<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
SCHEDULE 13E-4
Issuer Tender Offer Statement
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
HOLLINGER INTERNATIONAL INC.
(Name of Issuer)
HOLLINGER INTERNATIONAL INC.
(Name of Person(s) Filing Statement)
9-3/4% PRIDES Depositary Shares
(representing Series B Convertible Preferred Stock)
(Title of Class of Securities)
435569207
(CUSIP Number of Class of Securities)
Mark S. Kipnis, Esq.
Hollinger International Inc.
Chicago Sun-Times Building
401 North Wabash Avenue
Chicago, IL 60611
(312) 321-2299
Copy to:
William P. Rogers, Jr., Esq.
Cravath, Swaine & Moore
825 Eighth Avenue - Worldwide Plaza
New York, New York 10019
(212) 474-1000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
July 8, 1998
(Date Tender Offer First Published, Sent, or Given to Security Holders)
================================================================================
Transaction Value* Amount of Filing Fee*
- --------------------------------------------------------------------------------
$326,671,875 $65,334.38
================================================================================
*The Transaction Value, calculated solely for purposes of determining the
filing fee is equal to 20,700,000 (the maximum number of PRIDES for which
the offer is made multiplied by the average ($15.78125) of the high and
low prices of a PRIDES on the New York Stock Exchange on July 2, 1998. The
filing fee, pursuant to Rule 0-11 of the Securities Exchange Act of 1934,
is calculated as one-fiftieth of one percent of the Transaction Value.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Exhibit Index is on page 5
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ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Hollinger International Inc., a Delaware
corporation (the "Company"). The Company's principal executive offices are
located at 401 North Wabash Avenue, Chicago, Illinois 60611.
(b) The class of securities to which this statement relates is the Company's
9-3/4% PRIDES Depositary Shares (the "PRIDES"). Each PRIDES represents one-half
share of the Company's Series B Convertible Preferred Stock, par value $0.01 per
share. As of June 30, 1998, there were 20,700,000 PRIDES outstanding. The
Company is inviting holders to tender PRIDES to the Company in exchange for 0.92
shares of Class A Common Stock, $0.01 par value per share (the "Class A Common
Stock") of the Company for each PRIDES, pursuant to the Offering Circular dated
July 8, 1998 (the "Offering Circular") and the related Letter of Transmittal
(which together constitute the "Exchange Offer"), copies of which are attached
hereto as Exhibits (a)(1) and (a)(2), respectively, and are herein incorporated
by reference. All PRIDES properly tendered (as determined by the Company in
accordance with the Offering Circular) and not withdrawn will be exchanged for
Class A Common Stock upon the terms and subject to conditions of the Exchange
Offer. To the best of the Company's knowledge, no PRIDES are to be purchased
from any officer, director or affiliate of the Company.
(c) Reference is hereby made to the information set forth under the caption
"Market and Price Ranges of Class A Common Stock and PRIDES" in the Offering
Circular, which Section is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) Reference is hereby made to the information set forth under the captions
"Unaudited Pro Forma Consolidated Financial Information," "Capitalization" and
"The Exchange Offer" in the Offering Circular, which Sections are incorporated
herein by reference.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATES.
Reference is hereby made to the cover page of the Offering Circular, the
information set forth under the caption "The Exchange Offer--Certain Conditions
of the Exchange Offer", "Market and Price Ranges of Class A Common Stock and
PRIDES" and "Purposes and Effects of the Exchange Offer" in the Offering
Circular, which Sections are incorporated herein by reference. Tendered PRIDES
accepted for exchange by the Company will be retired.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) See the information set forth under the captions "Unaudited Pro Forma
Consolidated Financial Information" and "Capitalization" in the Offering
Circular, which Sections are specifically incorporated herein by reference.
(f) Not applicable
(g) Not applicable.
(h) and (i) The exchange of the PRIDES pursuant to the Exchange Offer will
reduce the number of outstanding PRIDES and the number of holders of PRIDES. In
the event that, as a result of the Exchange Offer, the aggregate market value of
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the publicly held PRIDES is less than $2,000,000, or the number of publicly
held PRIDES is less than 100,000, the PRIDES would become eligible for removal
from listing on the New York Stock Exchange, Inc. (the "NYSE"), although the
NYSE may continue to list the PRIDES, if any, which remain outstanding after
the consummation of the Exchange Offer. In the event that there are fewer than
300 holders of PRIDES, such securities would become eligible for termination of
registration under the Securities Exchange Act of 1934, as amended, pursuant to
Section 12(g)(4) thereof.
(j) Not applicable.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
None.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
None.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
None.
ITEM 7. FINANCIAL INFORMATION.
(a)(1) The audited consolidated financial statements for the years ended
December 31, 1996 and 1997, are included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997, attached hereto as Exhibit (g)(1),
which is incorporated herein by reference.
(a)(2) The unaudited condensed consolidated balance sheets and comparative
year-to-date condensed consolidated statements of operations and condensed
consolidated statements of cash flows and related earnings per share amounts are
included in the Company's Quarterly Report on Form 10-Q for the three months
ended March 31, 1998, attached hereto as Exhibit (g)(2), and are incorporated
herein by reference.
(a)(3) The ratios of earnings to fixed charges, which are included under the
caption "Selected Historical Consolidated Financial Data" in the Offering
Circular, are incorporated herein by reference.
(a)(4) The book values per share, which are included under the caption "Selected
Historical Consolidated Financial Data" in the Offering Circular, are
incorporated herein by reference.
(b)(1) Selected balance sheet items, on a pro forma basis, as of December 31,
1997, and March 31, 1998, which are included under the caption "Unaudited Pro
Forma Financial Information" in the Offering Circular, are incorporated herein
by reference.
(b)(2) The pro forma income statement, earnings per share amounts and ratios of
income to fixed charges for the year ended December 31, 1997, and the three
months ended March 31, 1998, which are included under the caption "Unaudited Pro
Forma Financial Information" in the Offering Circular, are incorporated herein
by reference.
(b)(3) The pro forma book value per common share as of December 31, 1997, and
March 31, 1998, which are included under the caption "Unaudited Pro Forma
Financial Information" in the Offering Circular, are incorporated herein by
reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
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(b) Reference is hereby made to "The Exchange Offer--Certain Legal Matters;
Regulatory and Foreign Approvals" of the Offering Circular, which Section is
incorporated herein by reference.
(c) Reference is hereby made to "Purposes and Effects of the Exchange Offer" of
the Offering Circular, which Section is incorporated herein by reference.
(d) None.
(e) Reference is hereby made to the Offering Circular and the Letter of
Transmittal, which are each incorporated herein by reference in their entirety.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offering Circular dated July 8, 1998.
(a)(2) Letter of Transmittal (together with Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9).
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from the Company's Chairman of the Board and Chief Executive
Officer to holders of PRIDES dated July 8, 1998.
(a)(5) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Nominees.
(a)(6) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to their clients.
(a)(7) Text of press release dated June 29, 1998.
(a)(8) Text of press release dated July 8, 1998.
(b) Not applicable.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
(g)(1) The Company's Annual Report on Form 10-K for the year ended December 31,
1997.
(g)(2) The Company's Quarterly Report on Form 10-Q for the three months ended
March 31, 1998.
3
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
HOLLINGER INTERNATIONAL INC.
July 8, 1998 By:/s/ Mark S. Kipnis
--------------------------
Name: Mark S. Kipnis
Title: Vice President and
Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS PAGE
<S> <C> <C>
(a)(1) Offering Circular dated July 8, 1998.............................................................
(a)(2) Letter of Transmittal (together with Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9).....................................
(a)(3) Notice of Guaranteed Delivery....................................................................
