, any Debt Security, or reduce
the principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or change the coin or currency in which any
Debt Security or any premium or interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof; (ii) amend, change or modify the obligation of Publishing to
make and consummate a Change of Control Offer in the event of a Change of
Control in accordance with "Certain Covenants-- Purchase of Debt Securities Upon
a Change of Control," including amending, changing or modifying any definitions
with respect thereto; (iii) reduce the percentage in principal amount of
outstanding Debt Securities, the consent of whose holders is required for any
such supplemental indenture, or the consent of whose holders is required for any
waiver; (iv) modify any of the provisions relating to supplemental indentures
requiring the consent of holders or relating to the waiver of past defaults or
relating to the waiver of certain covenants, except to increase the percentage
of outstanding Debt Securities required for such actions or to provide that
certain other provisions of the Indenture cannot be modified or waived without
the consent of the holder of each Debt Security affected thereby; (v) except as
otherwise permitted under "Consolidation, Merger, Sale of Assets" above, consent
to the assignment or transfer by Publishing, the Guarantor or any Restricted
Subsidiary Guarantor of any of its respective rights and obligations under the
Indenture; or (vi) amend or modify any of the provisions of the Indenture
relating to the subordination of the Debt Securities or the Hollinger
International Guarantee in any manner adverse to the holders of the Debt
Securities. No amendment or modification of the Indenture shall adversely affect
the rights of any holders of Senior Indebtedness under the subordination
provisions of the Indenture unless the requisite holders of each issue of Senior
Indebtedness affected thereby shall have consented to such amendment or
modification. (Section 9.02)
The holders of greater than 50% in aggregate principal amount of the Debt
Securities outstanding may waive compliance with certain restrictive covenants
and provisions of the Indenture. (Section 10.20)
GUARANTEE
The Guarantor will unconditionally guarantee the due and punctual payment
of principal, premium, if any, and interest on the Debt Securities on a senior
subordinated basis pursuant to the Hollinger International Guarantee. The Debt
Securities may also be guaranteed by one or more Restricted Subsidiaries from
time to time under certain circumstances. See "Certain Covenants--Limitation on
Issuances of Guarantees of Indebtedness." The Indebtedness to be evidenced by
any Guarantee (including the payment of principal of, premium, if any, and
interest on the Debt Securities) will be subordinated to Senior Guarantor
Indebtedness to the same extent as the Debt Securities are subordinated to
Senior Indebtedness. In particular, the Hollinger
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International Guarantee will rank subordinate to the guarantee issued by the
Guarantor in respect of the Publishing Credit Facility.
Each Guarantee will provide that upon any voluntary or involuntary
liquidation or dissolution of the Guarantor or any Restricted Subsidiary
Guarantor, as the case may be, or any bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Guarantor or such Restricted
Subsidiary Guarantor or any of their respective property, all Senior
Indebtedness guaranteed by it must be paid in full or provision made for such
payment, before any payment or distribution is made upon principal of, premium,
if any, or interest on, the Debt Securities. By reason of such subordination, in
the event of liquidation or insolvency, creditors of the Guarantor or such
Restricted Subsidiary Guarantor who are holders of guarantees of Senior
Indebtedness by the Guarantor or such Restricted Subsidiary Guarantor may
recover more ratably than the holders of the Debt Securities and the holders of
the Debt Securities may not recover any amounts in such event.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
conflicts of law principles thereof.
CERTAIN DEFINITIONS
"Acceleration Right" means a right, which at the time is immediately
exercisable (without further notice or lapse of time), by the holders or a
trustee to cause the acceleration of the maturity of Indebtedness of Publishing
or a Restricted Subsidiary having an aggregate principal amount outstanding of
at least $5,000,000.
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) (i) existing at the time such Person becomes a
Restricted Subsidiary or (ii) assumed in connection with the acquisition of
assets from such Person, in each case, other than Indebtedness incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary or such acquisition. Acquired Indebtedness will be deemed to be
incurred on the date of the related acquisition of assets from any Person or the
date the acquired Person becomes a Restricted Subsidiary.
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (ii) any other Person that
owns, directly or indirectly, 10% or more of such Person's equity ownership or
Voting Stock or any officer or director of any such Person or other Person or
with respect to any natural Person, any person having a relationship with such
Person by blood, marriage or adoption not more remote than first cousin. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Amortization Expense" of any Person means, for any period, amounts
recognized during such period as (i) amortization of goodwill or (ii)
amortization of any other intangible assets with an original life of ten years
or more, in each case in accordance with GAAP and to the extent reflected in the
Consolidated Net Income of Publishing and the Restricted Subsidiaries.
"AP-91" means American Publishing (1991) Inc., a wholly owned, indirect
Subsidiary.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale and leaseback transaction but not the grant of a pledge or security
interest) (collectively, a "transfer"), directly or indirectly, in one or a
series of related transactions, of (i) any Capital Stock of any Restricted
Subsidiary; (ii) all or substantially all of the properties and assets of any
division or line of business of Publishing or any of its Restricted
Subsidiaries; or (iii) any other properties or assets (other than cash) of
Publishing or any Restricted Subsidiary, other than in the ordinary course of
business. For the purposes of this definition, the term "Asset Sale" shall not
include any transfer of properties and assets (A) that is governed by the
provisions described under "Consolidation, Merger, Sale of Assets," (B) from any
Restricted Subsidiary to Publishing in accordance with the terms of the
Indenture, (C) having a market value of less than $1,000,000 (it being
understood that if the market value
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of the properties or assets being transferred exceeds $1,000,000, the entire
value and not just the portion in excess of $1,000,000, shall be deemed to have
been the subject of an Asset Sale), (D) which are obsolete (in the case of
equipment) to Publishing's and its Restricted Subsidiaries' businesses, (E) to
any Wholly Owned Restricted Subsidiary, (F) from any Wholly Owned Restricted
Subsidiary to any other Wholly Owned Restricted Subsidiary, (G) consisting of
any transfer of HTH common shares by FDTH to Hollinger Inc. pursuant to the
provisions of the HTH/FDTH Share Exchange Agreement, or (H) in the case of the
Telegraph Option Shares, to an Unrestricted Subsidiary.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal payment by (ii)
the sum of all such principal payments.
"Bankruptcy Law" means Title 11 of the United States Code, as amended, or
any similar United States federal or state or foreign law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of Publishing to have been duly adopted by the board
of directors of Publishing or a duly authorized committee of such board and to
be in full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Opportunities Agreement" means the Business Opportunities
Agreement dated as of February 7, 1996 between the Guarantor and Hollinger Inc.
and any amendment, modification or supplement thereto or restatement thereof and
any similar agreements entered into after the date of the original issuance of
the Debt Securities in accordance with the terms of the Indenture.
"Capital Lease Obligation" of any Person means any obligation of such
Person and its subsidiaries on a consolidated basis under any capital lease of
real or personal property which, in accordance with GAAP, has been recorded as a
capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock.
"Cash Equivalents" means (i) any evidence of Indebtedness with a maturity
of 180 days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided,
that the full faith and credit of the United States of America is pledged in
support thereof); (ii) certificates of deposit or acceptances with a maturity of
180 days or less of any financial institution that is a member of the Federal
Reserve System having combined capital and surplus and undivided profits of not
less than $500,000,000; (iii) commercial paper with a maturity of 180 days or
less issued by a corporation that is not an Affiliate of Publishing organized
under the laws of any state of the United States or the District of Columbia and
rated A-1 (or higher) according to S&P or P-1 (or higher) according to Moody's
or at least an equivalent rating category of another nationally recognized
securities rating agency; (iv) any money market deposit accounts issued or
offered by a domestic commercial bank having capital and surplus in excess of
$500,000,000; and (v) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the government of the United States of America or issued by any agency
thereof and backed by the full faith and credit of the United States of America,
in each case maturing within 180 days from the date of acquisition; provided
that the terms of such agreements comply with the guidelines set forth in the
Federal Financial Agreements of Depository Institutions With Securities Dealers
and Others, as adopted by the Comptroller of the Currency on October 31, 1985.
