<PAGE> 1
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[ ] Definitive Proxy Statement
[ X ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
HOLLINGER INTERNATIONAL INC.
------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ X ] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------
(5) Total fee paid:
------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------
(3) Filing Party:
--------------------------------------------------
(4) Date Filed:
----------------------------------------------------
<PAGE> 2
Hollinger International Inc. LOGO
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
TELEPHONE (312) 321-2299; FACSIMILE (312) 321-0629
JULY 11, 1997
Dear Stockholder:
You should have recently received a Proxy Statement dated May 21, 1997 (the
"Proxy Statement") and related proxy card (the "Proxy Materials") for a Special
Meeting of the Stockholders of Hollinger International Inc. (the "Company") to
be held at 11:00 a.m., on July 10, 1997 in the Atrium, 7th Floor of The
Sun-Times Building, 401 North Wabash Avenue, Chicago, Illinois 60611. We are
enclosing for your immediate review and consideration a supplement (the
"Supplement") to the Proxy Statement and proxy card previously sent to you. The
Supplement should be read in conjunction with the Proxy Materials. Please note
that the record date for stockholders entitled to vote at the Special Meeting
has been changed to July 11, 1997 and the date for the Special Meeting has been
changed to July 21, 1997.
The Proxy Statement requested that you consider the following proposals to:
(i) authorize the issuance of shares of Class A Common Stock, par value $.01 per
share ("Class A Common Stock") and convertible preferred stock of the Company in
exchange for securities issued in connection with the acquisition of certain
owned and controlled Canadian newspaper interests of the Company's parent
corporation, Hollinger Inc., on April 18, 1997 (the "Canadian Newspaper
Transaction"), as follows: (a) authorize the issuance of 3,207,045 shares of the
Company's Class A Common Stock and 8,294,090 shares of newly-authorized Series C
Convertible Preferred Stock, par value $.01 per share ("Series C Preferred
Stock") to UniMedia Holding Company, a wholly-owned subsidiary of Hollinger Inc.
("UniMedia Holding"), in exchange for all of the outstanding shares of the
Company's Series 1 Nonvoting Preferred Stock and Series 2 Nonvoting Preferred
Stock held by UniMedia Holding and received as partial consideration in
connection with the Canadian Newspaper Transaction on April 18, 1997 (the "First
Exchange"), and (b) the issuance of 8,294,090 shares of the Company's Class A
Common Stock to UniMedia Holding in exchange for outstanding shares of Series C
Preferred Stock issued in the First Exchange and the issuance of the same number
of newly-authorized shares of Series C Preferred Stock to a wholly-owned
subsidiary of Hollinger Inc. in exchange for 8,294,090 outstanding shares of
Class A Common Stock directly owned by such subsidiary (collectively, the
"Second Exchange"), with the Second Exchange to be consummated immediately
following the First Exchange (the First Exchange and Second Exchange were
referred to in the Proxy Statement as the "Exchange Proposal"); and (ii) approve
an increase in the authorized preferred stock of the Company from 20,000,000
shares to 120,000,000 shares (the "Charter Proposal").
The purpose of this Supplement is to modify and restate the Exchange
Proposal by separating subparts (a) and (b) of the Exchange Proposal into two
separate and distinct proposals. The proposal in subpart (a) remains as
described in the Proxy Statement dated May 21, 1997, except that the party to
the exchange will be UniMedia Holding and/or another subsidiary of Hollinger
Inc. and is hereinafter referred to as the "First Exchange Proposal." The
proposal in subpart (b) has been amended and restated so that you will be asked
to authorize: (i) the issuance of 7,211,649 shares of Series C Preferred Stock
(valued for these purposes at approximately $78.25 million) in exchange for
739,500 shares of Series A Convertible Redeemable Preferred Stock, par value
$.01 per share of the Company ("Series A Preferred Stock") (valued for these
purposes at approximately $78.25 million) held by Hollinger Inc. and/or its
designated subsidiary; (ii) the issuance of 739,500 shares of a newly-authorized
Series D Convertible Redeemable Preferred Stock, par value $.01 per share of the
Company ("Series D Preferred Stock") (valued for these purposes at approximately
$78.25 million) and 1,082,441 shares of Class A Common Stock (valued for these
purposes at approximately $11.75 million) in exchange for the 8,294,090 shares
of Series C Preferred Stock (valued for these purposes at approximately $90
million) issued in the First Exchange and held by Hollinger Inc. and/or its
designated
<PAGE> 3
subsidiary; and (iii) the issuance of 1,082,441 shares of Series C Preferred
Stock (valued for these purposes at approximately $11.75 million) in exchange
for 1,082,441 shares of Class A Common Stock (valued at approximately $11.75
million) held by Hollinger Inc. and/or its designated subsidiary (collectively,
the "Second Exchange Proposal").
There will be no net effect on Hollinger Inc.'s aggregate equity or voting
interests in the Company, and there will be no adverse tax or other impact upon
the Company, resulting from the modified Second Exchange Proposal.
Also, this Supplement adds an additional proposal (the "Southam Proposal")
to authorize the issuance of an indeterminate number of shares of Class A Common
Stock of the Company upon the exchange of the Nonvoting Special Shares (the
"HCPH Special Shares") of Hollinger Canadian Publishing Holdings Inc. ("HCPH"),
a Canadian company in the Company's consolidated group, that may be issued in
connection with the offer by HCPH to purchase all of the Common Shares of
Southam Inc. ("Southam") not owned by HCPH or any U.S. holder of Southam Common
Shares, and any related issuance or transfer of HCPH Special Shares to Hollinger
Inc. and/or its designated subsidiaries in connection with the early redemption
or conversion of the 7.00% Southam-linked convertible debentures issued by
Hollinger Inc.
The enclosed proxy card (which has been printed in blue ink) includes the
modified First Exchange Proposal, the new Second Exchange Proposal and the new
Southam Proposal, as well as the Charter Proposal previously submitted to the
stockholders. WE ENCOURAGE YOU TO SUBMIT THIS NEW PROXY CARD AND INDICATE YOUR
VOTE ON ALL FOUR PROPOSALS. Please note that any previously submitted proxy card
is no longer valid and ONLY THE ENCLOSED PROXY CARD WILL BE COUNTED AT THE
SPECIAL MEETING. Please disregard the prior proxy card and submit only the
enclosed proxy card. The First Exchange Proposal, the Second Exchange Proposal,
the Charter Proposal and the Southam Proposal (collectively, the "Proposals")
each will be voted upon separately by the stockholders of the Company.
A special committee of the Board of Directors, consisting solely of
Directors who are independent of Hollinger Inc. (the "Special Committee"),
thoroughly reviewed and unanimously approved the First Exchange Proposal and the
Second Exchange Proposal. Based on this Special Committee's recommendation, you
are encouraged to vote in favor of the First Exchange Proposal and the Second
Exchange Proposal. The Board of Directors also encourages you to vote in favor
of the Southam Proposal and the Charter Proposal. The Proposals are more fully
described in the enclosed Supplemental Notice of Meeting and the Supplement,
which you are encouraged to read carefully. Hollinger Inc. has sufficient voting
power to approve the Proposals regardless of the vote of any other stockholder.
The Board of Directors appreciates and encourages stockholder participation
in the Company's affairs. Whether or not you plan to attend the Special Meeting,
it is important that your shares are represented. Accordingly, we request that
you sign, date and mail the enclosed proxy in the enclosed postage-paid
envelope. We apologize for any inconvenience this may have caused.