(a)(4) Letter from the Company's Chairman of the Board and Chief Executive Officer to
holders of PRIDES dated July 8, 1998.............................................................
(a)(5) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees..........................................................................
(a)(6) Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees to their clients.........................................
(a)(7) Text of press release dated June 29, 1998........................................................
(a)(8) Text of press release dated July 8, 1998.........................................................
(g)(1) Annual Report on Form 10-K of Hollinger International Inc. for the year
ended December 31, 1997 (File No. 001-14164)...............................................*
(g)(2) Quarterly Report on Form 10-Q of Hollinger International Inc. for the
three months ended March 31, 1998 (File No. 001-14164).....................................*
</TABLE>
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* Incorporated by reference.
5
<PAGE> 1
OFFERING CIRCULAR
HOLLINGER INTERNATIONAL INC.
OFFER TO EXCHANGE SHARES OF ITS CLASS A COMMON STOCK
FOR ANY AND ALL 9 3/4% PRIDES DEPOSITARY SHARES REPRESENTING SERIES B
CONVERTIBLE PREFERRED STOCK
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, AUGUST 4, 1998, UNLESS THE EXCHANGE OFFER IS
EXTENDED.
- --------------------------------------------------------------------------------
Hollinger International Inc., a Delaware corporation (the "Company"),
hereby offers, upon the terms and subject to the conditions set forth in this
Offering Circular and the related Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange 0.92 shares of its Class A Common
Stock, par value $0.01 per share (the "Class A Common Stock"), for each
outstanding 9 3/4% PRIDES Depositary Share (the "PRIDES"), of which 20,700,000
PRIDES are outstanding. Each PRIDES represents one-half share of the Company's
Series B Convertible Preferred Stock, par value $0.01 per share (the
"Convertible Preferred Stock"). No fractional shares of Class A Common Stock
will be issued upon exchange of the PRIDES. In lieu thereof, the Company will
pay an amount in cash determined by multiplying such fraction by the last sales
price on the Expiration Date of a share of Class A Common Stock, as reported on
the New York Stock Exchange (the "NYSE") Composite Tape.
The dividend payable on the Convertible Preferred Stock represented by the
PRIDES for the dividend period that commenced May 1, 1998, will be paid on
August 1, 1998, to holders of record on July 15, 1998. A tender of PRIDES in the
Exchange Offer will not affect the rights of holders to receive such dividend.
Dividends that accrue on the Convertible Preferred Stock represented by the
PRIDES during the dividend period that will commence August 1, 1998, have been
taken into account in determining the consideration offered in the Exchange
Offer, and no cash payment will be made with respect to dividends that accrue
during such dividend period on PRIDES tendered and accepted in the Exchange
Offer. Holders of PRIDES who do not participate in the Exchange Offer, and are
record holders on the applicable record date, will receive the regular quarterly
cash dividend for the dividend period that will commence August 1, 1998, as
declared by the Board of Directors (the "Board of Directors") of the Company.
The Exchange Offer will expire at 12:00 midnight, New York City time, on
Tuesday, August 4, 1998, unless extended (the "Expiration Date"). Subject to the
terms and conditions of the Exchange Offer, the Company will accept for exchange
any and all PRIDES which are properly tendered in the Exchange Offer and not
withdrawn prior to the Expiration Date. Tenders of PRIDES may be withdrawn at
any time prior to the Expiration Date or, unless previously accepted for
exchange, after 12:00 midnight, New York City time, on Tuesday, September 1,
1998. Holders of PRIDES accepted by the Company for exchange pursuant to the
Exchange Offer will be deemed to have waived all rights with respect to accrued
but unpaid dividends on and after August 1, 1998 on the Convertible Preferred
Stock represented by the PRIDES exchanged. Certificates for shares of Class A
Common Stock to be issued in exchange for properly tendered PRIDES will be
mailed by the Exchange Agent (as defined) promptly after the Expiration Date.
------------------------
THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF PRIDES
BEING TENDERED. THE EXCHANGE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE "THE EXCHANGE OFFER -- CERTAIN CONDITIONS OF THE EXCHANGE
OFFER."
------------------------
The PRIDES and the Class A Common Stock are listed and traded on the NYSE.
On June 29, 1998, the last full trading day before the announcement of the terms
of the Exchange Offer, the reported closing sales price of the PRIDES and the
Class A Common Stock on the NYSE Composite Tape was $14.50 per PRIDES and
$17.125 per share of Class A Common Stock, and on July 7, 1998, the last full
trading day before the commencement of the Exchange Offer, the reported closing
sales price was $15.813 per PRIDES and $17.188 per share of Class A Common
Stock. HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE PRIDES AND
THE CLASS A COMMON STOCK.
------------------------
NEITHER THE COMPANY NOR THE BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS
TO WHETHER ANY HOLDER OF PRIDES SHOULD TENDER ANY OR ALL OF SUCH HOLDER'S PRIDES
PURSUANT TO THE EXCHANGE OFFER. EACH HOLDER OF PRIDES MUST MAKE SUCH HOLDER'S
OWN DECISION WHETHER OR NOT TO TENDER PRIDES AND, IF SO, HOW MANY PRIDES TO
TENDER.
------------------------
The date of this Offering Circular is July 8, 1998.
<PAGE> 2
IMPORTANT
The Exchange Offer is being made by the Company in reliance on the
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), afforded by Section 3(a)(9) thereof. The Company
therefore will not pay any commission or other remuneration to any broker,
dealer, salesman or other person for soliciting tenders of PRIDES. Regular
employees of the Company, who will not receive additional compensation therefor,
may solicit exchanges from holders of PRIDES.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE CONTAINED
IN THIS OFFERING CIRCULAR. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE
DELIVERY OF THIS OFFERING CIRCULAR NOR ANY EXCHANGE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATIONS THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE RESPECTIVE DATES AS OF WHICH INFORMATION IS
GIVEN HEREIN. TO THE EXTENT THERE IS A MATERIAL CHANGE IN THE AFFAIRS OF THE
COMPANY AFTER THE DATE HEREOF, THE COMPANY WILL PROMPTLY DISCLOSE SUCH
INFORMATION IN A MANNER REASONABLY CALCULATED TO INFORM THE HOLDERS OF PRIDES OF
SUCH CHANGE.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
TENDERS FROM OR ON BEHALF OF, OWNERS OF PRIDES IN ANY JURISDICTION IN WHICH THE
MAKING OF THE EXCHANGE OFFER OR ITS ACCEPTANCE WOULD NOT BE IN COMPLIANCE WITH
THE LAWS OF SUCH JURISDICTION. THE COMPANY IS NOT AWARE OF ANY JURISDICTION
WHERE THE MAKING OF THE EXCHANGE OFFER OR THE TENDER OF PRIDES WOULD NOT BE IN
COMPLIANCE WITH APPLICABLE LAW. IF THE COMPANY BECOMES AWARE OF ANY JURISDICTION
WHERE THE MAKING OF THE EXCHANGE OFFER OR THE TENDER OF PRIDES IS NOT IN
COMPLIANCE WITH ANY APPLICABLE LAW, THE COMPANY WILL MAKE A GOOD FAITH EFFORT TO
COMPLY WITH SUCH LAW. IF, AFTER SUCH GOOD FAITH EFFORT, THE COMPANY CANNOT
COMPLY WITH SUCH LAW, THE EXCHANGE OFFER WILL NOT BE MADE TO (NOR WILL TENDERS
BE ACCEPTED FROM OR ON BEHALF OF) THE HOLDERS OF PRIDES RESIDING IN SUCH
JURISDICTION.