"Change of Control" means the occurrence of any of the following:
(a) there is a report filed on Schedule 13D, 14D-1 or 14D-1F (or any
successor schedule, form or report) pursuant to the Exchange Act,
disclosing that any person (for purposes of this definition, as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act or any successor provision to either of the foregoing), other than any
person consisting solely of Conrad M. Black (or his heirs, executors or
legal representatives) and his Affiliates, has become the beneficial owner
(as the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the
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Exchange Act) of Voting Stock representing 50% or more of the total voting
power attached to all Voting Stock of Hollinger Inc., the Guarantor or
Publishing then outstanding; provided, however, that a person shall not be
deemed to be the beneficial owner of, or to own beneficially, (i) any
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such person or any of such person's Affiliates until such
tendered securities are accepted for purchase or exchange thereunder, or
(ii) any securities if such beneficial ownership (A) arises solely as a
result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to applicable law, and (B) is not also then
reportable on Schedule 13D (or any successor schedule) under the Exchange
Act;
(b) there is a report filed or required to be filed with any
securities commission or securities regulatory authority in Canada,
disclosing that any offeror (as the term "offeror" is defined in Section
89(1) of Securities Act (Ontario) for the purpose of Section 101 of such
Securities Act or any successor provision of the foregoing) other than any
person consisting solely of Conrad M. Black (or his heirs, executors or
legal representatives) and his Affiliates, has acquired beneficial
ownership (within the meaning of the Securities Act (Ontario)) of, or the
power to exercise control or direction over, or securities convertible
into, any voting or equity shares of Hollinger Inc., that together with
such offeror's securities (as the term "offeror's securities" is defined in
Section 89(1) of the Securities Act (Ontario) or any successor provision
thereto in relation to the voting or equity shares of Hollinger Inc.) would
constitute Voting Stock of Hollinger Inc. representing 50% or more of the
total voting power attached to all Voting Stock of Hollinger Inc. then
outstanding;
(c) the Guarantor shall cease to own, directly or indirectly, 100% of
the Voting Stock of Publishing;
(d) there is consummated a consolidation (involving a business
combination) or merger of Publishing or the Guarantor, as the case may be,
(i) in which Publishing or the Guarantor, as the case may be, is not the
continuing or surviving corporation or (ii) pursuant to which any Voting
Stock of Publishing or the Guarantor, as the case may be, would be
reclassified, changed or converted into or exchanged for cash, securities
or other property, other than (in each case) a consolidation or merger of
Publishing or the Guarantor, as the case may be, in which the holders of
the Voting Stock of Publishing or the Guarantor, as the case may be,
immediately prior to the consolidation or merger have, directly or
indirectly, 50% or more of the Voting Stock of the continuing or surviving
corporation immediately after such transaction; or
(e) Conrad M. Black (or his heirs, executors and legal
representatives) and his Affiliates cease to beneficially own and control
the voting of, directly or indirectly, Voting Stock of Publishing or the
Guarantor representing a greater percentage of the total voting power
attached to the Voting Stock of Publishing or the Guarantor than the
percentage beneficially owned and controlled, directly or indirectly, by
any other single shareholder of Publishing or the Guarantor together with
its Affiliates (a "Designated Transaction") and there shall occur a Rating
Decline.
Under the Indenture a "Rating Decline" will be deemed to have occurred if,
on any date within the period (the "Rating Period") beginning on the date (the
"Reference Date") of the earlier to occur of (A) the first public announcement
by Publishing or any other Person of an intention to effect any Designated
Transaction and (B) the occurrence of such Designated Transaction, and ending on
the date 90 days thereafter, either of the following events has occurred: (1)
the Debt Securities (or any other securities of Publishing which are rated by a
Rating Agency on the date which is 61 days prior to the Reference Date (the
"Rating Date")) shall be rated by any Rating Agency at any time during the
Rating Period at a rating which is lower than the rating of the Debt Securities
(or such other securities of Publishing, as the case may be) by such Rating
Agency on the Rating Date by one or more gradations (including gradations within
Rating Categories as well as between Rating Categories) or (2) any Rating Agency
shall have withdrawn its rating of the Debt Securities (or such other securities
of Publishing, as the case may be) during the Rating Period.
Conrad M. Black has advised Publishing that Hollinger Inc. does not
presently intend to reduce its voting power in the Guarantor's outstanding
Common Stock to less than 50%. Furthermore, Mr. Black has advised Publishing
that he does not presently intend to reduce his voting control over Hollinger
Inc. such that a third party would be able to exercise effective control over
it. Hollinger Inc. has pledged all shares of the Guarantor's Common Stock and
Series A Preferred Stock owned by it to a Canadian chartered bank as
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collateral for outstanding indebtedness of Hollinger Inc. A default under such
indebtedness and foreclosure upon such shares may result in a Change of Control.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of the Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Consolidated Assets" means with respect to Publishing, the total assets
shown on the balance sheet of Publishing and its consolidated Restricted
Subsidiaries, as determined on a consolidated basis in accordance with GAAP, as
of Publishing's latest full fiscal quarter.
"Consolidated Cash Flow Ratio" means, as at any date of determination, the
ratio of (i) the aggregate amount of Indebtedness of Publishing, the Restricted
Subsidiaries and the Controlled Entities on a Consolidated basis outstanding as
at such date to (ii) the Operating Cash Flow of Publishing, the Restricted
Subsidiaries and the Controlled Entities (determined on a Consolidated basis)
for the most recently completed period of four consecutive fiscal quarters of
Publishing, provided that, (a) in the case of a Controlled Entity that is not a
Wholly Owned Restricted Subsidiary, Indebtedness and Operating Cash Flow shall
be determined in accordance with the actual percentage of the equity interest or
the voting Stock of the Controlled Entity, whichever is higher, that is owned
directly or indirectly by Publishing (thus, for example, in the case of a
Controlled Entity in which Publishing Owns a 50% equity interest, 50% of such
Controlled Entity's Indebtedness and Operating Cash Flow would be included in
the calculation of Publishing's aggregate Indebtedness and Operating Cash Flow,
respectively), and (b) to the extent Operating Cash Flow of the Controlled
Entities exceeds thirty-three and one-third percent (33 1/3 %) of the aggregate
Operating Cash Flow of Publishing and its Restricted Subsidiaries and Controlled
Entities, such excess Operating Cash Flow of the Controlled Entities shall be
deducted from Operating Cash Flow.
"Consolidated Net Income (Loss)" of Publishing, the Restricted Subsidiaries
and the Controlled Entities means, for any period, the Consolidated net income
(or loss) of Publishing, the Restricted Subsidiaries and the Controlled Entities
for such period as determined in accordance with GAAP, adjusted, to the extent
included in calculating such Consolidated net income (or loss), by excluding,
without duplication, (i) all extraordinary gains and losses, (ii) the portion of
Consolidated net income (or loss) of Publishing and its Restricted Subsidiaries
allocable to Investments in unconsolidated Persons (other than Unrestricted
Subsidiaries) to the extent that cash dividends or distributions have not
actually been received by such Person or one of its Restricted Subsidiaries,
(iii) the portion of Consolidated net income (or loss) of Publishing and its
Restricted Subsidiaries allocable to Publishing's Unrestricted Subsidiaries (or
to payments received therefrom), (iv) net income (or loss) of a Person combined
with Publishing or any of its subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (v) any gain or
loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (vi) aggregate net gains and losses (less all fees and expenses
relating thereto) in respect of dispositions of assets (including without
limitation sales of shares of Unrestricted Subsidiaries or unconsolidated
Persons and write-offs, abandonment or revaluation of assets) other than in the
ordinary course of business, (vii) the net income of any Restricted Subsidiary
to the extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulations
applicable to that Restricted Subsidiary or its stockholders; provided, however,
that the foregoing shall not apply to the net income of AP-91, DTH or FDTH
relating to the business of AP-91, DTH or FDTH as conducted as of the date of
the Indenture on account of restrictions on AP-91, DTH or FDTH in agreements as
in effect on the date of the Indenture, (viii) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of income accrued at any time following the date of the Indenture, (ix)
any net gain from the collection of proceeds of life insurance policies, (x) any
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness of Publishing, (xi) aggregate net gains or
losses relating to foreign currency transactions or translations, or (xii) the
costs of any redundancies (i.e., payments and/or expenses relating to the
elimination of jobs). Notwithstanding the
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<PAGE> 37
requirements of GAAP, in the case of a Controlled Entity that is not a Wholly
Owned Restricted Subsidiary, Consolidated Net Income (Loss) shall be determined
in accordance with the actual percentage of the equity interest or the Voting
Stock of the Controlled Entity, whichever is greater, that is owned directly or
indirectly by Publishing (thus, for example, in the case of a Controlled Entity
in which Publishing owns a 50% equity interest, 50% of such Controlled Entity's
net income (or loss) would be included in the calculation of Publishing's
aggregate Consolidated Net Income (Loss)).