Very truly yours,
/s/ CONRAD M. BLACK
CONRAD M. BLACK
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE> 4
Hollinger International Inc. LOGO
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
TELEPHONE (312) 321-2299; FACSIMILE (312) 321-0629
------------------------
SUPPLEMENTAL NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 21, 1997
------------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of the Stockholders of
Hollinger International Inc. (the "Company") will be held in the Atrium, 7th
Floor of The Sun-Times Building, 401 North Wabash Avenue, Chicago, Illinois
60611, on July 21, 1997, at 11:00 a.m., local time, for the following purposes:
1. To authorize the issuance to UniMedia Holding Company ("UniMedia
Holding"), a subsidiary of Hollinger Inc. and/or another designated
subsidiary of Hollinger Inc., of 3,207,045 shares of the Company's Class A
Common Stock, par value $.01 per share ("Class A Common Stock"), and
8,294,090 shares of newly-authorized Series C Convertible Preferred Stock,
par value $.01 per share of the Company (the "Series C Preferred Stock")
(including up to 8,294,090 shares of Class A Common Stock into which the
shares of Series C Preferred Stock are convertible), in exchange (the
"First Exchange") for all of the outstanding shares of the Company's Series
1 Nonvoting Preferred Stock and Series 2 Nonvoting Preferred Stock held by
UniMedia Holding and/or such other designated subsidiary of Hollinger Inc.
(the "First Exchange Proposal").
2. To authorize the following exchanges (collectively, the "Second
Exchange") to occur immediately following the First Exchange: (a) the
issuance of 7,211,649 shares of the Company's Series C Preferred Stock
(including up to 7,211,649 shares of Class A Common Stock into which the
shares of Series C Preferred Stock are convertible) in exchange for 739,500
shares of Series A Convertible Redeemable Preferred Stock, par value $.01
per share, of the Company ("Series A Preferred Stock") held by Hollinger
Inc. and/or its designated subsidiary; (b) the issuance of 739,500 shares
of a newly-authorized Series D Convertible Redeemable Preferred Stock, par
value $.01 per share, of the Company ("Series D Preferred Stock")
(including the shares of Class A Common Stock into which such shares are
convertible) and 1,082,441 shares of Class A Common Stock in exchange for
the 8,294,090 shares of Series C Preferred Stock issued in the First
Exchange and held by Hollinger Inc. and/or its designated subsidiary; and
(c) the issuance of 1,082,441 shares of Series C Preferred Stock (including
1,082,441 shares of Class A Common Stock into which the shares of Series C
Preferred Stock are convertible) in exchange for 1,082,441 shares of Class
A Common Stock held by Hollinger Inc. and/or its designated subsidiary
(collectively, the "Second Exchange Proposal").
3. To approve and adopt an amendment to the Restated Certificate of
Incorporation, as amended (the "Restated Certificate"), of the Company, to
increase the authorized preferred stock of the Company from 20,000,000
shares of Preferred Stock, par value $.01 per share ("Preferred Stock"), to
120,000,000 shares of Preferred Stock (the "Charter Proposal").
4. To authorize the issuance of an indeterminate number of shares of
Class A Common Stock upon the exchange of the Nonvoting Special Shares (the
"HCPH Special Shares") of Hollinger Canadian Publishing Holdings Inc.
("HCPH"), a Canadian company in the Company's consolidated group, that may
be issued in connection with (a) the offer by HCPH to purchase all of the
common shares (the "Southam Common Shares") of Southam Inc. ("Southam") not
already owned by HCPH or any U.S. holder of Southam Common Shares pursuant
to an Exchange Indenture to be entered into by the Company, HCPH and
Montreal Trust Company of Canada, as trustee, and (b) any related issuance
or transfer of HCPH Special Shares to Hollinger Inc. and/or its designated
subsidiary in connection with
<PAGE> 5
the early redemption or conversion of the 7.00% Southam-linked convertible
debentures issued by Hollinger Inc. (the "Southam Proposal").
5. To transact such further and other business as may properly come
before the meeting or any adjournments or postponements thereof.
The First Exchange Proposal, the Second Exchange Proposal, the Charter
Proposal and the Southam Proposal (collectively, the "Proposals") each will be
voted upon separately by the stockholders of the Company. Approval of each of
the First Exchange Proposal, the Second Exchange Proposal and the Southam
Proposal requires the approval of a majority of the total votes cast on each
proposal in person or by proxy by the holders of the Class A Common Stock, Class
B Common Stock, par value $.01 par share ("Class B Common Stock" and, together
with Class A Common Stock, "Common Stock"), and Series B Convertible Preferred
Stock, par value $.01 per share ("Series B Preferred Stock"), of the Company,
voting together as a single class. Approval of the Charter Proposal requires the
approval of a majority of the voting power of all the outstanding shares of
Common Stock and Series B Preferred Stock voting together as a single class.
Each share of Class A Common Stock is entitled to one vote per share, each share
of Class B Common Stock is entitled to ten votes per share, and each half share
of Series B Preferred Stock is entitled to 4/5 of a vote per half share.
The First Exchange Proposal and the Charter Proposal are more fully
described in the Proxy Statement previously mailed on May 21, 1997 as modified
by the Supplement attached hereto. The Second Exchange Proposal and the Southam
Proposal are fully described in the Supplement attached hereto. The close of
business on July 11, 1997 (the "Record Date") has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Special Meeting and any adjournments or postponements thereof. A list of
stockholders as of the Record Date will be available for inspection by
stockholders at the Company's principal executive office at the address set
forth above during ordinary business hours in the ten-day period prior to and
including the Special Meeting. Stockholders of the Company will not have the
right to seek an appraisal of their shares of Common Stock in connection with
the Proposals. See "Dissenting Stockholders" in the Proxy Statement.
PLEASE NOTE THAT ANY PREVIOUSLY SUBMITTED PROXY CARDS ARE NO LONGER VALID.
ALL VOTES MUST BE CAST ON THE ENCLOSED PROXY CARD. PLEASE ALSO NOTE THAT THE
SPECIAL MEETING WILL BE HELD ON JULY 21, 1997, NOT JULY 10, 1997 AS STATED IN
THE PROXY STATEMENT MAILED PREVIOUSLY.
As of the Record Date, Hollinger Inc. directly or indirectly owned all of
the outstanding shares of Class B Common Stock and 33,610,754 shares of Class A
Common Stock which represented 77.75% of the outstanding combined voting power
of the Common Stock and Series B Preferred Stock. Therefore, Hollinger Inc. has
sufficient voting power to approve the Proposals regardless of the vote of any
other stockholders. As described in the attached Supplement, Hollinger Inc. has
agreed to vote in favor of the Proposals.
By Order of the Board of Directors,
Kenneth L. Serota
Vice President-Law & Finance and
Secretary
July 11, 1997
If you are unable to attend the meeting in person, you are requested to
disregard the previous proxy card mailed with the proxy materials dated May 21,
1997 and to mark, sign, date and return the enclosed proxy card in the enclosed
addressed, postage paid envelope.
<PAGE> 6
Hollinger International Inc. LOGO
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
TELEPHONE (312) 321-2299; FACSIMILE (312) 321-0629
------------------------
SUPPLEMENT
DATED JULY 11, 1997
TO
PROXY STATEMENT DATED MAY 21, 1997
------------------------
THIS IS A SUPPLEMENT TO THE PROXY STATEMENT DATED MAY 21, 1997 AND SHOULD
BE READ IN CONJUNCTION THEREWITH.