------------------------
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER,
INCLUDING THE MERITS AND RISKS INVOLVED. THE CLASS A COMMON STOCK HAS NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
Any holder of PRIDES desiring to tender all or any portion of such holder's
PRIDES should either (1) complete and sign the Letter of Transmittal or a
facsimile copy thereof in accordance with the instructions in the Letter of
Transmittal, mail or deliver it and any other documents required by the Letter
of Transmittal to First Chicago Trust Company of New York, the exchange agent
for the Exchange Offer (the "Exchange Agent"), and either mail or deliver the
certificates for such PRIDES to the Exchange Agent along with the Letter of
Transmittal or follow the procedure for book-entry transfer set forth in "The
Exchange Offer -- Procedure for Tendering PRIDES," or (2) request such holder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such holder. A HOLDER HAVING PRIDES REGISTERED IN THE NAME OF A
BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT
SUCH BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE IF SUCH
HOLDER DESIRES TO TENDER SUCH PRIDES INTO THE EXCHANGE OFFER.
HOLDERS MUST PROPERLY COMPLETE THE LETTER OF TRANSMITTAL IN ORDER TO EFFECT
A VALID TENDER OF THEIR PRIDES.
ii
<PAGE> 3
A holder who desires to tender PRIDES and whose certificates for such
PRIDES are not immediately available (or who cannot follow the procedure for
book-entry transfer on a timely basis) or who cannot transmit the Letter of
Transmittal and all other required documents to the Exchange Agent before the
Expiration Date should tender such PRIDES by following the procedure for
guaranteed delivery set forth in "The Exchange Offer -- Procedure for Tendering
PRIDES."
------------------------
Any questions or requests for assistance or for additional copies of this
Offering Circular, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at its addresses and telephone
numbers set forth on the back cover of this Offering Circular. Holders of PRIDES
may also contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Exchange Offer.
iii
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C>
AVAILABLE INFORMATION....................................... 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 1
SUMMARY OF THE EXCHANGE OFFER............................... 2
THE COMPANY................................................. 6
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA............. 7
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION...... 8
CAPITALIZATION.............................................. 10
MARKET AND PRICE RANGES OF CLASS A COMMON STOCK AND
PRIDES.................................................... 11
DIVIDENDS................................................... 12
Common Stock.............................................. 12
PRIDES.................................................... 12
PURPOSES AND EFFECTS OF THE EXCHANGE OFFER.................. 12
Purposes.................................................. 12
Certain Effects........................................... 13
THE EXCHANGE OFFER.......................................... 13
Terms of the Exchange Offer............................... 13
Procedure for Tendering PRIDES............................ 14
Withdrawal Rights......................................... 16
Acceptance of PRIDES for Exchange; Delivery of Class A
Common Stock........................................... 17
Certain Conditions of the Exchange Offer.................. 17
Certain Legal Matters; Regulatory and Foreign Approvals... 19
Extension of Tender Period; Termination; Amendments....... 19
Fees and Expenses......................................... 20
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS................... 20
DESCRIPTION OF CAPITAL STOCK................................ 21
Class A and Class B Common Stock.......................... 21
Preferred Stock........................................... 22
Transfer Agent and Registrar.............................. 25
</TABLE>
iv
<PAGE> 5
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith the Company files reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). The
reports, proxy statements and other information filed by the Company with the
SEC can be inspected and copied at the public reference facilities maintained by
the SEC at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the SEC at Seven World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street
(Suite 1400), Chicago, Illinois 60661. Copies of such material also can be
obtained at prescribed rates from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, the SEC maintains a
Website (http://www.sec.gov) that also contains such reports, proxy statements
and other information filed by the Company. Material filed by the Company can
also be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005. The Company's Schedule 13E-4 will not be available at the SEC's
regional offices.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC by the Company are incorporated
by reference in this Offering Circular:
(a) Annual Report on Form 10-K (the "1997 Form 10-K") for the year ended
December 31, 1997, filed pursuant to Section 13 of the Exchange Act; and
(b) Quarterly Report on Form 10-Q (the "Q1 1998 Form 10-Q") for the quarter
ended March 31, 1998, filed pursuant to Section 13 of the Exchange Act.
Pursuant to Rule 13e-4 under the Exchange Act, the Company has filed an
Issuer Tender Offer Statement on Schedule 13E-4 (the "Schedule 13E-4") with the
SEC. The Schedule 13E-4, including exhibits, may be inspected or copied at the
public reference facilities of the SEC in Washington, D.C. See "Available
Information."
All reports subsequently filed by the Company pursuant to Section 13(a) and
(c) of the Exchange Act and any definitive proxy or information statements filed
pursuant to Section 14 of the Exchange Act in connection with any subsequent
stockholders' meeting and any reports filed pursuant to Section 15(d) of the
Exchange Act prior to completion of the Exchange Offer shall be deemed to be
incorporated by reference into this Offering Circular and to be a part hereof
from the date of filing such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Offering Circular to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Offering Circular.
This Offering Circular incorporates by reference documents which are not
present herein or delivered herewith. The Company will provide without charge to
each person to whom this Offering Circular is delivered, on the request of any
such person, a copy of any or all of the foregoing documents incorporated herein
by reference (other than exhibits to such documents). Written or telephone
requests for such documents should be directed to the Information Agent at (800)
251-4215. In order to ensure timely delivery of documents, any such request
should be made by July 24, 1998.
1
<PAGE> 6
SUMMARY OF THE EXCHANGE OFFER
This summary is qualified in its entirety by the detailed information
appearing elsewhere in this Offering Circular or incorporated by reference
herein. Terms used in this Summary and not defined herein shall have the
meanings given to them elsewhere in this Offering Circular.
Exchange Ratio................ 0.92 shares of Class A Common Stock for each
PRIDES. The Company will aggregate all tenders
of PRIDES by a beneficial holder for purposes
of calculating the aggregate number of shares
of Class A Common Stock to be issued in
exchange for PRIDES. No fractional shares of
Class A Common Stock will be issued upon
exchange and, in lieu thereof, the Company will
pay an amount in cash determined by multiplying
such fraction by the last sales price on the
Expiration Date of a share of Class A Common
Stock, as reported on the NYSE Composite Tape.
Expiration Date............... 12:00 midnight, New York City time, on Tuesday,
August 4, 1998, unless extended by the Company.
See "The Exchange Offer -- Terms of the
Exchange Offer."
Procedures for Tendering
PRIDES........................ Each holder of PRIDES who wishes to tender his
or her PRIDES must deliver the following
documents prior to the Expiration Date to the
Exchange Agent at one of the addresses set
forth on the back cover hereof: (i)
certificates representing such PRIDES together
with the Letter of Transmittal, which will have
been properly completed and duly executed by
such holder, and all other documents required
by such Letter of Transmittal, (ii) if such
holder wishes to deliver his or her PRIDES
through book-entry transfer, confirmation of
such transfer together with an applicable
Letter of Transmittal, which will have been
properly completed and duly executed by such
holder, and all other documents required by
such Letter of Transmittal, or (iii) if such
holder wishes to tender by guaranteed delivery,
a properly completed and duly executed Notice
of Guaranteed Delivery. A holder having PRIDES
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
must contact such registered holder promptly if
such holder wishes to tender such PRIDES into
the Exchange Offer. LETTERS OF TRANSMITTAL,
NOTICES OF GUARANTEED DELIVERY AND PRIDES
CERTIFICATES SHOULD BE SENT TO THE EXCHANGE
AGENT, AND NOT TO THE COMPANY. See "The
Exchange Offer -- Procedure for Tendering
PRIDES."