"Consolidated Net Worth" means the common and preferred stockholders'
equity of Publishing and its Restricted Subsidiaries (exclusive of any
redeemable capital stock), as determined on a Consolidated basis and in
accordance with GAAP.
"Consolidated Tangible Assets" means the total assets appearing on a
Consolidated balance sheet of Publishing and its Restricted Subsidiaries less,
without duplication, each of the following: (i) all applicable depreciation,
amortization and other valuation reserves; (iii) all other intangible assets and
deferred charges; (iv) deferred income tax assets (to the extent recorded as an
asset); and (v) all investments in unconsolidated subsidiaries (including all
Unrestricted Subsidiaries).
"Consolidation" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries if and to the extent the
accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP; provided,
however, that the accounts of any Unrestricted Subsidiary shall not be
consolidated with Publishing but instead the interest of Publishing or any
Restricted Subsidiary therein will be accounted for as an investment. The term
"Consolidated" shall have a correlative meaning.
"Controlled Entity" means any Person in which at least 50% of the equity
ownership or the Voting Stock is at the time owned, directly or indirectly, by
Publishing or one or more Subsidiaries, or by Publishing and one or more other
Subsidiaries, provided, that at the time (i) such Person is not designated as a
Restricted Subsidiary hereunder and (ii) the Capital Stock of such person is
listed or admitted for trading on a recognized securities exchange or market in
the United States, Canada, the United Kingdom or Australia. For greater
certainty, a Controlled Entity shall not be (or be deemed to be) a Restricted
Subsidiary hereunder unless as designated by Publishing in accordance with
Section 10.21 of the Indenture.
"CST Real Estate" means the real estate, including land, building and
fixtures, located at 401 North Wabash Avenue, Chicago, Illinois, where
Publishing currently maintains its headquarters, and all improvements thereon.
"CST Real Estate Transactions" means the sale or other disposition (other
than to an Affiliate) of all or any portion of the interest of Publishing or a
Restricted Subsidiary in the CST Real Estate.
"Currency Agreements" means one or more of the following agreements which
shall be entered into with one or more financial institutions: foreign exchange
contracts, currency swap agreements or other similar agreements or arrangements
designed to protect against fluctuations in currency values.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Depositary" means, with respect to Debt Securities of any series issuable
in whole or in part in the form of one or more Global Securities, the Person
designated as Depositary for such series by Publishing pursuant to Section 3.01
of the Indenture until a successor Depositary shall have become such pursuant to
the applicable provisions of this Indenture, and "Depositary" shall mean or
include each Person who is a Depositary under the Indenture.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under
the New Bank Credit Facility and (ii) any other Senior Indebtedness which, at
the time of determination, has an aggregate principal amount outstanding of at
least $50,000,000 and is specifically designated by Publishing in the instrument
evidencing such Senior Indebtedness or the agreement under which such Senior
Indebtedness arises as "Designated Senior Indebtedness."
"DTH" means DT Holdings Limited, a corporation under the laws of England
and a wholly owned subsidiary of Publishing.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extraordinary Cash Dividend" means in respect of the Southam Interests:
(i) a cash dividend in respect of a particular calendar year
representing the excess, if any, of (A) the aggregate of all cash dividends
declared and paid on such securities during the calendar year over (B) the
greatest of (x) 200% of the aggregate of all cash dividends declared and
paid on such securities during the immediately preceding calendar year, (y)
300% of the average of the aggregate of all cash dividends declared and
paid on such securities during the immediately preceding three calendar
years; and (z) 100% of the aggregate consolidated net income of the issuer
of such securities, before extraordinary items, for its immediately
preceding fiscal year; and
(ii) any cash dividend declared by Southam on its common shares which
the directors of Southam by resolution determine to be extraordinary,
taking into account the amount of the dividend, the effect of the dividend
on the market value of such securities after payment thereof, the form of
payment, the financial position of Southam, economic conditions, business
practices and such other factors as the directors of Southam consider to be
relevant.
"FDTH" means First DT Holdings Limited, a corporation under the laws of
England and a wholly owned subsidiary of DTH.
"FDTH Bank Credit Facility" means the credit agreement dated as of May 30,
1996, among FDTH, the financial institutions party thereto and The
Toronto-Dominion Bank, as issuing bank and the Agent, as such agreement may be
amended, renewed, extended, substituted, refinanced, restructured, replaced,
supplemented or otherwise modified from time to time (including, without
limitation, any successive renewals, extensions, substitutions, refinancings,
restructurings, replacements, supplementations or other modifications of the
foregoing that increase the aggregate amount of borrowings outstanding or the
aggregate commitments of the lenders thereunder).
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, which
are in effect on the date of the Indenture.
"Global Security" means a Debt Security evidencing all or part of the Debt
Securities of any series and issued to a Depositary in accordance with Section
3.03 of the Indenture and bearing the legend prescribed in the eighth paragraph
of Section 3.03 of the Indenture.
"Guarantee" means the guarantee by the Guarantor and, if the context
requires, by any Restricted Subsidiary Guarantor, of the Indenture Obligations.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person referred to in the definition of Indebtedness
guaranteed directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (i) to pay
or purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness (or to indemnify another Person for the costs
thereof), (ii) to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling the debtor to
make payment of such Indebtedness or to assure the holder of such Indebtedness
against loss, (iii) to supply funds to, or in any other manner invest in, the
debtor (including any agreement to pay for property or services without
requiring that such property be received or such services be rendered), (iv) to
maintain working capital or equity capital of the debtor, or otherwise to
maintain the net worth, solvency or other financial condition of the debtor or
(v) otherwise to assure a creditor against loss, provided that the term
"guarantee" shall not include endorsements for collection or deposit, in either
case in the ordinary course of business.
"Guarantor" means any guarantor of the Securities in accordance with the
terms of the Indenture, including Hollinger International.
"Holder" means a Person in whose name a Debt Security is registered in the
Security Register.
"Hollinger International" means Hollinger International Inc., a corporation
incorporated under the laws of Delaware and a Guarantor of the Indenture
Obligations, until a successor Person shall have become such pursuant to Article
VIII of the Indenture and thereafter "Hollinger International" shall mean such
successor Person.
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"HTH" means Hollinger-Telegraph Holdings Inc., a corporation continued
under the laws of Alberta.
"HTH/FDTH Share Exchange Agreement" means the share exchange agreement
dated as of July 19, 1995, between Hollinger Inc. and FDTH.