GENERAL INFORMATION
This supplement (the "Supplement") to the Proxy Statement dated May 21,
1997 (the "Proxy Statement") and the accompanying proxy card are furnished in
connection with the solicitation of proxies by the Board of Directors of
Hollinger International Inc., a Delaware corporation (the "Company"), for use at
the Special Meeting of Stockholders of the Company to be held on July 21, 1997
(the "Special Meeting") at 11:00 a.m., local time, in the Atrium, 7th Floor of
The Sun-Times Building, 401 North Wabash Avenue, Chicago, Illinois 60611. The
Supplement relates to an additional matter that arose subsequent to the mailing
of the Proxy Statement and to a modification of one of the original proposals
included in the Proxy Statement, as well as to a change in the record date and
the meeting date for the Special Meeting. Proxies are being solicited from
holders of record as of the close of business on July 11, 1997 (the "Record
Date") of the outstanding shares of Class A Common Stock, par value $.01 per
share ("Class A Common Stock"), Class B Common Stock, par value $.01 per share
("Class B Common Stock," and together with Class A Common Stock, "Common
Stock"), and Series B Convertible Preferred Stock, par value $.01 per share
("Series B Preferred Stock"), of the Company for use at the Special Meeting and
at any adjournments or postponements thereof.
At the Special Meeting the stockholders of the Company will be asked to
vote upon the following proposals (the "Proposals"):
1. FIRST EXCHANGE PROPOSAL: To authorize the issuance to UniMedia
Holding Company ("UniMedia Holding"), a subsidiary of Hollinger Inc. and/or
another designated subsidiary of Hollinger Inc., of 3,207,045 shares of
Class A Common Stock, and 8,294,090 shares of newly-authorized Series C
Convertible Preferred Stock, par value $.01 per share, of the Company (the
"Series C Preferred Stock") (including up to 8,294,090 shares of Class A
Common Stock into which the shares of Series C Preferred Stock are
convertible), in exchange (the "First Exchange") for 23,267 shares of
Series 1 Nonvoting Preferred Stock and 149,658 shares of Series 2 Nonvoting
Stock Preferred Stock of the Company held by UniMedia Holding, and/or such
other designated subsidiary of Hollinger Inc.
2. SECOND EXCHANGE PROPOSAL: To authorize the following exchanges
(collectively, the "Second Exchange") to occur immediately following the
First Exchange: (a) the issuance of 7,211,649 shares of Series C Preferred
Stock (including up to 7,211,649 shares of Class A Common Stock into which
the shares of Series C Preferred Stock are convertible) in exchange for
739,500 shares of Series A Convertible Redeemable Preferred Stock, par
value $.01 per share, of the Company ("Series A Preferred Stock") held by
Hollinger Inc. and/or its designated subsidiary; (b) the issuance of
739,500 shares of a newly-authorized Series D Convertible Redeemable
Preferred Stock, par value $.01 per share, of the Company ("Series D
Preferred Stock") (including the shares of Class A Common Stock into which
<PAGE> 7
such shares are convertible) and 1,082,441 shares of Class A Common Stock
in exchange for the 8,294,090 shares of Series C Preferred Stock issued in
the First Exchange and held by Hollinger Inc. and/or its designated
subsidiary; and (c) the issuance of 1,082,441 shares of Series C Preferred
Stock (including 1,082,441 shares of Class A Common Stock into which the
shares of Series C Preferred Stock are convertible) in exchange for
1,082,441 shares of Class A Common Stock held by Hollinger Inc. and/or its
designated subsidiary.
3. CHARTER PROPOSAL: To approve and adopt an amendment to the Restated
Certificate of Incorporation, as amended (the "Restated Certificate"), of
the Company, to increase the authorized Preferred Stock of the Company from
20,000,000 shares of Preferred Stock, par value $.01 per share ("Preferred
Stock"), to 120,000,000 shares of Preferred Stock.
4. SOUTHAM PROPOSAL: To authorize the issuance of an indeterminate
number of shares of Class A Common Stock upon the exchange of the Nonvoting
Special Shares (the "HCPH Special Shares") of Hollinger Canadian Publishing
Holdings Inc. ("HCPH"), a Canadian company in the Company's consolidated
group, that may be issued in connection with (a) the offer by HCPH to
purchase all of the common shares (the "Southam Common Shares") of Southam
Inc. ("Southam") not already owned by HCPH or any U.S. holder of Southam
Common Shares, pursuant to an Exchange Indenture to be entered into by the
Company, HCPH and Montreal Trust Company of Canada, as trustee, and (b) any
related issuance or transfer of HCPH Special Shares to Hollinger Inc.
and/or its designated subsidiaries in connection with the early redemption
or conversion of the 7.00% Southam-linked convertible debentures issued by
Hollinger Inc.
5. OTHER MATTERS: To transact such further and other business as may
properly come before the meeting and any adjournments or postponements
thereof.
In accordance with the rules of the New York Stock Exchange (the "NYSE"),
on which the Company's Class A Common Stock and Preferred Redeemable Increased
Dividend Equity Securities ("PRIDES") are listed, the Company is required to
obtain stockholder approval for the First Exchange Proposal, the Second Exchange
Proposal and the Southam Proposal.
REQUIRED VOTES
The First Exchange Proposal, the Second Exchange Proposal, the Charter
Proposal and the Southam Proposal each will be voted upon separately by the
stockholders of the Company. Approval of the First Exchange Proposal, the Second
Exchange Proposal and the Southam Proposal each requires the approval of a
majority of the total votes cast on the proposal in person or by proxy by the
holders of the Common Stock and Series B Preferred Stock voting together as a
single class. Approval of the Charter Proposal requires the approval of a
majority of the voting power of all the outstanding shares of Common Stock and
Series B Preferred Stock voting together as a single class. Abstentions from
voting will have the effect of a vote against the Proposals, and broker
non-votes will have no effect except that the broker non-votes will have the
effect of a vote against the Charter Proposal.
As of the Record Date, Hollinger Inc. has a majority equity ownership in
interest in the Company, which consists of approximately 51.21% of the combined
equity interest, and approximately 77.75% of the combined voting power, of the
outstanding Common Stock and Series B Preferred Stock. Hollinger Inc. has
sufficient voting power to approve the Proposals regardless of the vote of any
other stockholders. Hollinger Inc. has indicated that it will vote in favor of
the Proposals.
PROXIES
Stockholders of record on the Record Date (July 11, 1997) are entitled to
cast their votes, in person or by properly executed proxy, at the Special
Meeting. The presence, in person or by properly executed proxy, of the holders
of a majority of the voting power attributable to the outstanding shares of
Common Stock and Series B Preferred Stock is necessary to constitute a quorum at
the Special Meeting.
2
<PAGE> 8
All shares represented at the Special Meeting by properly executed proxies
received prior to or at the Special Meeting and not properly revoked will be
voted at the Special Meeting in accordance with the instructions indicated in
such proxies. If no instructions are indicated, such proxies will be voted FOR
approval of the Proposals. The Board of Directors of the Company does not know
of any matters, other than the matters described in the Supplemental Notice of
Special Meeting attached to this Supplement, that will come before the Special
Meeting.
If a quorum is not present at the time the Special Meeting is convened, or
if for any other reason the Company believes that additional time should be
allowed for the solicitation of proxies, the Company may adjourn or postpone the
Special Meeting with a vote of the stockholders. If the Company proposes to
adjourn or postpone the Special Meeting, the persons named in the enclosed proxy
card will vote all shares for which they have voting authority in favor of such
adjournment or postponement.