Purposes of the Exchange
Offer......................... The Exchange Offer provides holders of the
PRIDES with the opportunity to convert PRIDES
into a greater number of shares of Class A
Common Stock than they would obtain if they
were to exercise the optional conversion
feature of the PRIDES and thereby to obtain
shares of Class A Common Stock having a market
price in excess of the recent market price of
the PRIDES prior to the initial public
announcement of the Exchange Offer and the
market price of the 0.8439 shares of Class A
Common Stock into which each PRIDES may be
converted at the option of its holder prior to
August 1, 2000. The principal purposes of the
Exchange Offer are to simplify the Company's
capital structure and to reduce the Company's
dividend requirements on the
2
<PAGE> 7
Convertible Preferred Stock represented by the
PRIDES, resulting in increased future earnings
on the Common Stock. The Company also believes
that the Exchange Offer should provide greater
market liquidity for the Class A Common Stock,
and possibly broader investor interest, to the
extent it results in a greater number of
publicly-held shares of Class A Common Stock
outstanding following the consummation of the
Exchange Offer. See "Purposes and Effects of
the Exchange Offer," "Selected Historical
Consolidated Financial Data" and "Unaudited Pro
Forma Consolidated Financial Information."
Acceptance of PRIDES and
Delivery of Class A Common
Stock....................... Subject to the terms and conditions of the
Exchange Offer, the Company will accept for
exchange any and all PRIDES which are properly
tendered in the Exchange Offer and not
withdrawn prior to the Expiration Date. The
Company will deliver shares of Class A Common
Stock issued pursuant to the Exchange Offer and
make any cash payment in lieu of fractional
shares of Class A Common Stock promptly
following the Expiration Date. See "The
Exchange Offer -- Acceptance of PRIDES for
Exchange; Delivery of Class A Common Stock."
Withdrawal of Tenders......... Tenders may be withdrawn at any time prior to
12:00 midnight, New York City time, on the
Expiration Date or, unless previously accepted
for exchange, after 12:00 midnight, New York
City time, on Tuesday, September 1, 1998. See
"The Exchange Offer -- Withdrawal Rights."
Conditions of the Exchange
Offer......................... The Exchange Offer is not conditioned upon any
minimum number of PRIDES being tendered for
exchange. The Exchange Offer is, however,
subject to certain other conditions, any or all
of which may be waived by the Company. See "The
Exchange Offer -- Certain Conditions of the
Exchange Offer."
Certain Federal Income Tax
Considerations.............. The exchange of the Class A Common Stock for
PRIDES should be treated as a tax-free
transaction for Federal income tax purposes
(other than cash received in lieu of fractional
shares of Class A Common Stock). For a
discussion of the Federal income tax
consequences of the exchange of PRIDES, see
"Certain Federal Income Tax Considerations."
The PRIDES.................... There are currently outstanding 20,700,000
PRIDES. Each PRIDES is a depositary share
representing one-half share of Convertible
Preferred Stock. The Convertible Preferred
Stock ranks prior to the Common Stock, pari
passu to the Company's existing Series C
Preferred Stock and junior to the Company's
existing Series D Preferred Stock as to payment
of dividends and distribution of assets upon
liquidation.
Mandatory Conversion. Unless converted or
redeemed at an earlier date, each half share of
Convertible Preferred Stock represented by a
PRIDES mandatorily converts into one share of
Class A Common Stock on August 1, 2000 (the
"Mandatory Conversion Date").
3
<PAGE> 8
Conversion at the Option of the Holder. Each
half share of Convertible Preferred Stock
represented by a PRIDES is convertible into
0.8439 shares of Class A Common Stock at the
option of the holder at any time prior to the
Mandatory Conversion Date.
Optional Redemption. The Company has the option
to redeem the Convertible Preferred Stock
represented by the PRIDES, in whole or in part,
at any time and from time to time on or after
August 1, 1999, and prior to the Mandatory
Conversion Date at specified prices, payable in
shares of Class A Common Stock. See
"Description of Capital Stock -- Preferred
Stock -- PRIDES."
PRIDES Dividends.............. Holders of PRIDES are entitled to receive
annual cumulative dividends on the shares of
Convertible Preferred Stock represented thereby
at a rate of 9 3/4% per annum of the initial
stated liquidation amount of $9.75 per half
share of Convertible Preferred Stock
(equivalent to $0.9506 per annum or $0.2377 per
quarter for each half share represented by a
PRIDES), payable quarterly in arrears on
February 1, May 1, August 1 and November 1 of
each year, including the Mandatory Conversion
Date or, if any such date is not a business
day, on the next succeeding business day.
Holders of PRIDES accepted by the Company for
exchange pursuant to the Exchange Offer will be
deemed to have waived all rights with respect
to any accrued but unpaid dividends on or after
August 1, 1998 on the shares of Convertible
Preferred Stock represented by the PRIDES
exchanged. See "Dividends -- PRIDES," "The
Exchange Offer -- Terms of the Exchange Offer"
and "Description of Capital Stock -- Preferred
Stock -- PRIDES."
The Common Stock.............. The authorized capital stock of the Company
consists of 250,000,000 shares of Class A
Common Stock, 50,000,000 shares of Class B
Common Stock, $0.01 par value per share (the
"Class B Common Stock" and, together with the
Class A Common Stock, the "Common Stock"), and
20,000,000 shares of Preferred Stock. As of
June 30, 1998 there were approximately
71,689,899 shares of Class A Common Stock
outstanding and 14,990,000 shares of Class B
Common Stock outstanding. See "Capitalization"
and "Description of Capital Stock."
Common Stock Dividends........ Each share of Class A Common Stock and Class B
Common Stock is entitled to receive dividends
if, as and when declared by the Board of
Directors. Dividends must be paid equally,
share for share, on both the Class A Common
Stock and the Class B Common Stock at any time
that dividends are paid. Since the second
quarter of 1996 the Company has paid a
quarterly dividend of $0.10 per share of Common
Stock. On June 29, 1998, the Company announced
an increase in the quarterly dividend to be
paid on the Common Stock to $0.1375 per share,
and declared a dividend of $0.1375 per share of
Common Stock payable October 15, 1998, to
stockholders of record on October 1, 1998.
As a holding company, the Company's ability to
declare and pay dividends in the future with
respect to its Common Stock will be dependent,
among other factors, upon the results of
operations, financial condition and cash
requirements of its subsidiaries, the
4
<PAGE> 9
ability of its United States and foreign
subsidiaries to pay dividends or make advances
to the Company in compliance with debt
agreements, as well as foreign and United
States tax liabilities with respect to
dividends and payments from those entities.
Exchange Agent and Information
Agent....................... First Chicago Trust Company of New York, Suite
4680, 14 Wall Street, 8th Floor, New York, New
York, telephone: (800) 251-4215.
Further Information........... For further information, contact Mark S.
Kipnis, Vice President and Secretary of the
Company.
5
<PAGE> 10
THE COMPANY
The Company, through subsidiaries and affiliated companies, is a leading
publisher of English-language newspapers in the United States, the United
Kingdom, Canada and Israel. Included among the paid daily newspapers which the
Company owns or has an interest in are the Chicago Sun-Times, The Daily
Telegraph and the Ottawa Citizen. In addition, the Company owns or has an
interest in several hundred non-daily newspapers as well as magazines and other
publications principally in small- and medium-sized communities in the United
States. 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 was incorporated in the State of Delaware on December 28, 1990
and is the successor to a business that was formed through acquisitions in 1986.
Its executive offices are located at 401 North Wabash Avenue, Chicago, Illinois
60611, telephone number (312) 321-2299. References herein to the "Company" refer
to Hollinger International Inc. and its subsidiaries, unless the context
requires otherwise.