"Incur" means create, issue, assume, guarantee or otherwise in any manner
become directly or indirectly liable for or with respect to or otherwise incur.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (or other obligations to former owners of acquired
businesses), excluding any trade payables and other accrued current liabilities
arising in the ordinary course of business, but including, without limitation,
all obligations, contingent or otherwise, of such Person in connection with any
letters of credit issued under letter of credit facilities, acceptance
facilities or other similar facilities and in connection with any agreement to
purchase, redeem, exchange, convert or otherwise acquire for value any Capital
Stock of such Person, or any warrants, rights or options to acquire such Capital
Stock, now or hereafter outstanding, (ii) all obligations of such Person
evidenced by bonds, notes, debentures or other similar instruments, (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even if
the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), but
excluding trade payables arising in the ordinary course of business, (iv) all
obligations under Interest Rate Agreements and Currency Agreements of such
Person, (v) all Capital Lease Obligations of such Person, (vi) all Indebtedness
referred to in clauses (i) through (v) above of other Persons and all dividends
of other Persons, the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien, upon or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness (provided,
however, that with respect to nonrecourse Indebtedness under this clause (vi),
the term Indebtedness shall be determined by reference to the lesser of (x) the
Fair Market Value of the pledged or mortgaged assets as of the time of such
determination or (y) the amount of such indebtedness), (vii) all Guaranteed Debt
of such Person, (viii) all Redeemable Capital Stock valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends and (ix) any amendment, supplement, modification, deferral, renewal,
extension, refunding or refinancing of any Indebtedness of the types referred to
in clauses (i) through (viii) above. For purposes hereof, the "maximum fixed
repurchase price" of any Redeemable Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
the Indenture, and if such price is based upon, or measured by, the fair market
value of such Redeemable Capital Stock, such fair market value to be determined
in good faith by the Board of Directors of such Person.
"Indenture Obligations" means the obligations of Publishing under the
Indenture or under the Debt Securities to pay principal of, premium, if any, and
interest when due and payable, and all other amounts due or to become due under
or in connection with the Indenture and, the Debt Securities and the performance
of all other obligations to the Trustee, the Paying Agent and the holders under
the Indenture and the Debt Securities, according to the terms thereof.
"Independent Committee" means a committee of the board of directors of
Publishing whose membership meets the requirements of the New York Stock
Exchange applicable to audit committees as in effect on the date of original
issuance of the Debt Securities or a committee of the board of directors of
Publishing whose membership satisfies any more restrictive requirements of
independence of any securities exchange or market on which Publishing's or the
Guarantor's equity securities are traded or listed.
"Independent Director" means a member of the board of directors of
Publishing that is not an officer, employee or former officer or employee of
Publishing or one of its Affiliates (including Hollinger Inc.) and, with respect
to any transaction or series of related transactions, a member of the board of
directors who does not have any material direct or indirect financial interest
in or with respect to such transaction or series of related transactions
(including for such purpose the interest of any other Person with respect to
whom such director is also a director, officer or employee).
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"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into from time to time with one or more financial
institution: interest rate protection agreements (including, without limitation,
interest rate swaps, caps, floors, collars and similar agreements) and/or other
types of interest rate hedging agreements.
"Investment" means, with respect to any Person, directly or indirectly, any
advance, loan (including guarantees), or other extension of credit or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase, acquisition or ownership by such Person of any Capital Stock, bonds,
notes, debentures or other securities issued or owned by, any other Person and
all other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
security interest, hypothecation or other encumbrance upon or with respect to
any property of any kind, real or personal, movable or immovable, now owned or
hereafter acquired.
"Material Restricted Subsidiary" means each Restricted Subsidiary of
Publishing which (i) for the most recent fiscal year of Publishing accounted for
more than 5% of the Consolidated revenues of Publishing and its Restricted
Subsidiaries or (ii) at the end of such fiscal year was the owner (beneficial or
otherwise) of more than 5% of the Consolidated Assets of Publishing and its
Restricted Subsidiaries, all as shown on Publishing's Consolidated financial
statements for such fiscal year.
"Maturity" when used with respect to any Debt Security means the date on
which the principal of such Note becomes due and payable as therein provided or
as provided in the Indenture, whether at Stated Maturity, the Purchase Date or
the redemption date and whether by declaration of acceleration, Offer in respect
of Excess Proceeds, Change of Control, call for redemption or otherwise.
"Media Business" means the business of the broadcast of radio or television
broadcasting, cable and satellite programs (including national, regional or
local radio, television, cable and satellite programs).
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any Person,
the proceeds thereof in the form of cash or cash equivalents including payments
of principal and interest in respect of deferred payment obligations when
received in the form of, or stock or other assets when disposed of for, cash or
cash equivalents (except to the extent that such obligations are financed or
sold with recourse to Publishing or any Restricted Subsidiary) net of (i)
brokerage commissions and other reasonable fees and expenses (including fees and
expenses of counsel and investment bankers) related to such Asset Sale, (ii)
provisions for all taxes payable as a result of such Asset Sale, (iii) payments
made to retire indebtedness where payment of such indebtedness is secured by the
assets or properties the subject of such Asset Sale, (iv) amounts required to be
paid to any Person (other than Publishing or any Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale and (v) appropriate
amounts to be provided by Publishing or any Restricted Subsidiary, as the case
may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by Publishing or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as determined and reflected in
an officers' certificate delivered to the Trustee and (b) with respect to any
issuance or sale of Capital Stock or options, warrants or rights to purchase
Capital Stock, or debt securities or Capital Stock that have been converted into
or exchanged for Capital Stock, as referred to under "Certain
Covenants--Limitation on Restricted Payments," the proceeds of such issuance or
sale in the form of cash or cash equivalents, including payments in respect of
deferred payment obligations when received in the form of, or stock or other
assets when disposed of for, cash or cash equivalents (except to the extent that
such obligations are financed or sold with recourse to Publishing or any
Restricted Subsidiary), net of attorney's fees, accountant's fees and brokerage,
consultation, underwriting and other fees and expenses actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Newspaper Business" means the business of publishing and distributing
(including distributing by electronic means) newspapers, magazines and other
paid or free publications having national, regional, local or
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<PAGE> 41
targeted markets, including publications having limited or no news or editorial
content such as shoppers or other "total market coverage" publications and
similar publications.
"Operating Cash Flow" means, for any period, an amount equal to the
Consolidated Net Income of Publishing, the Restricted Subsidiaries and the
Controlled Entities for such period, plus, to the extent deducted in calculating
such Consolidated Net Income, (a) interest expense and other financing costs and
expenses, (b) depreciation and amortization, (c) all taxes, whether or not
deferred, applicable to such period and (d) to the extent not in excess of $8.0
million, costs and expenses associated with the Reorganization which were
reflected in the Guarantor's consolidated results of operations for the year
ended December 31, 1995.
For purposes of calculating Operating Cash Flow for the four fiscal
quarters most recently completed prior to any date on which an action is taken
that requires a calculation of the Consolidated Cash Flow Ratio, (a) any Person
that is a Restricted Subsidiary or a Controlled Entity on such date (or would
become a Restricted Subsidiary or a Controlled Entity in connection with the
transaction that requires the determination of such ratio) shall be deemed to
have been a Restricted Subsidiary or a Controlled Entity at all times during
such period, (b) any Person that is not a Restricted Subsidiary or a Controlled
Entity on such date (or would cease to be a Restricted Subsidiary or a
Controlled Entity in connection with the transaction that requires the
determination of such ratio) shall be deemed not to have been a Restricted
Subsidiary or a Controlled Entity at any time during such period and (c) if
Publishing or any Restricted Subsidiary or a Controlled Entity shall have in any
manner acquired or disposed of any operating business during or subsequent to
such period, such calculation shall be made on a pro forma basis on the
assumption that such acquisition or disposition has been completed on the first
day of such period (it being understood that if such pro forma calculations have
been made in accordance with Regulation S-X under the Exchange Act, such method
of calculation (but not necessarily the adjustments) shall be presumed to be
acceptable).
"Original Issue Discount Security" means any Debt Security which provides
for an amount less than the principal thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 5.2 of
the Indenture.
"Pari Passu Guarantor Indebtedness" means any Indebtedness of any Guarantor
that is pari passu in right of payment which such Guarantor's Guarantee.