The enclosed proxy card (which is printed in blue ink) includes the
newly-modified First Exchange Proposal and the Second Exchange Proposal, the
Charter Proposal and the Southam Proposal. WE ENCOURAGE YOU TO SUBMIT THIS NEW
PROXY AND INDICATE YOUR VOTE ON ALL FOUR PROPOSALS. Please note that if you have
submitted the proxy previously provided, it is no longer valid. ONLY THE
ENCLOSED PROXY CARD WILL BE COUNTED AT THE SPECIAL MEETING.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, at or before the Special Meeting, a written
notice of revocation bearing a date later than the date of the proxy, (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of the Company at or before the Special Meeting, or (iii)
attending the Special Meeting and voting in person (although attendance at the
Special Meeting will not in and of itself constitute revocation of a proxy). Any
written notice revoking a proxy should be sent to: Hollinger International Inc.,
401 North Wabash Avenue, Chicago, Illinois 60611, Attention: Secretary.
Proxies are being solicited by and on behalf of the Board of Directors of
the Company. All expenses of this solicitation, including the cost of mailing
this Proxy Statement, will be borne by the Company. In addition to solicitation
by use of the mails, proxies may be solicited by directors, officers and
employees of the Company in person or by telephone, telegram or other means of
communication. Such directors, officers and employees will not be additionally
compensated but may be reimbursed for out-of-pocket expenses in connection with
such solicitation. Arrangements will be made with custodians, nominees and
fiduciaries for forwarding of proxy solicitation material to beneficial owners
of Common Stock and Series B Preferred Stock held of record by such persons, and
the Company may reimburse such custodians, nominees and fiduciaries for
reasonable expenses incurred in connection therewith.
OWNERSHIP BY HOLLINGER INC.
Hollinger Inc. directly and indirectly owns approximately 51.21% of the
combined equity interest and approximately 77.75% of the combined voting power
of the outstanding Class A Common Stock, Class B Common Stock and Series B
Preferred Stock of the Company (without giving effect to the future issuance of
Class A Common Stock in connection with the PRIDES or the Series A Preferred
Stock or the proposed issuances under the First Exchange Proposal and Second
Exchange Proposal). As a result, Hollinger Inc. will be able to approve the
Proposals regardless of the vote of any other stockholders, as well as to
continue to control the outcome of any election of directors and to direct
management policy, strategic direction and financial decisions of the Company
and its subsidiaries. Hollinger Inc. owns all of the outstanding Series A
Preferred Stock, which is convertible at any time into shares of Class A Common
Stock at the initial conversion price of the Canadian dollar equivalent of $14
per share. Based on the initial conversion price, 5,634,734 shares of Class A
Common Stock would have been issuable as of July 8, 1997.
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.
securities.
3
<PAGE> 9
THE FIRST EXCHANGE PROPOSAL
See discussion of "The Exchange Proposal--Terms of the Exchange Agreement"
"-- Terms of the Series C Preferred Stock"; and "-- Interests of Certain Persons
in the Exchange Proposal" in the May 21, 1997 Proxy Statement.
THE SECOND EXCHANGE PROPOSAL
REASONS FOR THE SECOND EXCHANGE
Subsequent to the mailing of the Proxy Statement, Hollinger Inc. requested
that the Company consider a modification to the terms of the Second Exchange
described in the Proxy Statement. Pursuant to its request, Hollinger Inc. asked
the Company to enter into an agreement providing for an exchange of securities
as described in the Second Exchange Proposal set forth in this Supplement in
lieu of the Second Exchange described in the Proxy Statement. Hollinger Inc.
advised the Company that in making its request it had no specific plans or
proposals regarding the Company or its securities and that it was proposing the
modified exchange of securities solely to increase its flexibility and as part
of its general tax, financing and corporate planning in connection with its
holding of the Company's securities.
Pursuant to the documentation entered into by Hollinger Inc. and the
Company in connection with the Canadian Newspaper Transaction, Hollinger Inc.'s
request was referred to the Special Committee for its consideration. Based on
Hollinger Inc.'s representations to the Company as described in the preceding
paragraph and because the Second Exchange Proposal will have no net effect on
Hollinger Inc.'s aggregate equity or voting interests in the Company and no
adverse tax or other impact upon the Company, the Special Committee approved the
Second Exchange Proposal and recommended its adoption.
TERMS OF THE AMENDED AND RESTATED SECOND EXCHANGE AGREEMENT
The Company, Hollinger Inc., UniMedia Holding and another subsidiary of
Hollinger Inc. entered into the Amended and Restated Second Exchange Agreement
(the "Amended and Restated Second Exchange Agreement") pursuant to which the
Company, subject to stockholder approval, agreed to issue (a) 7,211,649 shares
of the Company's newly-authorized Series C Preferred Stock (valued for these
purposes at approximately $78.25 million) (including up to 7,211,649 shares of
Class A Common Stock into which the shares of Series C Preferred Stock are
convertible) in exchange for 739,500 shares of Series A Preferred Stock (valued
for these purposes at approximately $78.25 million); (b) 739,500 shares of
newly-authorized Series D Preferred Stock (valued for these purposes at
approximately $78.25 million) (including the shares of Class A Common Stock into
which such shares are convertible) and 1,082,441 shares of Class A Common Stock
(valued for these purposes at approximately $11.75 million), in exchange for the
8,294,090 shares of Series C Preferred Stock (valued for these purposes at
approximately $90 million); and (c) 1,082,441 of Series C Preferred Stock
(valued for these purposes at approximately $11.75 million) (including up to
1,082,441 shares of Class A Common Stock into which the shares of Series C are
convertible) for 1,082,441 of Class A Common Stock (valued for these purposes at
approximately $11.75 million). The Second Exchange, as contemplated by the
Amended and Restated Second Exchange Agreement, would occur immediately
following the First Exchange, subject to receiving the requisite approval of the
stockholders of the Company. A copy of the Amended and Restated Second Exchange
Agreement is attached to this Supplement as Annex 1 and is incorporated by
reference herein in its entirety. The Amended and Restated Second Exchange
Agreement amends and restates in its entirety the Second Exchange Agreement
attached as Annex C to the Proxy Statement dated May 21, 1997.
There will be no net effect on Hollinger Inc.'s aggregate equity or voting
interests in the Company, and there will be no adverse tax or other impact upon
the Company, resulting from the modified Second Exchange Proposal.
In the event stockholder approval of the Second Exchange Proposal is not
obtained, none of the exchanges contemplated therein will occur.
4
<PAGE> 10
INTERESTS OF CERTAIN PERSONS IN THE SECOND EXCHANGE PROPOSAL
In considering the Second Exchange Proposal, the Company's stockholders
should be aware that Hollinger Inc. is the majority stockholder of the Company
and that certain members of the Company's management and its Board of Directors
are also officers, directors and/or shareholders of Hollinger Inc. and thus have
certain interests in the Second Exchange Proposal that may present them with
actual or potential conflicts of interest in connection with the Second Exchange
Proposal. See the discussion in the Proxy Statement dated May 21, 1997 under
"The Company--Certain Relationships and Related Transactions."
TERMS OF SERIES D PREFERRED STOCK
The Company's newly-authorized Series D Preferred Stock will consist of
739,500 shares of Series D Preferred Stock. The shares of the Series D Preferred
Stock will be entitled to receive cumulative cash dividends, payable quarterly.