6
<PAGE> 11
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth selected financial information of the
Company and its consolidated subsidiaries for each of the periods indicated. The
Selected Historical Consolidated Financial Data is qualified in its entirety by,
and should be read in conjunction with, the Company's Consolidated Financial
Statements for the three years ended December 31, 1997, included in the 1997
Form 10-K, and the Condensed Financial Statements for the three months ended
March 31, 1997 and 1998, included in the Q1 1998 Form 10-Q.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------- ------------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Operating revenues........................... $1,078,514 $2,074,022 $2,211,530 $ 514,243 $ 537,969
Operating costs and expenses................. 1,016,650 1,926,055 1,923,808 459,115 476,125
---------- ---------- ---------- ---------- ----------
Operating income............................. 61,864 147,967 287,722 55,128 61,844
Other income (expense)....................... (12,340) (18,029) (43,573) 38,801 169,162
---------- ---------- ---------- ---------- ----------
Earnings before income taxes, minority
interest and extraordinary item............ 49,524 129,938 244,149 93,929 231,006
Provision for income taxes................... 20,584 51,865 93,655 28,022 90,982
---------- ---------- ---------- ---------- ----------
Earnings before minority interest and
extraordinary item......................... 28,960 78,073 150,494 65,907 140,024
Minority interest............................ 22,637 33,138 45,973 10,481 6,954
---------- ---------- ---------- ---------- ----------
Earnings before extraordinary item........... 6,323 44,935 104,521 55,426 133,070
Extraordinary loss on debt extinguishments... -- (2,150) -- -- (5,067)
---------- ---------- ---------- ---------- ----------
Net earnings................................. $ 6,323 $ 42,785 $ 104,521 $ 55,426 $ 128,003
========== ========== ========== ========== ==========
FINANCIAL POSITION (AT END OF PERIOD):
Working capital (deficit).................... $ (390,673) $ (695,760) $ 56,365 $ 6,845 $ 52,959
Total assets(1).............................. $1,737,980 $3,425,544 $3,023,921 $3,371,141 $3,002,979
Minority interest............................ $ 97,298 $ 109,943 $ 203,034 $ 119,108 $ 209,874
Total long-term debt......................... $ 475,048 $ 711,348 $1,428,415 $1,180,863 $1,223,827
Redeemable preferred stock................... $ 306,452 $ 605,579 $ 75,891 $ 603,705 $ 76,261
Total stockholders' equity................... $ 159,973 $ 686,326 $ 687,602 $ 733,630 $ 808,684
PER COMMON SHARE DATA:
Basic earnings per share before extraordinary
item....................................... $0.09 $0.43 $0.93 $0.49 $1.20
Diluted earnings per share before
extraordinary item......................... $0.09 $0.42 $0.87 $0.47 $1.10
Basic earnings per share..................... $0.09 $0.41 $0.93 $0.49 $1.15
Diluted earnings per share................... $0.09 $0.39 $0.87 $0.47 $1.06
Weighted average shares
outstanding -- basic....................... 67,215 79,081 87,130 111,807 11,097
Weighted average shares
outstanding -- diluted..................... 68,443 84,784 119,486 117,506 121,135
Book value (at end of period)(2)............. $(6.22) $(11.99) $(11.33) $(10.85) $(9.33)
OTHER DATA:
Ratio of earnings to fixed charges(3)........ 1.38 1.47 2.27 1.72 2.22
Ratio of earnings to combined fixed charges
and preferred stock dividend
requirements(3)............................ 1.14 1.29 1.85 1.38 1.76
</TABLE>
- ---------------
(1) Includes intangible assets, net of accumulated amortization, which amounted
(in thousands) to $621,939, $1,641,485 and $1,671,210 at December 31, 1995,
1996 and 1997, respectively, and $1,607,417 and $1,631,977 at March 31, 1997
and 1998, respectively. Such assets consist of the value of acquired
subscriber and advertiser lists, noncompetition agreements, archives and
goodwill. The amortization periods for intangible assets range from three to
40 years.
(2) Book value is computed based on total assets minus the sum of: intangible
assets net of accumulated amortization, total liabilities and preferred
stock, divided by the number of shares of common stock outstanding at period
end.
(3) Earnings represent income from continuing operations before income taxes and
fixed charges. Fixed charges consist of interest expense, the interest
component of rental expense and amortization of debt expense.
7
<PAGE> 12
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information sets
forth the pro forma effects on the historical financial results of the Company
assuming the Exchange Offer is accepted on a 100% basis and a 50% basis.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 THREE MONTHS ENDED MARCH 31, 1998
------------------------------------ ------------------------------------
ASSUMES ASSUMES
EXCHANGE EXCHANGE
ACCEPTANCE OF ACCEPTANCE OF
----------------------- -----------------------
HISTORICAL 100% 50% HISTORICAL 100% 50%
---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Operating revenues.................. $2,211,530 $2,211,530 $2,211,530 $ 537,969 $ 537,969 $ 537,969
Operating costs and expenses........ 1,923,808 1,923,808 1,923,808 476,125 476,125 476,125
---------- ---------- ---------- ---------- ---------- ----------
Operating income.................... 287,722 287,722 287,722 61,844 61,844 61,844
Other income (expense).............. (43,573) (43,573) (43,573) 169,162 169,162 169,162
---------- ---------- ---------- ---------- ---------- ----------
Earnings before income taxes,
minority interest and
extraordinary item................ 244,149 244,149 244,149 231,006 231,006 231,006
Provision for income taxes.......... 93,655 93,655 93,655 90,982 90,982 90,982
---------- ---------- ---------- ---------- ---------- ----------
Earnings before minority interest
and extraordinary item............ 150,494 150,494 150,494 140,024 140,024 140,024
Minority interest................... 45,973 45,973 45,973 6,954 6,954 6,954
---------- ---------- ---------- ---------- ---------- ----------
Earnings before extraordinary
item.............................. 104,521 104,521 104,521 133,070 133,070 133,070
Extraordinary loss on debt
extinguishments................... -- -- -- (5,067) (5,067) (5,067)
---------- ---------- ---------- ---------- ---------- ----------
Net earnings........................ $ 104,521 $ 104,521 $ 104,521 $ 128,003 $ 128,003 $ 128,003
========== ========== ========== ========== ========== ==========
FINANCIAL POSITION (AT END OF
PERIOD):
Working capital (deficit)........... $ 56,365 $ 56,365 $ 56,365 $ 52,959 $ 52,959 $ 52,959
Total assets(1)..................... $3,023,921 $3,023,921 $3,023,921 $3,002,979 $3,002,979 $3,002,979
Minority interest................... $ 203,034 $ 203,034 $ 203,034 $ 200,874 $ 200,874 $ 200,874
Total long-term debt................ $1,428,415 $1,428,415 $1,428,415 $1,223,827 $1,223,827 $1,223,827
Redeemable preferred stock.......... $ 75,891 $ 75,891 $ 75,891 $ 76,261 $ 76,261 $ 76,261
Total stockholders' equity.......... $ 687,602 $ 687,602 $ 687,602 $ 808,684 $ 808,684 $ 808,684
PER COMMON SHARE DATA:
Basic earnings per share before
extraordinary item................ $0.93 $0.95 $0.94 $1.20 $1.18 $1.19
Diluted earnings per share before
extraordinary item................ $0.87 $0.86 $0.87 $1.10 $1.08 $1.09
Basic earnings per share............ $0.93 $0.95 $0.94 $1.15 $1.13 $1.14
Diluted earnings per share.......... $0.87 $0.86 $0.87 $1.06 $1.04 $1.05
Weighted average shares
outstanding -- basic.............. 87,130 106,174 96,652 111,097 112,673 111,885
Weighted average shares
outstanding -- diluted............ 119,486 121,061 120,273 121,135 122,711 121,923
Book value (at end of period)(2).... $(11.33) $(4.15) $(5.58) $(9.33) $(6.99) $(8.04)
OTHER DATA:
Ratio of earnings to fixed
charges(3)........................ 2.27 2.27 2.27 2.22 2.22 2.22
Ratio of earnings to combined fixed
charges and preferred stock
dividend requirements(3).......... 1.85 2.12 1.98 1.76 2.05 1.89
</TABLE>
- ---------------
(1) Includes intangible assets, net of accumulated amortization, which amounted
(in thousands) to $1,671,210 at December 31, 1997 and $1,631,977 at March
31, 1998. Such assets consist of the value of acquired subscriber and
advertiser lists, noncompetition agreements, archives and goodwill. The
amortization periods for intangible assets range from three to 40 years.