"Pari Passu Indebtedness" means any Indebtedness of Publishing that is pari
passu in right of payment with the Notes.
"Paying Agent" means any Person authorized by Publishing to pay the
principal, premium, if any, or interest on any Securities on behalf of
Publishing.
"Payment Default" means any default in the payment of principal, premium,
if any, interest, commitment fees, letter of credit fees, reimbursement
obligations in respect of amounts owing under letters of credit or payments in
respect of interest under Interest Rate Agreements, in each case, on any
Designated senior Indebtedness.
"Permitted Guarantor Junior Securities" means, so long as the effect of any
exclusion employing this definition is not to cause the Securities to be treated
in any case or proceeding or similar event described in clauses (a), (b) or (c)
of the first paragraph of Section 14.17 of the Indenture as part of the same
class of claims as the Senior Guarantor Indebtedness or any class of claims pari
passu with, or senior to, the Senior Guarantor Indebtedness, for any payment of
distribution, debt or equity securities of Hollinger International or any
successor corporation provided for by a plan of reorganization or readjustment
that are subordinated at least to the same extent that the Guarantee of
Hollinger International is subordinated to the payment of all Senior Guarantor
indebtedness then outstanding; provided that (1) if a new corporation results
from such reorganization or readjustment, such corporation assumes any Senior
guarantor Indebtedness not paid in full in cash or Cash Equivalents in
connection with such reorganization or readjustment and (2) the rights of the
holders of such Senior Indebtedness are not, without the consent of such
holders, altered by such reorganization or readjustment.
"Permitted Indebtedness" means the following:
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(i) Indebtedness of Publishing under the New Bank Credit Facility in
an aggregate principal amount at any one time outstanding not to exceed
$200 million;
(ii) guarantees by, and Liens on the property of, any Restricted
Subsidiary guaranteeing or securing Publishing's Indebtedness under the New
Bank Credit Facility, which guarantees or Liens are in existence on the
date of the Indenture or guarantees that are otherwise permitted under
"Certain Covenants--Limitation on Issuances of Guarantees of Indebtedness;"
(iii) Indebtedness of Publishing pursuant to the Debt Securities and
Indebtedness of any Restricted Subsidiary constituting a Guarantee of the
Debt Securities;
(iv) Indebtedness of Publishing or any Restricted Subsidiary
outstanding on the date of the Indenture and listed on a schedule thereto;
(v) Indebtedness (a) of Publishing owing to a Restricted Subsidiary or
(b) of a Restricted Subsidiary owing to Publishing or another Restricted
Subsidiary; provided that any such Indebtedness is made pursuant to an
intercompany note in the form attached as an exhibit to the Indenture and,
in the case of Indebtedness of Publishing owing to a Wholly Owned
Restricted Subsidiary, is subordinated in right of payment from and after
such time as the Notes shall become due and payable (whether at Stated
Maturity, acceleration or otherwise) to the payment and performance of
Publishing's obligations under the Notes; provided, further, that (x) any
disposition, pledge or transfer of any such Indebtedness to a Person (other
than (x) to Publishing or a Restricted Subsidiary or (y) a pledge of such
Indebtedness to secure Indebtedness existing at such time under, and
pursuant to the terms of, the New Bank Credit Facility or the AP-91 Senior
Notes) will be deemed to be an incurrence of such Indebtedness by the
obligor not permitted by this clause (v) and (y) any transaction pursuant
to which any Restricted Subsidiary that has Indebtedness owing to
Publishing or any other Restricted Subsidiary, ceases to be a Restricted
Subsidiary will be deemed to be the incurrence of Indebtedness by
Publishing or such other Restricted Subsidiary that is not permitted by
this clause (v);
(vi) obligations of Publishing or any Restricted Subsidiary pursuant
to Interest Rate Agreements or Currency Agreements designed to protect
Publishing or any Restricted Subsidiary against fluctuations in interest
rates or currency exchange rates in respect of Indebtedness of Publishing
or any of its Restricted Subsidiaries or changes in dividend rates in
respect of preference shares of DTH, the notional amount of which (in the
case of Interest Rate Agreements) and the notional or exchange amount of
which (in the case of Currency Agreements) do not exceed the aggregate
principal amount of such Indebtedness or of such preference shares of DTH,
as the case may be;
(vii) guarantees by Restricted Subsidiaries of Senior Indebtedness of
Publishing otherwise permitted to be incurred in accordance with the
provisions of this Limitation on Indebtedness;
(viii) Indebtedness of Publishing or a Restricted Subsidiary incurred
to finance (or refinance) a new printing plant for Chicago Sun-Times and
the liabilities directly associated therewith (collectively, the "CST
Printing Plant") in an aggregate amount not in excess of the lesser of (x)
$75,000,000 and (y) the aggregate amount needed to finance the CST Printing
Plant and associated financing costs;
(ix) letter of credit reimbursement obligations incurred by Publishing
or a Restricted Subsidiary in the ordinary course of business to support
workers compensation insurance obligations to the extent that such
obligations are recorded on the balance sheet of the issuer;
(x) any renewals, extensions, substitutions, refundings, refinancings
or replacements (collectively, a "refinancing") of any Indebtedness
described in paragraphs (i), (ii), (iii), (iv) and (viii) of this
definition of "Permitted Indebtedness" by Publishing or by the obligor of
such Permitted Indebtedness, including any successive refinancings, so long
as such refinancing does not increase the aggregate principal amount of
Indebtedness represented thereby and, in the case of Pari Passu
Indebtedness or Subordinated Indebtedness, such refinancing does not reduce
the Average Life to Stated Maturity or the Stated Maturity of such
Indebtedness;
(xi) Indebtedness of FDTH owed to Hollinger International;
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<PAGE> 43
(xii) Indebtedness of Publishing or any Restricted subsidiary in an
aggregate principal amount at any time outstanding not to exceed $25
million; and
(xiii) Indebtedness of Publishing or any Restricted Subsidiary in an
aggregate amount at any time not to exceed $50 million in respect of
purchase money obligations, provided such Indebtedness (a) is incurred
within 180 days of the purchase of the relevant assets, (b) does not exceed
the actual purchase price of such assets and (c) any related Liens do not
extend to any assets other than those being purchased.
"Permitted Investment" means any of the following provided that, in the
case of clauses (vii), (viii) and (ix) (a) no Default or Event of Default shall
have occurred and be continuing, (b) no holders of any other Indebtedness of
Publishing or any Restricted Subsidiary shall have an Acceleration Right and (c)
immediately before and immediately after giving effect to such Investment, on a
pro forma basis, Publishing could Incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the provisions described above under
"Limitation on Indebtedness":
(i) Investments in any Restricted Subsidiary or Publishing or any
Controlled Entity or Investments in a Person, if as a result of such
Investment (A) such Person becomes a Restricted Subsidiary or a Controlled
Entity or (B) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, Publishing or any Restricted Subsidiary or a Controlled
Entity;
(ii) Investments in the Debt Securities;
(iii) Indebtedness owing to a Restricted Subsidiary described under
clause (v) of the definition of "Permitted Indebtedness";
(iv) Temporary Cash Investments;
(v) Investments acquired by Publishing or any Subsidiary in connection
with an Asset Sale permitted under "Certain Covenants--Limitation on Sale
of Assets" to the extent such Investments are non-cash consideration as
permitted under such covenant;
(vi) Investments in existence on the date of the Indenture;
(vii) Investments in or in Persons owning Newspaper Business or Media
Business assets (including Investments in Unrestricted Subsidiaries but
excluding Investments in Affiliates that control Publishing) in an
aggregate amount following the date of the original issuance of the Debt
Securities not in excess of 25% of the aggregate cumulative cash dividends
or distributions received by Publishing and its Restricted Subsidiaries
from any of Publishing's Unrestricted Subsidiaries received during the
period (treated as a single accounting period) after the date of original
issuance of the Debt Securities and prior to the date of the Permitted
Investment; provided, however, that for purposes of this clause, cash
dividends or distributions shall not include the Southam Dividend Amount or
any cash dividends or distributions received by Publishing or any
Restricted Subsidiary in accordance with paragraph (b)(vii) of the
"Limitation on Restricted Payments" covenant;
(viii) Investments by Publishing or a Restricted Subsidiary not
exceeding $200,000,000 in the aggregate in additional ordinary shares of
The Telegraph plc; and
(ix) in addition to the Investments described in clauses (i) through
(viii) of this definition of "Permitted Investments," Investments in any
Restricted Subsidiary, Unrestricted Subsidiary or in any joint venture or
other entity in an amount not to exceed $10,000,000 in the aggregate since
the date of the Indenture.