The amount of each dividend per share will be equal to the aggregate amount (if
any) of ordinary course cash dividends paid during the preceding calendar
quarter on 7,395,000 Southam Common Shares owned beneficially, directly or
indirectly, by the Company, divided by 739,500. If at any time full cumulative
dividends on the shares of the Series D Preferred Stock have not been and are
not being contemporaneously paid, no dividend or distribution shall be declared
or paid on the Common Stock or any preferred Stock ranking junior to the Series
D Preferred Stock as to dividend or liquidation rights, and no shares of Common
Stock or the Company's preferred stock (except shares senior to the Series D
Preferred Stock as to dividend and liquidation rights) shall be purchased,
redeemed or acquired by the Company, subject to certain exceptions including
stock dividends payable in shares of junior capital stock, the acquisition of
stock ranking junior to the Series D Preferred Stock as to dividend and
liquidation rights in exchange for or out of the net cash proceeds from the
contemporaneous sale of junior stock, the redemption in whole of the shares of
the Series D Preferred Stock, offers to purchase shares made on the same terms
to all holders of shares of the Series D Preferred Stock and each other series
of Preferred Stock ranking on a parity with the Series D Preferred Stock, and
dividends on preferred stock ranking junior as to dividend rights if full
cumulative dividends on the shares of the Series D Preferred Stock to the next
preceding dividend date for the Series D Preferred Stock (or the date of the
payment on the junior preferred stock, if identical to a dividend date for the
Series D Preferred Stock) have been or are contemporaneously declared and paid
or set apart for payment.
The shares of the Series D Preferred Stock will be redeemable in whole or
in part, at any time and from time to time, subject to restrictions in the
Company's existing credit facilities, by the Company or by a holder of such
shares. Hollinger Inc., the direct and/or indirect holder of all of the
outstanding shares of Series A Preferred Stock, has agreed pursuant to the Share
Exchange Agreement (defined below) to limit the exercise of its redemption
rights to a number of Southam Common Shares that at the time of such exercise
have been delivered to the Company free and clear of encumbrances other than
certain encumbrances. The redemption price and liquidation preference per share
of the Series D Preferred Stock will be Cdn. $146.625 (10 times the average
closing market price per share of the Southam Common Shares on the Toronto Stock
Exchange during the 20 business days preceding the date of the Share Exchange
Agreement, dated July 19, 1995, between Hollinger Inc. and the Company, as
amended (the "Share Exchange Agreement"), plus an amount equal to accrued and
unpaid dividends to the date fixed for redemption. A holder exercising
redemption rights must give notice to the Company not less than 180 and not more
than 240 days prior to the redemption date if the aggregate redemption price of
the shares to be so redeemed and shares of the Series D Preferred Stock redeemed
or to be redeemed prior to such redemption date will exceed Cdn. $10,000,000. If
the aggregate redemption price of the shares to be so redeemed and shares of the
Series D Preferred Stock redeemed or to be redeemed prior to the redemption date
does not exceed Cdn. $10,000,000, a holder exercising redemption rights must
give notice to the Company not less than 15 and not more than 60 days prior to
the redemption date. Shares of Common Stock or of any other stock ranking junior
to the Series D Preferred Stock as to dividend or liquidation rights may not be
purchased, redeemed or acquired by the Company if after giving effect thereto
the remaining net assets of the Company would be less than the aggregate
liquidation preference of the Series D Preferred Stock and each series of
preferred stock ranking, as to liquidation rights, on a parity
5
<PAGE> 11
with or senior to the Series D Preferred Stock, or if at the time thereof the
Company is insolvent or would become so as a result thereof.
A holder or holders of shares of the Series D Preferred Stock will be able
to convert such shares at any time into shares of Class A Common Stock of the
Company. The conversion price will initially be based upon the Canadian dollar
equivalent of $14.00 per share of Class A Common Stock, subject to adjustment
upon the occurrence of any of the following events: the subdivision, combination
or reclassification of outstanding shares of Common Stock; a distribution or
dividend to holders of Common Stock paid in shares of Common Stock or other
capital stock of the Company; the distribution of rights or warrants to all
holders of Common Stock entitling them for a period expiring within 60 days to
acquire shares of Common Stock at a price per share less than the then Current
Market Price Per Share (as defined) of the Common Stock; and the distribution to
all holders of Common Stock of any assets or debt securities or any rights or
warrants to purchase securities of the Company, not including dividends or
distributions paid in cash out of consolidated current or retained earnings per
the Company's books, and not including rights or warrants mentioned above. No
adjustment in the conversion price need be made unless adjustment would increase
or decrease the conversion price by at least one percent. In the event of any
capital reorganization, reclassification, consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of the
Company's assets to another corporation, each holder of shares of the Series D
Preferred Stock will have the right to convert such shares into such shares of
stock, securities or assets as such holder would have owned immediately after
the transaction if the shares had been converted immediately prior to the
effective date of the transaction, and adjustments are to be provided for events
subsequent to such transaction. In addition, the Company will be permitted to
make such reductions in the conversion price as it considers to be advisable in
order that any event treated for federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the holders of Common Stock or to
diminish any income taxes payable because of such event.
The shares of Series D Preferred Stock will be non-voting, rank on a parity
with each other series of preferred stock except as specified by the Board of
Directors when such other series is created, and will be subject to certain
restrictions on transfer.
Any holder of Series D Preferred Stock will be able to pledge such shares
to a pledgee pursuant to a bona fide pledge of such shares as collateral
security for indebtedness or other obligations due to the pledgee, provided that
such shall remain subject to, and upon foreclosure, realization or other similar
action by the pledge, shall be transferred only in accordance with, the transfer
restrictions set forth in the Restated Certificate.
THE CHARTER PROPOSAL
For a discussion of the Charter Proposal, see "The Charter Proposal" in the
Proxy Statement dated May 21, 1997.
THE SOUTHAM PROPOSAL
SOUTHAM OFFER
Subsequent to the mailing of the Proxy Statement dated May 21, 1997, HCPH
initiated a take-over bid to acquire control over all the common shares of
Southam (the "Southam Offer") not owned by HCPH or any United States holder of
Southam Common Shares. Currently, HCPH owns 50.45% of the outstanding Southam
Common Shares. The Company owns indirectly 100% of the currently outstanding
non-voting shares, 100% of the outstanding non-voting preference shares, and 50%
of the outstanding voting preference shares of HCPH. The remaining 50% of HCPH's
outstanding voting preference shares are owned by Hollinger Inc., which owns a
controlling interest in the Company. The complete terms of the take-over bid are
contained in the HCPH Offering Circular dated May 15, 1997, as amended pursuant
to Notices of Extension and Variation dated June 12, 1997 and June 26, 1997
(collectively, the "Southam Circular"). The Company's Board of Directors
approved the making of the bid on April 30, 1997. The Southam Circular relates
to the offer by HCPH of Cdn. $13.50 in cash and one newly-issued HCPH Special
Share for each of the Southam
6
<PAGE> 12
Common Shares. The Southam Offer expired at 5:00 p.m. (Toronto time) on Monday,
July 7, 1997 (the "Expiry Time"). HCPH has announced that it does not intend to
further vary the Southam Offer, and that it intends, subject to the satisfaction
of the remaining conditions of the offer, to take up and pay for all Southam
Common Shares validly deposited and not withdrawn under the Southam Offer,
regardless of the number of shares tendered, at the Expiry Time. On June 13,
1997, Southam's Board of Directors, based upon the recommendation of a special
committee of independent directors, recommended to Southam shareholders that the
Southam Offer, as amended, be accepted and that shareholders tender their
Southam Common Shares in response to the Southam Offer.