(2) Book value is computed based on total assets minus the sum of: intangible
assets net of accumulated amortization, total liabilities and preferred
stock, divided by the number of shares of common stock outstanding at period
end.
(3) Earnings represent income from continuing operations before income taxes and
fixed charges. Fixed charges consist of interest expense, the interest
component of rental expense and amortization of debt expense.
8
<PAGE> 13
The consolidated pro forma income statement information for the periods
ended March 31, 1998 and December 31, 1997 assumes that the repurchase of PRIDES
by the Company pursuant to the Exchange Offer had occurred as of January 1, 1998
and January 1, 1997, respectively. See "Notes to Unaudited Pro Forma
Consolidated Financial Information" below.
The estimated financial effects of the exchange of PRIDES by the Company
pursuant to the Exchange Offer presented in the pro forma financial information
are not necessarily indicative of the Company's results of operations which
would have been obtained had the transactions described above actually occurred
on the dates described above, nor are they necessarily indicative of the results
of future operations. The pro forma financial information should be read in
conjunction with the 1997 Form 10-K and the Q1 1998 Form 10-Q.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The consolidated pro forma income statement information for the three
months ended March 31, 1998, and the year ended December 31, 1997, assumes that
the exchange of PRIDES by the Company pursuant to the Exchange Offer had
occurred as of January 1, 1998 and January 1, 1997, respectively, and includes
only those adjustments that are expected to have a continuing impact on the
Company. The adjustments presented in the pro forma financial information
reflect the following assumptions: 10,350,000 shares of Convertible Preferred
Stock issued and outstanding at December 31, 1997 and March 31, 1998 and
71,556,899 and 71,651,899 shares of Class A Common Stock issued and outstanding
at December 31, 1997 and March 31, 1998, respectively, on a historical basis;
5,175,000 shares of Convertible Preferred Stock and 9,522,000 additional shares
of Class A Common Stock issued and outstanding assuming 50% acceptance of the
Exchange Offer; and 0 shares of Convertible Preferred Stock and 19,044,000
additional shares of Class A Common Stock issued and outstanding assuming 100%
acceptance of the Exchange Offer.
9
<PAGE> 14
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and consolidated subsidiaries which should be read in conjunction with
the Company's Consolidated Financial Statements for the three months ended March
31, 1998, included in the Q1 1998 Form 10-Q. The capitalization of the Company
has been adjusted on a pro forma basis to reflect the Exchange Offer for the
PRIDES being accepted on a 100% basis and a 50% basis. See "Unaudited Pro Forma
Consolidated Financial Information."
<TABLE>
<CAPTION>
MARCH 31, 1998
--------------------------------------
ASSUMES EXCHANGE
ACCEPTANCE OF
------------------------
HISTORICAL 100% 50%
---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE DATA)
<S> <C> <C> <C>
DEBT:
Total consolidated debt.................................. $1,223,827 $1,223,827 $1,223,827
========== ========== ==========
Minority interest........................................ 209,874 209,874 209,874
Redeemable Preferred Stock............................... 76,261 76,261 76,261
---------- ---------- ----------
$1,509,962 $1,509,962 $1,509,962
========== ========== ==========
STOCKHOLDER'S EQUITY:
Preferred Stock, $0.01 par value Authorized: 20,000,000
shares
Convertible Preferred Stock represented by PRIDES,
10,350,000 shares authorized(a)..................... $ 195,104 $ 0 $ 97,552
Class A Common Stock, $0.01 par value
Authorized: 250,000,000 shares(a)................... 726 916 821
Class B Common Stock, $.01 par value
Authorized: 50,000,000 shares
Issued: 14,990,000.................................. 150 150 150
Additional paid-in capital............................. 358,682 553,596 456,139
Cumulative foreign currency translation account........ (13,558) (13,558) (13,558)
Retained earnings...................................... 281,657 281,657 281,657
Common Stock in Treasury, at cost...................... (14,077) (14,077) (14,077)
---------- ---------- ----------
Total stockholders' equity..................... $ 808,684 $ 808,684 $ 808,684
========== ========== ==========
Total capitalization........................... $2,318,646 $2,318,646 $2,318,646
========== ========== ==========
</TABLE>
- ---------------
(a) 10,350,000 shares of Convertible Preferred Stock and 71,651,899 shares of
Class A Common Stock issued and outstanding on a historical basis; 5,175,000
shares of Convertible Preferred Stock and 9,522,000 additional shares of
Class A Common Stock issued and outstanding assuming 50% acceptance of the
Exchange Offer; and 0 shares of Convertible Preferred Stock and 19,044,000
additional shares of Class A Common Stock issued and outstanding assuming
100% acceptance of the Exchange Offer.
10
<PAGE> 15
MARKET AND PRICE RANGES OF CLASS A COMMON STOCK AND PRIDES
The Class A Common Stock (symbol HLR) and the PRIDES (symbol HLR PrP) are
listed and traded on the NYSE. The table that follows sets forth, for the
calendar quarters indicated, the reported high and low closing sales prices of
the Class A Common Stock and the PRIDES on the NYSE Composite Tape:
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK PRIDES(A)
------------------ ------------------
HIGH LOW HIGH LOW
------- ------- ------- -------
<S> <C> <C> <C> <C>
1996:
First Quarter (through January 15, 1996) (Nasdaq Stock
Market)............................................ $11.125 $10.250 -- --
First Quarter (from January 16, 1996) (NYSE).......... 12.375 9.250 -- --
Second Quarter........................................ 13.125 10.625 -- --
Third Quarter......................................... 12.500 9.375 $12.000 $ 9.500
Fourth Quarter........................................ 12.875 10.000 12.500 10.375
1997:
First Quarter......................................... $12.000 $ 9.125 $12.000 $ 9.500
Second Quarter........................................ 12.000 9.000 11.875 9.750
Third Quarter......................................... 13.438 11.125 12.500 11.188
Fourth Quarter........................................ 14.125 12.375 13.000 11.250
1998:
First Quarter......................................... $17.375 $13.000 $15.500 $12.313
Second Quarter (through July 7)....................... 17.188 14.875 15.813 13.000
</TABLE>
- ---------------
(a) The PRIDES commenced trading on the NYSE on August 2, 1996.
On June 29, 1998, the last full trading day before the announcement of the
terms of the Exchange Offer, the reported closing sales price of the PRIDES and
the Class A Common Stock on the NYSE Composite Tape was $14.50 per PRIDES and
$17.125 per share of Class A Common Stock, and on July 7, 1998, the last full
trading day before the commencement of the Exchange Offer, the reported closing
sales price was $15.813 per PRIDES and $17.188 per share of Class A Common
Stock. Holders are urged to obtain a current market quotation for the PRIDES and
the Class A Common Stock.