"Permitted Junior Securities" means, so long as the effect of any exclusion
employing this definition is not to cause the Debt Securities to be treated in
any case or proceeding or similar event described in clauses (a), (b) or (c) of
the first paragraph of Section 12.02 of the Indenture as part of the same class
of claims as the Senior Indebtedness or any class of claims pari passu with, or
senior to, the Senior Indebtedness, for any payment or distribution, debt or
equity securities of Publishing or any successor corporation provided for by a
plan of reorganization or readjustment that are subordinated at least to the
same extent that the Debt Securities are subordinated to the payment of all
Senior Indebtedness then outstanding; provided that (1) if a
42
<PAGE> 44
new corporation results from such reorganization or readjustment, such
corporation assumes any senior Indebtedness not paid in full in cash or Cash
Equivalents in connection with such reorganization or readjustment and (2) the
rights of the holders of such Senior Indebtedness are not, without the consent
of such holders, altered by such reorganization or readjustment.
"Permitted Real Estate Sale" means any Asset Sale not involving an
Affiliate of Publishing consisting of the sale of any printing or distribution
facility (including the associated real property and the improvements and
fixtures forming a part thereof) (other than the CST Real Estate) formerly used
by Publishing or a Restricted Subsidiary in the production of newspapers and
related publications (or acquired by one of them as part of the acquisition of a
Newspaper Business whether or not used by Publishing) and that after such Asset
Sale will not be used for the production of any newspaper or related publication
of Publishing or a Restricted Subsidiary, provided that the aggregate value (as
determined by the Board of Directors of Publishing) of all such Asset Sales
completed within any twelve month period shall not exceed $5,000,000 (it being
understood that this definition does not include, among other things, any Asset
Sale consisting of the sale of any printing or distribution facility in
connection with the sale by Publishing or any Restricted Subsidiary of any
Newspaper Business).
"Preferred Stock" means, with respect to any Person, any Capital Stock of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over the
Capital Stock of any other class in such Person.
"Publishing Credit Facility" means the credit agreement dated as of May 30,
1996, among Publishing, the financial institutions party thereto and The
Toronto-Dominion Bank, as issuing bank and the Agent, as such agreement may be
amended, renewed, extended, substituted, refinanced, restructured, replaced,
supplemented or otherwise modified from time to time (including, without
limitation, any successive renewals, extensions, substitutions, refinancings,
restructuring, replacements, supplementations or other modifications of the
foregoing that increase the aggregate amount of borrowings outstanding or the
aggregate commitments of the lenders thereunder).
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Rating Agency" means Standard & Poor's Corporation and its successors
("S&P"), and Moody's Investors Service, Inc. and its successors ("Moody's"), or
if S&P and Moody's or both shall not make a rating of the Debt Securities
publicly available, a nationally recognized United States statistical rating
agency or agencies, substituted for S&P or Moody's or both, as the case may be.
"Rating Category" is defined in the Indenture as each major rating category
symbolized by (a) in the case of S&P, AAA, AA, A, BBB, BB, B, CCC, CC and C and
each such Rating Category shall include pluses or minuses ("gradations")
modifying such capital letters; and (b) in the case of Moody's, Aaa, Aa, A, Baa,
Ba, B, Caa, Ca and C and each such Rating Category shall include added numerals
such as 1, 2 or 3 ("gradations") modifying such letters.
"Redeemable Capital Stock" means any Capital Stock that, either by its
terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is, or upon the happening of an event or passage of
time would be, required to be redeemed prior to any Stated Maturity of the
principal of the Debt Securities or is redeemable at the option of the holder
thereof at any time prior to any such Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to any such Stated Maturity
at the option of the holder thereof. Notwithstanding the foregoing Capital Stock
shall not be deemed to be Redeemable Capital Stock so long as the holder and
issuer have agreed in writing that the holder shall have no right to require the
issuer to redeem such Capital Stock prior to the Stated Maturity of the
principal of the Debt Securities.
"Restricted Subsidiary" means, initially, each Subsidiary of Publishing
existing on the date of the Indenture, other than DTH and its Subsidiaries, and
any other Subsidiary designated from time to time by the Board of Directors of
Publishing as a "Restricted Subsidiary" in accordance with the "Restricted
Subsidiaries" covenant of the Indenture.
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<PAGE> 45
"Restricted Subsidiary Guarantor" means each Subsidiary of Publishing that
is required to issue a Guarantee of the Debt Securities under the terms of the
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Shares" means the Series A Redeemable Convertible
Preferred Stock of the Guarantor, as in effect on the date of the Indenture.
"Services Agreement" means the Services Agreement dated as of February 7,
1996, as amended in connection with the Debt Securities Offering, among the
Guarantor, Publishing and Hollinger Inc., and as the same may be further amended
in accordance with the terms of the Indenture.
"Southam Dividend Amount" means the lesser of (x) the aggregate amount paid
or payable by the Guarantor since the date of original issuance of the Debt
Securities in respect of regularly scheduled periodic dividends on the Series A
Preferred and (y) the aggregate amount of the Southam Interests Dividends
received by Publishing since the date of original issuance of the Debt
Securities on account of its ownership interest (whether direct or indirect) in
Southam.
"Southam Interests" means the aggregate of (i) 7,145,000 Southam common
shares, being one-half the shares held by HTH (in which Publishing holds a 50%
indirect common equity interest) and (ii) 250,000 Southam common shares held by
FDTH (in which Publishing holds a 100% indirect common equity interest);
provided, however, that if Southam shall pay a dividend, or make a distribution,
on its common shares in the form of capital stock of the same or another
corporation, or subdivide its outstanding common shares into a greater number of
common shares, or combine its outstanding common shares into a smaller number of
common shares, or effect a reorganization or reclassification of its capital
stock, or amalgamate, enter into an arrangement or consolidation or merge with
or into another entity (other than an amalgamation, arrangement, consolidation
or merger which does not result in a reclassification or change of the
outstanding common shares of Southam), the "Southam Interests" shall thereafter
include any securities distributed with respect to any such shares or into which
any such shares shall be converted, changed or reclassified or for which any
such shares shall be exchanged.
"Southam Interests Dividend" means a dividend or other distribution paid on
or with respect to the Southam Interests on or prior to the earlier of (i) the
redemption date for the redemption of all the Series A Preferred Shares
outstanding as of such redemption date or (ii) the date of final distribution to
the holders of the Series A Preferred Shares of the full preferential amount
provided under the terms thereof; provided, however, that the term "Southam
Interests Dividend" does not mean or include (x) any part of any dividend or
distribution that is payable otherwise than in cash or that constitutes an
Extraordinary Cash Dividend as applied to the Southam Interests, or (y) any
dividend or distribution on or with respect to the 250,000 Southam common shares
of which a subsidiary of Telegraph is the direct owner or the 7,145,000 Southam
common shares which constitute the balance of the Southam common shares held by
HTH in which Telegraph has a 50% indirect equity interest.
"Stated Maturity," when used with respect to any Indebtedness or any
installment of interest thereon, means the dates specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest, as the case may be, is due and payable.
"Subordinated Indebtedness" means Indebtedness of Publishing subordinated
in right of payment to the Notes.
"Subsidiary Indebtedness" means the Indebtedness of any Restricted
Subsidiary.
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by
Publishing or by one or more Subsidiaries, or by Publishing and one or more
other Subsidiaries.