Hollinger Inc. has announced that, subject to regulatory approval, if
Southam Common Shares are taken up under the Southam Offer, in addition to the
foregoing, it will also offer to non-United States holders of its 7.00%
Southam-linked debentures (the "Debentures") the ability to elect to receive
similar consideration to that offered to Southam shareholders pursuant to the
Southam Offer. Specifically, debentureholders will be entitled to elect to
receive the conversion value for each Cdn. $1,000.00 principal amount of
Debentures by the payment of Cdn. $771.43 in cash and the balance (Cdn. $571.43)
through the issue of 57.143 HCPH Special Shares with the same terms as those
issued under the bid to Southam shareholders. So long as the HCPH Special Share
alternative is available to debentureholders, they will continue to have the
right to receive from Hollinger Inc. the conversion value in cash only (with
accrued interest). The Company and Hollinger Inc. intend to enter into
appropriate arrangements regarding the issuance or transfer to Hollinger Inc. of
a sufficient number of HCPH Special Shares to permit satisfaction of such
conversion rights by debentureholders, in consideration for the transfer to, or
exchange or redemption by, the Company or its subsidiaries of shares of the
Company's newly issued Series D Preferred Stock of equivalent value.
HCPH EXCHANGE INDENTURE
The HCPH Special Shares will be issued subject to, and with the benefit of,
an Exchange Indenture (the "HCPH Exchange Indenture") among HCPH, the Company,
and Montreal Trust Company of Canada, as trustee for the holders of the HCPH
Special Shares (the "Exchange Trustee"). The Company proposes to authorize the
issuance of a presently indeterminable number of shares of Class A Common Stock
to satisfy its obligations under the HCPH Exchange Indenture.
Subject to the cash payment option described below, each HCPH Special Share
will be automatically exchanged (the "Mandatory Exchange") on June 26, 2000 (the
"Mandatory Exchange Date") into a number (the "Mandatory Exchange Number") of
newly issued shares of the Company's Class A Common Stock equal to (a) $8.88
less the amount of dividends per share (to a maximum of $1.67) paid on the HCPH
Special Shares up to the Mandatory Exchange Date (the "Base Amount") divided by
(b) 95% of the then Current Market Price of Class A Common Stock.
The Mandatory Exchange Date will be accelerated upon the occurrence of
certain events, including (a) the insolvency, bankruptcy, liquidation,
dissolution or winding up of HCPH, the Company or Hollinger International
Publishing Inc., the Company's wholly owned subsidiary ("Publishing"); (b) a
payment default under the Second Amended and Restated Credit Agreement dated as
of April 7, 1997, among HCPH, Publishing and certain financial institutions, as
amended or supplemented from time to time (the "Bank Credit Facility") or
default in payment (after the expiry of any cure or grace period) of principal
of or interest on any other indebtedness of HCPH, the Company or Publishing
which, in the aggregate, exceeds $25,000,000 ("Material Indebtedness"); or (c)
the acceleration of the maturity of indebtedness of HCPH or Publishing under the
Bank Credit Facility upon any event of default thereunder or under any other
Material Indebtedness. For these purposes, the "Current Market Price" of Class A
Common Stock on any particular date means the weighted average trading price of
the Class A Common Stock on the NYSE for the period of 20 consecutive trading
days (whether or not shares of Class A Common Stock traded on such day) ending
on the 14th day (the "Determination Date") preceding such date or, if such
shares are not then listed on the NYSE, on any stock exchange on which such
shares are listed as the directors of the Company may select for this purpose
or, if not listed on any stock exchange, in such over-the-counter market as the
directors of the Company with the approval of the Exchange Trustee may select
for such purpose.
7
<PAGE> 13
Subject to the cash payment option described below, each HCPH Special Share
will be exchangeable at the option of the holder (an "Optional Exchange") at any
time after December 23, 1997 but prior to the Mandatory Exchange Date for the
following number (each, an "Exchange Ratio") of shares of Class A Common Stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF
CLASS A
DATE OF OPTIONAL EXCHANGE COMMON STOCK
------------------------- ------------
<S> <C>
(a) after December 23, 1997 but on or before June 23, 1998;... 0.510
(b) thereafter but on or before December 23, 1998;............ 0.530
(c) thereafter but on or before June 23, 1999;................ 0.550
(d) thereafter but on or before December 23, 1999;............ 0.570
(e) thereafter but on or before June 8, 2000; and............. 0.590
(f) thereafter but before June 26, 2000....................... 0.602
</TABLE>
Upon either the Mandatory Exchange or an Optional Exchange, the Company has
the option, in lieu of delivering all or any of the Class A Common Stock
issuable on exchange, to make a cash payment in an amount equal to, in the case
of a Mandatory Exchange, a portion specified by the Company of the Base Amount
for each HCPH Special Share and, in the case of Optional Exchange, the price per
share for the last trade of a board lot on the NYSE prior to the date of
Optional Exchange of all or such portion of the Class A Common Stock as is
specified by the Company.
The HCPH Exchange Indenture provides for the adjustment of the terms of the
Optional Exchange on the occurrence of (a) the subdivision of the Class A Common
Stock into a greater number of shares; (b) the consolidation of the Class A
Common Stock into a smaller number of shares; (c) the issuance by the Company to
all or substantially all holders of Class A Common Stock, or the distribution on
the Class A Common Stock by the Company, of Class A Common Stock or securities
convertible into or exchangeable for Class A Common Stock (other than certain
dividends) (each of the foregoing "Class A Share Reorganization"); (d) the
issuance of rights, options, or warrants to all or substantially all holders of
Class A Common Stock entitling the holders to subscribe for or purchase Class A
Common Stock or securities exchangeable for or convertible into Class A Common
Stock with an average price (in the case of a right, option, or warrant to
subscribe for or purchase Class A Common Stock) or conversion or exchange price
(in the case of a right, option, or warrant to subscribe for or purchase
securities convertible into or exchangeable for Class A Common Stock) of less
than 95% of the Current Market Price of the Class A Common Stock on the record
date for the issuance of such rights, options, or warrants; or (e) the issuance
or distribution to all or substantially all holders of Class A Common Stock of
other securities or property (other than certain dividends). The terms of the
Mandatory Exchange and Optional Exchange will also be adjusted as a result of
(i) any reclassification of the Company's Class A Common Stock (other than a
Class A Share Reorganization); (ii) an amalgamation, merger or arrangement of
the Company with another entity; (iii) a transfer by the Company of all or
substantially all of its assets.
Adjustments will also be made in the event of any similar action by HCPH in
respect of the HCPH Special Shares. The Company will not be required to make any
adjustment unless the cumulative effect of the adjustment and other adjustments
not previously made on the terms then in effect is at least 1%.
THE TOTAL NUMBER OF SHARES OF CLASS A COMMON STOCK TO BE ISSUED ON THE
MANDATORY EXCHANGE DATE AND/OR WITH RESPECT TO THE OPTIONAL EXCHANGE IS SUBJECT
TO CHANGE AND WILL BE DETERMINED BY THE COMPANY BASED ON THE TERMS AND
CONDITIONS OF THE HCPH EXCHANGE INDENTURE.
No fractional share of the Company's Class A Common Stock will be issued on
the Mandatory Exchange or any Optional Exchange. In lieu of fractional shares,
the holder will receive in a Mandatory Exchange a cash payment for the balance
of the Base Amount not satisfied by the issuance of Class A Common Stock and in
an Optional Exchange a cash payment equal to the fraction of a share to which
the holder would be entitled
8
<PAGE> 14
multiplied by the price per share for the last trade of a board lot on the NYSE
for the trade date immediately prior to the date of Optional Exchange.
The Company has agreed, at its cost, to file with the Securities and
Exchange Commission and to use all reasonable efforts to cause to be declared
effective on or before December 23, 1997 a registration statement on Form S-3
under the Securities Act of 1933 relating to the issuance of Class A Common
Stock on the Mandatory Exchange or an Optional Exchange and maintain the
effectiveness of such registration statement until the earlier of the date that
is 15 days after the Mandatory Exchange Date and the date on which all HCPH
Special Shares shall have been exchanged for Class A Common Stock.