11
<PAGE> 16
DIVIDENDS
COMMON STOCK
Each share of Class A Common Stock and Class B Common Stock is entitled to
receive dividends if, as and when declared by the Board of Directors. Dividends
must be paid equally, share for share, on both the Class A Common Stock and the
Class B Common Stock at any time that dividends are paid. Since the second
quarter of 1996 the Company has paid a quarterly dividend of $0.10 per share of
Common Stock. On June 29, 1998, the Company announced an increase in the
quarterly dividend to be paid on the Common Stock to $0.1375 per share, and
declared a dividend of $0.1375 per share of Common Stock payable October 15,
1998, to stockholders of record on October 1, 1998.
As a holding company, the Company's ability to declare and pay dividends in
the future with respect to its Common Stock will be dependent, among other
factors, upon the results of operations, financial condition and cash
requirements of its subsidiaries, the ability of its United States and foreign
subsidiaries to pay dividends or make advances to the Company in compliance with
borrowing debt agreements, as well as foreign and United States tax liabilities
with respect to dividends and payments from those entities.
PRIDES
Holders of PRIDES are entitled to receive annual cumulative dividends on
the shares of Convertible Preferred Stock represented thereby at a rate of
9 3/4% per annum of the initial stated liquidation amount of $9.75 per half
share of Convertible Preferred Stock (equivalent to $0.9506 per annum or $0.2377
per quarter for each half share represented by a PRIDES), payable quarterly in
arrears on February 1, May 1, August 1 and November 1 of each year, including
the Mandatory Conversion Date or, if any such date is not a business day, on the
next succeeding business day. See "Description of Capital Stock -- Preferred
Stock -- PRIDES."
The dividend payable on the Convertible Preferred Stock represented by the
PRIDES for the dividend period that commenced May 1, 1998, will be paid on
August 1, 1998, to holders of record on July 15, 1998. A tender of PRIDES in the
Exchange Offer will not affect the rights of holders to receive such dividend.
Dividends that accrue on the Convertible Preferred Stock represented by the
PRIDES during the dividend period that will commence August 1, 1998, have been
taken into account in determining the consideration offered in the Exchange
Offer, and no cash payment will be made with respect to dividends that accrue
during such dividend period on PRIDES tendered and accepted in the Exchange
Offer. Holders of PRIDES who do not participate in the Exchange Offer, and are
record holders on the applicable record date, will receive the regular quarterly
cash dividend for the dividend period that will commence August 1, 1998, as
declared by the Board of Directors.
PURPOSES AND EFFECTS OF THE EXCHANGE OFFER
PURPOSES
The Exchange Offer provides holders of the PRIDES with the opportunity to
convert PRIDES into a greater number of shares of Class A Common Stock than they
would obtain if they were to exercise the optional conversion feature of the
PRIDES and thereby to obtain shares of Class A Common Stock having a market
price in excess of the recent market price of the PRIDES prior to the initial
public announcement of the Exchange Offer and the market price of the 0.8439
shares of Class A Common Stock into which each PRIDES may be converted at the
option of its holder prior to August 1, 2000. The principal purposes of the
Exchange Offer are to simplify the Company's capital structure and to reduce the
Company's dividend requirements on the Convertible Preferred Stock represented
by the PRIDES, resulting in increased future earnings on the Common Stock. The
Company also believes that the Exchange Offer should provide greater market
liquidity for the Class A Common Stock, and possibly broader investor interest,
to the extent it results in a greater number of publicly-held shares of Class A
Common Stock outstanding following the consummation of the Exchange Offer. See
"Selected Historical Consolidated Financial Data" and "Unaudited Pro Forma
Consolidated Financial Information."
12
<PAGE> 17
CERTAIN EFFECTS
PRIDES exchanged for Class A Common Stock (and the shares of Convertible
Preferred Stock represented by such PRIDES) will be retired. The exchange of
Class A Common Stock for PRIDES pursuant to the Exchange Offer will reduce the
number of outstanding PRIDES and the number of holders of PRIDES. In the event
there are fewer than 300 holders of PRIDES as a result of the Exchange Offer,
such securities would become eligible for termination of registration under the
Exchange Act.
In addition, depending upon the number of PRIDES tendered pursuant to the
Exchange Offer, the PRIDES may no longer meet the requirements of the NYSE for
continued listing. Published guidelines of the NYSE indicate that the NYSE would
consider delisting an issue of preferred stock if, among other things, (i) the
number of publicly-held shares (exclusive of holdings of officers, directors,
controlling shareholders or other family or concentrated holdings ("Excluded
Holdings")) should fall below 100,000 or (ii) if the aggregate market value of
the publicly-held shares (exclusive of Excluded Holdings) should fall below $2
million. If, as a result of the exchange of PRIDES pursuant to the Exchange
Offer, the PRIDES no longer meet the requirements of the NYSE for continued
listing and the NYSE were to delist the PRIDES, the market therefor could be
adversely affected.
The PRIDES are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the PRIDES. Depending on the number of PRIDES
outstanding after the Exchange Offer and certain other factors, PRIDES might not
constitute "margin securities" for the purposes of the margin regulations of the
Board of Governors of the Federal Reserve System and, in such event, could not
be used as collateral for margin loans.
NEITHER THE COMPANY NOR THE BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS
TO WHETHER ANY HOLDER OF PRIDES SHOULD TENDER ANY OF OR ALL SUCH HOLDER'S PRIDES
PURSUANT TO THE EXCHANGE OFFER. EACH HOLDER MUST MAKE SUCH HOLDER'S OWN DECISION
WHETHER OR NOT TO TENDER PRIDES AND, IF SO, HOW MANY PRIDES TO TENDER.
Rule 13e-4 under the Exchange Act generally prohibits the Company and its
affiliates from purchasing any PRIDES, other than pursuant to the Exchange
Offer, or any shares of Class A Common Stock for at least ten business days
after the Expiration Date.
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject to the conditions set
forth herein and in the accompanying Letter of Transmittal, to exchange 0.92
shares of Class A Common Stock for each PRIDES outstanding. Upon the terms and
subject to the conditions of the Exchange Offer, the Company will accept for
exchange (and will thereby exchange for shares of Class A Common Stock) any and
all PRIDES that are properly tendered (and not withdrawn) before the Expiration
Date.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Tuesday, August 4, 1998, unless and until the Company shall have extended the
period of time for which the Exchange Offer is open, in which event the term
"Expiration Date" shall refer to the latest time and date at which the Exchange
Offer, as so extended by the Company, shall expire. For a description of the
Company's rights to extend the period of time during which the Exchange Offer is
open and to delay, terminate or amend the Exchange Offer, see "-- Extension of
Tender Period; Termination; Amendments".
The Company reserves the right, in its sole discretion, at any time or from
time to time, to extend the period of time during which the Exchange Offer is
open by giving oral or written notice of such extension to the Exchange Agent
and making a public announcement thereof. See "-- Extension of Tender Period;
Termination; Amendments." There can be no assurance, however, that the Company
will exercise its right to extend the Exchange Offer.
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The dividend payable on the Convertible Preferred Stock represented by the
PRIDES for the dividend period that commenced May 1, 1998, will be paid on
August 1, 1998, to holders of record on July 15, 1998. A tender of PRIDES in the
Exchange Offer will not affect the rights of holders to receive such dividend.
Dividends that accrue on the Convertible Preferred Stock represented by the
PRIDES during the dividend period that will commence August 1, 1998, have been
taken into account in determining the consideration offered in the Exchange
Offer, and no cash payment will be made with respect to dividends that accrue
during such dividend period on PRIDES tendered and accepted in the Exchange
Offer. Holders of PRIDES who do not participate in the Exchange Offer, and are
record holders on the applicable record date, will receive the regular quarterly
cash dividend for the dividend period that will commence August 1, 1998, as
declared by the Board of Directors.