"Tax Sharing Agreement" means an agreement providing for the payment of
amounts in lieu of income taxes among Publishing and other companies with which
it forms a single consolidated tax group.
"Telegraph Option Shares" means an aggregate of 7,000,000 ordinary shares
of The Telegraph acquired by the Guarantor on October 20, 1995, and subsequently
transferred to Publishing.
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<PAGE> 46
"Temporary Cash Investments" means (i) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof, and
guaranteed fully as to principal, premium, if any, and interest by the United
States of America, (ii) any certificate of deposit, maturing not more than one
year after the date of acquisition, issued by, or time deposit of, the Trustee
or a commercial banking institution that is a member of the Federal Reserve
System and that has combined capital and surplus and undivided profits of not
less than $500,000,000, whose debt has a rating, at the time as of which any
investment therein is made, of "P-1" (or higher) according to Moody's or "A-1"
(or higher) according to S&P, (iii) commercial paper, maturing not more than one
year after the date of acquisition, issued by a corporation (other than an
Affiliate or Restricted Subsidiary of Publishing) organized and existing under
the laws of the United States of America with a rating, at the time as of which
any investment therein is made, of "P-1" (or higher) according to Moody's or
"A-1" (or higher) according to S&P, (iv) any money market deposit accounts
issued or offered by the Trustee or a domestic commercial bank having capital
and surplus in excess of $500,000,000.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Unrestricted Subsidiary" means any Subsidiary that is not a Restricted
Subsidiary, including any Restricted Subsidiary that becomes an Unrestricted
Subsidiary in accordance with the "Restricted Subsidiaries" covenant of the
Indenture; provided, however, that a Person may not be designated as an
Unrestricted Subsidiary unless (i) the creditors of such Person have no direct
or indirect recourse (including, but not limited to, recourse with respect to
the payment of principal or interest on Indebtedness of such Subsidiary) to
Publishing or a Restricted Subsidiary and (ii) a default by such Person on any
of its Indebtedness will not result in, or permit any holder of Indebtedness of
Publishing or a Restricted Subsidiary to declare, a default on such Indebtedness
of Publishing or a Restricted Subsidiary or cause the payment thereof to be
accelerated or payable prior to its Stated Maturity. Any subsidiary of an
Unrestricted Subsidiary shall be an Unrestricted Subsidiary for purposes of the
Indenture.
"Voting Stock" means stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency).
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary all the
outstanding Capital Stock (other than directors' qualifying shares) of which are
owned by Publishing or another Wholly Owned Restricted Subsidiary.
PLAN OF DISTRIBUTION
The Company may sell Securities to one or more underwriters for public
offering and sale by them or may sell Securities to investors directly or
through agents or dealers. Any such underwriter, agent or dealer involved in the
offer and sale of the Securities will be named in an applicable Prospectus
Supplement. Securities offered pursuant to a particular Prospectus supplement
are referred to herein as "Offered Securities."
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company also may, from time to time, authorize
underwriters acting as its agents to offer and sell the Offered Securities upon
the terms and conditions set forth in any Prospectus Supplement. In connection
with the sale of Offered Securities, underwriters may be deemed to have received
compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Offered
Securities for whom they may act as agent. Underwriters may sell Offered
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions (which may be changed from time to time) from the purchasers for
whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to
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<PAGE> 47
participating dealers, will be set forth in an applicable Prospectus Supplement.
Underwriters, dealers and agents participating in the distribution of the
Offered Securities may be deemed to be underwriters under the Securities Act,
and any discounts and commissions received by them and any profit realized by
them on resale of the Offered Securities may be deemed to be underwriting
discounts and commissions under the Securities Act. Underwriters, dealers and
agents may be entitled, under agreements with the Company, to indemnification
against and contribution toward certain civil liabilities, including liabilities
under the Securities Act, and to reimbursement by the Company for certain
expenses.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to such
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale.
If so indicated in an applicable Prospectus Supplement, the Company will
authorize dealers acting as its agents to solicit offers by certain institutions
to purchase Offered Securities from the Company at the public offering price set
forth in such Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date or dates stated in
such Prospectus Supplement. Each Contract will be for an amount not less than,
and the aggregate principal amount of Offered Securities sold pursuant to
Contracts shall not be less nor more than, the respective amounts stated in such
Prospectus Supplement. Institutions with whom Contracts, when authorized, may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and other
institutions, but will in all cases be subject to the approval of the Company.
Contracts will not be subject to any conditions except (i) the purchase by an
institution of the Offered Securities covered by its Contracts shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject, and (ii) if the Offered Securities
are being sold to underwriters, the Company shall have sold to such underwriters
the total principal amount of the Offered Securities less the principal amount
thereof covered by Contracts. Agents and underwriters will have no
responsibility in respect of the delivery or performance of Contracts.
LEGAL MATTERS
Certain legal matters in connection with the Securities offered hereby will
be passed upon for the Company by Kirkpatrick & Lockhart LLP, Pittsburgh,
Pennsylvania. Certain legal matters relating to the Securities offered hereby
will be passed upon for any underwriter, dealer or agent by its legal counsel.
EXPERTS
The consolidated financial statements of Hollinger International Inc. and
subsidiaries as of December 31, 1995 and 1994, and for each of the years in the
three-year period ended December 31, 1995 incorporated herein by reference from
the Company's Annual Report on Form 10-K for the year ended December 31, 1995
have been incorporated by reference in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, and upon the authority of
said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy solicitation materials and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy solicitation materials and other information can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices located at Seven World Trade Center, Suite 1300,
New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Website that contains
reports, proxy, information statements and other information regarding
registrants that file electronically with the Commission. Such reports, proxies,
information statements and other information may be found on the Commission's
site address, http://www.sec.gov. The Class A Common Stock is listed on the
NYSE. Such reports, proxy
46
<PAGE> 48
solicitation materials and other information can also be inspected and copied at
the NYSE at 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the offering
made hereby. This Prospectus does not contain all of the information set forth
in the Registration Statement, certain portions of which are omitted in
accordance with the rules and regulations of the Commission. Such additional
information may be obtained from the Commission's principal office in
Washington, D.C. as set forth above. For further information, reference is
hereby made to the Registration Statement, including the exhibits filed as a
part thereof or otherwise incorporated herein. Statements made in this
Prospectus as to the contents of any documents referred to are not necessarily
complete, and in each instance reference is made to such exhibit for a more
complete description and each such statement is modified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-24004) pursuant to the Exchange Act are incorporated herein by reference:
1. the Company's Annual Report on Form 10-K for the year ended December 31,
1995;
2. the Company's Proxy Statement for the Annual Meeting of Stockholders
held May 28, 1996;
3. the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996 and June 30, 1996;
4. the Company's Current Reports on Form 8-K dated February 7, 1996, April
24, 1996 and August 7, 1996; and
5. the description of the Class A Common Stock contained in the Company's
Registration Statement on Form 8-A, as the same may be amended.
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and any Prospectus Supplement and prior to the termination of the
offering made by this Prospectus and any Prospectus Supplement shall be deemed
to be incorporated by reference herein. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus and any
Prospectus Supplement to the extent that a statement contained herein or in any
other subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this Prospectus and any Prospectus
Supplement.
The Company will provide without charge to each person to whom a copy of
this Prospectus and any Prospectus Supplement is delivered, upon the written or
oral request of such person, a copy of any or all of the documents that are
incorporated herein by reference, other than exhibits to such information
(unless such exhibits are specifically incorporated by reference into such
documents). Requests should be directed to Hollinger International Inc., 401
North Wabash Avenue, Chicago, Illinois 60611, Attention: Secretary, telephone
number (312) 321-2299.
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================================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE CLASS A COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company............................ 3
Risk Factors........................... 5
Use of Proceeds........................ 12
Ratio of Earnings to Fixed Charges..... 12
Description of the Debt Securities..... 13
Plan of Distribution................... 45
Legal Matters.......................... 46
Experts................................ 46
Available Information.................. 46
Incorporation of Certain Documents by
Reference............................ 47
</TABLE>
================================================================================
================================================================================
HOLLINGER INTERNATIONAL PUBLISHING INC.