The Southam Offer is not being made to residents, nationals, or citizens of
the United States and there will be no solicitation for tenders of Southam
Common Shares under the offer in the United States. The HCPH Special Shares and
the Company's obligations under the HCPH Exchange Indenture have not been
registered under the Securities Act of 1933 and may not be offered or sold in
the United States or to U.S. Persons (as defined in Regulation S under the
Securities Act of 1933) absent said registration except pursuant to an exemption
from the registration requirements of that Act.
The Company has also agreed to use all reasonable efforts to obtain on or
before December 23, 1997 a rating of the HCPH Special Shares from two credit
rating agencies one of which will be Standard & Poor's Corporation or Moody's
Investors Service, Inc.
OTHER MATTERS
The Board of Directors does not know of any other business which will come
before the Special Meeting for action by the stockholders other than the matters
specified in the accompanying Supplemental Notice of Special Meeting. If any
other matters requiring a stockholder vote properly come before the meeting, the
persons appointed in the enclosed proxy will vote in accordance with their
discretion with respect to such matters.
Kenneth L. Serota
Vice President-Law & Finance and
Secretary
Chicago, Illinois
July 11, 1997
9
<PAGE> 15
ANNEX 1
HOLLINGER INTERNATIONAL INC.
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
JULY 3, 1997
Hollinger Inc.
UniMedia Holding Company
1159670 Ontario Limited
10 Toronto Street
Toronto, Ontario Canada M5C2B7
Attention: Mr. John A. Boultbee, Vice-President, Finance and Treasury
Re: Amended and Restated Second Exchange Agreement
Dear Mr. Boultbee:
This letter ("Amended and Restated Second Exchange Agreement") amends and
restates in its entirety that certain Second Exchange Agreement dated as of May
20, 1997.
Reference is hereby made to the Exchange Agreement dated as of April 18,
1997 ("First Exchange Agreement") among Hollinger Inc., a corporation continued
under the laws of Canada ("Hollinger"), UniMedia Holding Company, a company
formed under the laws of Nova Scotia ("UniMedia"), and Hollinger International
Inc., a Delaware corporation ("International"), relating to the issuance to
UniMedia of shares of Series 1 Nonvoting Preferred Stock and of Series 2
Nonvoting Preferred Stock of International and the exchange by UniMedia and
International ("First Exchange") of the shares of Series 1 Nonvoting Preferred
Stock and Series 2 Nonvoting Preferred Stock for shares of Class A Common Stock
and Series C Convertible Preferred Stock of International in accordance with the
terms, and subject to the conditions, set forth in the First Exchange Agreement.
All capitalized terms not otherwise defined herein have the meaning ascribed to
them in the First Exchange Agreement.
As soon as practicable, but in any event no later than five (5) business
days, after completion of the First Exchange, International shall issue ("Second
Exchange"): (x) to Hollinger or any other direct or indirect wholly owned
subsidiaries of Hollinger as Hollinger may designate (any such subsidiary a
"Designated Subsidiary"), shares of Series C Convertible Preferred Stock in
exchange for all (but not less than all) of the 739,500 shares of Series A
Redeemable Convertible Preferred Stock, par value $.01 per share, of
International ("Series A Preferred Shares"), (y) to UniMedia or a Designated
Subsidiary, shares of Class A Common Stock and shares of Series D Redeemable
Convertible Preferred Stock (having the relative rights and preferences set
forth in the form of Certificate of Designations attached hereto as Exhibit 1 in
exchange for all (but not less than all) of the 8,294,090 shares of Series C
Convertible Preferred Stock ("UniMedia Series C Preferred Shares") issued to
UniMedia pursuant to the First Exchange (which shall be immediately cancelled),
and (z) to 1159670 or a Designated Subsidiary, newly issued shares of Series C
Convertible Preferred Stock in exchange for 1,082,441 shares of Class A Common
Stock ("1159670 Class A Common Shares") as set forth below:
(i) in exchange for the Series A Preferred Shares, 7,211,649 newly
issued shares of Series C Convertible Preferred Stock, and
(ii) in exchange for the UniMedia Series C Preferred Shares, 739,500
newly issued shares of Series D Redeemable Convertible Preferred Stock and
1,082,441 newly issued shares of Class A Common Shares, and
(iii) in exchange for the 1159670 Class A Common Shares, 1,082,441
newly issued shares of Series C Convertible Preferred Stock.
10
<PAGE> 16
Hollinger, as soon as practicable but in any event no later than five (5)
business days after Stockholder Approval, will furnish to International a
certificate ("Officer's Certificate"), executed by a duly authorized officer of
Hollinger, identifying each of the Designated Subsidiaries that will be party to
each exchange described in the immediately preceding paragraph.
The Second Exchange shall be mandatory and shall not require any request or
other action by, or notice to, Hollinger, 1159670, UniMedia, the Designated
Subsidiaries or International. The obligations of the parties to this Amended
and Restated Second Exchange Agreement to perform the Second Exchange are
conditioned upon and the Second Exchange will occur only after: (i) receipt by
International of the approval by its stockholders of the proposed stock
issuances contemplated by both the First Exchange and the Second Exchange and
(ii) completion of the First Exchange.
Immediately upon the Second Exchange dividends will cease to accrue in
respect of the Series A Preferred Shares, the UniMedia Series C Preferred Shares
and the 1159670 Class A Common Shares. Hollinger, UniMedia, 1159670 and/or each
Designated Subsidiary will promptly tender all stock certificates evidencing
the, Series A Preferred Shares, the UniMedia Series C Preferred Shares and the
1159670 Class A Common Shares in order to permit International to complete the
Second Exchange.
Upon completion of the First Exchange and for a period of thirty (30) days
thereafter pending completion of the Second Exchange, Hollinger and UniMedia
shall not exercise the registration rights granted under the First Exchange
Agreement. The shares of Class A Common Stock and Series C Convertible Preferred
Stock issued upon the Second Exchange will not be registered under the
Securities Act at the time of issuance, and the certificates evidencing such
shares will bear the legends set forth in Exhibit 2 attached hereto. At the
request of Hollinger, UniMedia, 1159670 and/or the Designated Subsidiaries,
International agrees to take commercially reasonable efforts to cause the
registration under the Securities Act of the shares of Class A Common Stock and
Series C Convertible Preferred Stock issued to Hollinger, UniMedia, 1159670
and/or the Designated Subsidiaries upon the Second Exchange and to list such
newly issued shares of Class A Common Stock and Series C Convertible Preferred
Stock on the New York Stock Exchange, in each case as soon as practicable after
the issuance thereof.
International, Hollinger, UniMedia, 1159670 and the Designated Subsidiaries
shall each use its reasonable commercial efforts to perform and fulfil all
conditions and obligations on its part to be performed and fulfilled under this
Amended and Restated Second Exchange Agreement, to the end that the transactions
contemplated by this Amended and Restated Second Exchange Agreement shall be
fully carried out. At the Stockholders Meeting, Hollinger, as the holder,
directly or indirectly through its subsidiaries, of all of the outstanding Class
B Common Stock, and 33,610,754 shares of Class A Common Stock, has agreed to
vote or cause to be voted all such shares of International held by Hollinger or
its subsidiaries in favor of the second exchange proposals and all other
proposals relating thereto.
This Amended and Restated Second Exchange Agreement may be amended or
modified, but only by a written agreement that identifies this Amended and
Restated Second Exchange Agreement and is signed by all of the parties hereto.