SECURITIES
UNCONDITIONALLY GUARANTEED BY
LOGO
---------------------------
PROSPECTUS
---------------------------
,
================================================================================
<PAGE> 50
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be paid by the Company in connection with the
distribution of the securities being registered are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee.................. $151,516
NYSE Listing fee............................................... *
Accounting fees and expenses................................... *
Legal fees and expenses........................................ *
Printing....................................................... *
Transfer agent's fees.......................................... *
Blue sky fees and expenses (including counsel fees)............ *
Miscellaneous expenses......................................... *
--------
Total........................................................ *
========
</TABLE>
- ---------
* To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Restated Certificate of Incorporation provides that no
director of the Company will be personally liable to the Company or any of its
stockholders for monetary damages arising from the director's breach of the duty
of care as a director, with certain limited exceptions.
Pursuant to the provisions of Section 145 of the Delaware General
Corporation Law, every Delaware corporation has the power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that he is
or was a director, officer, employee or agent of any corporation, partnership,
joint venture, trust or other enterprise, against any and all expenses,
judgments, fines and amounts paid in settlement and reasonably incurred in
connection with such action, suit or proceeding. The power to indemnify applies
only if such person acted in good faith and in a manner he reasonably believed
to be in the best interest, or not opposed to the best interest, of the
corporation and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
The power to indemnify applies to actions brought by or in the right of the
corporation as well, but only to the extent of defense and settlement expenses
and to any satisfaction of a judgment or settlement of the claim itself, and
with the further limitation that in such actions no indemnification shall be
made in the event of any adjudication or liability unless the court, in its
discretion, believes that in light of all the circumstances indemnification
should apply.
To the extent any of the persons referred to in the two immediately
preceding paragraphs is successful in the defense of the actions referred to
therein, such person is entitled, pursuant to Section 145, to indemnification as
described above.
The Company's Restated Certificate of Incorporation and Amended and
Restated Bylaws provide for indemnification to officers and directors of the
Company to the fullest extent permitted by the Delaware General Corporation Law.
The Company maintains a policy of liability insurance which insures its
officers and directors against losses resulting from certain wrongful acts
committed by them in their capacity as officers and directors of the Company.
The form of Underwriting Agreement included as Exhibit 1.01 provides for
indemnifying the Company and certain controlling persons under certain
circumstances, including indemnification for liabilities under the Securities
Act of 1933, as amended (the "Securities Act").
II-1
<PAGE> 51
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS. The following exhibits are filed as part of this registration
statement:
<TABLE>
<CAPTION>
EXHIBIT PRIOR FILING OR
NUMBER DESCRIPTION SEQUENTIAL PAGE NUMBER
- ------- ----------- ----------------------
<C> <S> <C>
1.01 Form of Underwriting Agreement between the Company and
the Underwriter(s) with respect to Debt Securities or
Convertible Securities*
4.01 Form of Debt Securities Indenture, dated as of
,
between the Company and , as Trustee*
4.04 Specimen certificate evidencing Class A Common Stock Incorporated by reference
to Exhibit 4.1 to
Registration Statement on
Form S-1 (No. 33-74980)
5.01 Opinion of Kirkpatrick & Lockhart LLP*
12.01 Computation of Ratio of Earnings to Fixed Charges*
23.01 Consent of Kirkpatrick & Lockhart LLP (included in
Exhibit 5.01)*
23.02 Consent of KPMG Peat Marwick LLP
24.01 Powers of Attorney (included on signature page)
25.01 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of , as Trustee under
the Debt Securities Indenture*
</TABLE>
- ---------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registration pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE> 52
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of trustees to act under subsection (a)
of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the
Securities Act.
The undersigned registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois, on November 29, 1996.
HOLLINGER INTERNATIONAL
PUBLISHING INC.
HOLLINGER INTERNATIONAL INC.
By: /s/ CONRAD M. BLACK
------------------------------
Conrad M. Black,
Chairman of the Board
and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth L. Serota and J. David Dodd, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documentation in connection therewith, with the Securities and Exchange
Commission, granted unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in or about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ CONRAD M. BLACK Chairman of the Board, Chief Executive November 29, 1996
- ------------------------------ Officer and Director (Principal Executive
Conrad M. Black Officer)
/s/ F. DAVID RADLER President, Chief Operating Officer and November 29, 1996
- ------------------------------ Director
F. David Radler
/s/ J. A. BOULTBEE Vice President and Chief Financial November 29, 1996
- ------------------------------ Officer (Principal Financial Officer)
J. A. Boultbee
/s/ FREDERICK A. CREASEY Group Corporate Controller (Principal November 29, 1996
- ------------------------------ Accounting Officer)
Frederick A. Creasey
/s/ BARBARA AMIEL BLACK Director November 29, 1996
- ------------------------------
Barbara Amiel Black
/s/ DWAYNE O. ANDREAS Director November 29, 1996
- ------------------------------
Dwayne O. Andreas
/s/ RICHARD BURT Director November 29, 1996
- ------------------------------
Richard Burt
Director , 1996
- ------------------------------
Raymond G. Chambers
</TABLE>
II-4
<PAGE> 54
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DANIEL W. COLSON Director November 29, 1996
- ------------------------------
Daniel W. Colson
/s/ HENRY A. KISSINGER Director November 29, 1996
- ------------------------------
Henry A. Kissinger
/s/ MARIE-JOSEE KRAVIS Director November 29, 1996
- ------------------------------
Marie-Josee Kravis
/s/ SHMUEL MEITAR Director November 29, 1996
- ------------------------------
Shmuel Meitar
Director , 1996
- ------------------------------
Richard N. Perle
/s/ ROBERT S. STRAUSS Director November 29, 1996
- ------------------------------
Robert S. Strauss
/s/ ALFRED TAUBMAN Director November 29, 1996
- ------------------------------
Alfred Taubman
/s/ JAMES R. THOMPSON Director November 29, 1996
- ------------------------------
James R. Thompson
/s/ LORD WEIDENFELD Director November 29, 1996
- ------------------------------
Lord Weidenfeld
/s/ LESLIE H. WEXNER Director November 29, 1996
- ------------------------------
Leslie H. Wexner
</TABLE>
II-5
<PAGE> 55
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PRIOR FILING OR
NO. DESCRIPTION SEQUENTIAL PAGE NUMBER
- ------- ----------- ----------------------
<C> <S> <C>
1.01 Form of Underwriting Agreement between the Company and
the Underwriter(s) with respect to Debt Securities or
Convertible Securities*
4.01 Form of Debt Securities Indenture, dated as of
,
between the Company and , as Trustee*
4.04 Specimen certificate evidencing Class A Common Stock Incorporated by reference
to Exhibit 4.1 to
Registration Statement on
Form S-1 (No. 33-74980)
5.01 Opinion of Kirkpatrick & Lockhart LLP*
12.01 Computation of Ratio of Earnings to Fixed Charges*
23.01 Consent of Kirkpatrick & Lockhart LLP (included in
Exhibit 5.01)*
23.02 Consent of KPMG Peat Marwick LLP
24.01 Powers of Attorney (included on signature page)
25.01 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of , as Trustee under
the Debt Securities Indenture*
</TABLE>
- ---------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 23.02
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Hollinger International Inc.
Hollinger International Publishing Inc.:
We consent to the use of our report dated February 27, 1996, relating to the
consolidated balance sheets of Hollinger International Inc. and subsidiaries as
of December 31, 1995 and 1994, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1995, incorporated herein by reference from
the Company's Annual Report on 1995 Form 10-K for the year ended December 31,
1995, and to the reference of our firm under the heading "Experts" in the
Prospectus.
/s/ KPMG Peat Marwick, LLP
Chicago, Illinois
November 29, 1996