Any such amendment or modification shall be effective as to International only
if in writing signed by the Chairman of the Special Committee on behalf of
International. In addition, International shall not waive any obligations of
1159670, UniMedia or the Designated Subsidiaries hereunder or any other benefits
to International arising under this Amended and Restated Second Exchange
Agreement
11
<PAGE> 17
unless approved by the Board of Directors of International following receipt of
a favorable recommendation thereof by the Special Committee.
Very truly yours,
HOLLINGER INTERNATIONAL INC.
By: /s/ KENNETH L. SEROTA
----------------------------
Name: Kenneth L. Serota
Title: Vice President-Law &
Finance and Secretary
Agreed and Accepted
this 3rd day of July, 1997:
HOLLINGER INC.
By: /s/ J. A. BOULTBEE
----------------------------------
Name: J. A. Boultbee
Title: Vice President,
Finance and Treasury
UNIMEDIA HOLDING COMPANY
By: /s/ J. A. BOULTBEE
----------------------------------
Name: J. A. Boultbee
Title: Vice President,
Finance and Treasury
1159670 ONTARIO LIMITED
By: /s/ J. A. BOULTBEE
----------------------------------
Name: J. A. Boultbee
Title: Vice President,
Finance and Treasury
12
<PAGE> 18
P
R HOLLINGER INTERNATIONAL INC.
O THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
X OF HOLLINGER INTERNATIONAL INC.
Y SPECIAL MEETING OF STOCKHOLDERS TO BE HELD JULY 21, 1997
The undersigned holder of shares of Class A Common Stock, par value $.01 per
share ("Class A Common Stock"), Class B Common Stock, par value $.01 per share
("Class B Common Stock") and/or Series B Convertible Preferred Stock, par value
$.01 per share ("Series B Preferred Stock") of Hollinger International Inc. (the
"Company"), hereby appoints Kenneth L. Serota and Paul B. Healy, individually,
with full power of substitution in each of them, as proxy or proxies to
represent the undersigned and vote all shares of Class A Common Stock, Class B
Common Stock and/or Series B Preferred Stock of the Company which the
undersigned would be entitled to vote if personally present and voting at the
Special Meeting of Stockholders of the Company to be held on July 21, 1997 at
11:00 a.m., local time, at the Atrium, 7th Floor of The Sun-Times Building,
401 North Wabash Avenue, Chicago, Illinois 60611, and at any adjournments or
postponements thereof, upon all matters coming before such meeting. Said
proxies are directed to vote as set forth below and, in their discretion, upon
such other matters as may properly come before the meeting.
SEE BELOW
Please mark, sign, date and return the proxy card promptly using the enclosed
postage paid envelope.
FOLD AND DETACH HERE
(1) Authorization of the issuance to UniMedia Holding Company ("UniMedia
Holding"), a subsidiary of Hollinger Inc. and/or another designated subsidiary
of Hollinger Inc., of 3,207,045 shares of Class A Common Stock, and 8,294,090
shares of newly-authorized Series C Convertible Preferred Stock, par value $.01
per share of the Company (the "Series C Preferred Stock") (including up to
8,294,090 shares of Class A Common Stock into which such shares are
convertible), in exchange (the "First Exchange") for all of the outstanding
shares of the Company's Series 1 Nonvoting Preferred Stock and Series 2
Nonvoting Preferred Stock held by UniMedia Holding and/or such other designated
subsidiary of Hollinger Inc. (the "First Exchange Proposal").
(2) Authorization of the following exchanges (collectively, the "Second
Exchange") to occur immediately following the First Exchange: (a) the issuance
of 7,211,649 shares of the Company's Series C Preferred Stock (including up to
7,211,649 shares of Class A Common Stock into which the shares of Series C
Preferred Stock are convertible) in exchange for 739,500 shares of Series A
Convertible Redeemable Preferred Stock, par value $.01 per share, of the Company
("Series A Preferred Stock") held by Hollinger Inc. and/or its designated
subsidiary; (b) the issuance of 739,500 shares of a newly-authorized Series D
Convertible Redeemable Preferred Stock, par value $.01 per share, of the Company
("Series D Preferred Stock") (including the shares of Class A Common Stock into
which such shares are convertible) and 1,082,441 shares of Class A Common Stock
in exchange for the 8,294,090 shares of Series C Preferred Stock issued in the
First Exchange and held by Hollinger Inc. and/or its designated subsidiary; and
(c) the issuance of 1,082,441 shares of Series C Preferred Stock (including
1,082,441 shares of Class A Common Stock into which the shares of Series C
Preferred Stock are convertible) in exchange for 1,082,441 shares of Class A
Common Stock held by Hollinger Inc. and/or its designated subsidiary
(collectively, the "Second Exchange Proposal").
(3) Approval and adoption of an amendment to the Restated Certificate of
Incorporation, as amended (the "Restated Certificate") of the Company, to
increase the authorized preferred stock of the Company from 20,000,000 shares of
Preferred Stock, par value $.01 per share ("Preferred Stock"), to 120,000,000
shares of Preferred Stock (the "Charter Proposal").
(4) Authorization of the issuance of an indeterminate number of shares of Class
A Common Stock upon the exchange of the Nonvoting Special Shares (the "HCPH
Special Shares") of Hollinger Canadian Publishing Holdings Inc. ("HCPH"), a
Canadian company in the Company's consolidated group, that may be issued in
connection with (a) the offer by HCPH to purchase all of the common shares (the
"Southam Common Shares") of Southam Inc. ("Southam") not already owned by HCPH
or any U.S. holder of Southam Common Shares pursuant to an Exchange Indenture to
be entered into by the Company, HCPH and Montreal Trust Company of Canada, as
trustee, and (b) any related issuance or transfer of HCPH Special Shares to
Hollinger Inc. and/or its designated subsidiary in connection with the early
redemption or conversion of the 7.00% Southam-linked convertible debentures
issued by Hollinger Inc. (the "Southam Proposal").
<PAGE> 19
[ X ] PLEASE MARK YOUR
VOTES AS IN THIS 4252
EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HOLLINGER
INTERNATIONAL. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR THE FIRST EXCHANGE PROPOSAL, THE SECOND EXCHANGE PROPOSAL,
THE CHARTER PROPOSAL AND THE SOUTHAM PROPOSAL IN THEIR DISCRETION, THE PROXIES
ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING.
The Board of Directors recommends a vote FOR all proposals.
FOR ABSTAIN AGAINST
1. FIRST [ ] [ ] [ ]
EXCHANGE
PROPOSAL
(see opposite side)
2. SECOND EXCHANGE [ ] [ ] [ ]
PROPOSAL
(see opposite side)
3. CHARTER [ ] [ ] [ ]
PROPOSAL
(see opposite side)
4. SOUTHAM [ ] [ ] [ ]
PROPOSAL
(see opposite side)
5. OTHER BUSINESS. The proxies shall be authorized to vote on any other business
properly brought before the meeting and any adjournments or postponements
thereof in accordance with their discretion.
I WILL ATTEND [ ]
THE SPECIAL MEETING
I WILL NOT ATTEND [ ]
THE SPECIAL MEETING
SIGNATURE(S) ___________________________________ DATE _________________, 1997
NOTE: Please sign EXACTLY as your name appears hereon. When signing as executor,
trustee, etc., or as officer of a corporation, give full title as such.
For joint accounts, please obtain both signatures.
FOLD AND DETACH HERE
PLEASE NOTE THAT ANY PREVIOUSLY SUBMITTED PROXY CARD IS
NO LONGER VALID. ALL VOTES MUST BE CAST ON THIS PROXY IN ORDER
FOR YOUR SHARES TO BE REPRESENTED AT THE SPECIAL MEETING.