In the event that the Company modifies the consideration offered for PRIDES
in the Exchange Offer, such modified consideration would be paid for all PRIDES
tendered and accepted in the Exchange Offer.
If (a) the Company (i) increases or decreases the price to be paid for
PRIDES or (ii) decreases the number of PRIDES being sought, and (b) the Exchange
Offer is scheduled to expire at any time earlier than the expiration of a period
ending on the tenth business day from and including the date that notice of such
increase or decrease is first published, sent or given in the manner specified
in " -- Extension of Tender Period; Termination; Amendments", the Exchange Offer
will be extended until the expiration of such ten business day period. For the
purposes of the Exchange Offer, a "business day" means any day other than a
Saturday, Sunday or Federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.
As of June 30, 1998, 20,700,000 PRIDES were outstanding. This Offering
Circular, together with the Letter of Transmittal, is first being sent to all
holders of record of PRIDES on July 8, 1998.
Although the Company currently has no plan or intention to do so, subject
to applicable laws and regulations, it reserves the right in its sole discretion
to purchase, redeem or make offers for any PRIDES that remain outstanding
subsequent to the consummation of the Exchange Offer. The terms of any such
purchases, redemptions or offers could differ from the terms of the Exchange
Offer.
Tendering holders of PRIDES will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of PRIDES pursuant to
the Exchange Offer. The Company will pay all charges and expenses, other than
certain applicable taxes, in connection with the Exchange Offers. See "-- Fees
and Expenses."
THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF PRIDES
BEING TENDERED. THE EXCHANGE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE "-- CERTAIN CONDITIONS OF THE EXCHANGE OFFER."
PROCEDURE FOR TENDERING PRIDES
PROPER TENDER OF PRIDES. For PRIDES to be properly tendered pursuant to the
Exchange Offer:
(a) the certificates for such PRIDES (or confirmation of receipt of
such PRIDES pursuant to the procedure for book-entry transfer set forth
below), together with a properly completed and duly executed Letter of
Transmittal (or a facsimile copy thereof) with any required signature
guarantees, and any other documents required by the Letter of Transmittal,
must be received before the Expiration Date by the Exchange Agent at one of
its addresses set forth on the back cover of this Offering Circular; or
(b) the tendering holder must comply with the guaranteed delivery
procedure set forth below.
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It is a violation of Section 14(e) of the Exchange Act, and the rules and
regulations thereunder, and Rule 14e-4 promulgated thereunder, for a person to
tender PRIDES for such person's own account unless the person so tendering:
(a) owns such PRIDES; or
(b) owns an option, warrant or right to purchase such PRIDES and
intends to acquire PRIDES for tender by exercise of such option, warrant or
right.
Section 14(e) and Rule 14e-4 provide a similar restriction applicable to
the tender or guarantee of a tender on behalf of another person.
A tender of PRIDES made pursuant to any method of delivery set forth herein
will constitute a binding agreement between the tendering holder and the Company
upon the terms and subject to the conditions of the Exchange Offer, including
the tendering holder's representation that (i) such holder owns the PRIDES being
tendered within the meaning of Rule 14e-4 promulgated under the Exchange Act and
(ii) the tender of such PRIDES complies with Rule 14e-4.
SIGNATURE GUARANTEES AND METHODS OF DELIVERY. No signature guarantee is
required on the Letter of Transmittal if the Letter of Transmittal is signed by
the registered owner of the PRIDES (which term, for purposes of this Section,
includes any participant in The Depository Trust Company (the "Book-Entry
Transfer Facility") whose name appears on a security position listing as the
owner of the PRIDES) tendered therewith, and payment and delivery are to be made
directly to such registered owner at such owner's address shown on the records
of the Company, or if PRIDES are tendered for the account of a financial
institution (including most banks, savings and loan associations, and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchanges Medallion Program (each such entity being hereinafter referred to as
an "Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of
the Letter of Transmittal. If a certificate representing PRIDES is registered in
the name of a person other than the person signing a Letter of Transmittal, or
if shares of Class A Common Stock or any check for cash in lieu of fractional
shares of Class A Common Stock are to be issued, or certificates for PRIDES not
purchased or tendered are to be issued, to a person other than the registered
owner, the certificate must be endorsed or accompanied by an appropriate stock
power, in either case signed exactly as the name of the registered owner appears
on the certificate, with the signature on the certificate or stock power
guaranteed by an Eligible Institution. In all cases, shares of Class A Common
Stock to be issued in exchange for PRIDES tendered and accepted for exchange
pursuant to the Exchange Offer will be issued only after timely receipt by the
Exchange Agent of certificates for such PRIDES (or a timely confirmation of a
book-entry transfer of such PRIDES into the Exchange Agent's account at the
Book-Entry Transfer Facility), a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and any other documents required by the
Letter of Transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING STOCK CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
BOOK-ENTRY DELIVERY. The Exchange Agent will establish an account with
respect to the PRIDES at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Offering
Circular. Any financial institution that is a participant in the Book-Entry
Transfer Facility's system may make book-entry delivery of the PRIDES by causing
such facility to transfer such PRIDES into the Exchange Agent's account in
accordance with such facility's procedure for such transfer. Even though
delivery of PRIDES may be effected through book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees and other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at one of its addresses set
forth on the back cover of this Offering Circular before the Expiration Date, or
the guaranteed delivery procedure set forth below must be
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<PAGE> 20
followed. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS
TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
GUARANTEED DELIVERY. If a holder desires to tender PRIDES pursuant to the
Exchange Offer and such holder's PRIDES certificates are not immediately
available (or the procedure for book-entry transfer cannot be followed on a
timely basis) or time will not permit the Letter of Transmittal and all other
required documents to reach the Exchange Agent before the Expiration Date, such
PRIDES may nevertheless be tendered provided that all the following conditions
are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Exchange Agent receives (by hand, mail or facsimile
transmission) before the Expiration Date, a properly completed and duly
executed Notice of Guaranteed Delivery substantially in the form the
Company has provided with this Offering Circular; and
(c) the certificates for all tendered PRIDES in proper form for
transfer (or confirmation of book-entry transfer of such PRIDES into the
Exchange Agent's account at the Book-Entry Transfer Facility), together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and any other documents required by the Letter of
Transmittal, are received by the Exchange Agent within three NYSE trading
days after the date of execution of such Notice of Guaranteed Delivery.
DETERMINATION OF VALIDITY; REJECTION OF PRIDES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of PRIDES
to be accepted and the validity, form, eligibility (including time of receipt)
and acceptance for exchange of any tender of PRIDES will be determined by the
Company, in its sole discretion, which determination shall be final and binding
on all parties. The Company reserves the right to reject any or all tenders
determined by it not to be in proper form or the acceptance for exchange of
which may, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the right to waive any of the conditions of the Exchange Offer and
any defect or irregularity in the tender of any particular PRIDES. No tender of
PRIDES will be deemed properly made until all defects or irregularities have
been cured or waived. None of the Company, the Exchange Agent, the Information
Agent or any other person is or will be obligated to give notice of any defects
or irregularities in tenders, and none of them will incur any liability for
failure to give any such notice.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, a tender of PRIDES pursuant to the
Exchange Offer is irrevocable. PRIDES tendered pursuant to the Exchange Offer
may be withdrawn at any time before the Expiration Date and, unless theretofore
accepted for payment by the Company, after 12:00 midnight, New York City time,
on Tuesday, September 1, 1998.
For a withdrawal to be effective, the Exchange Agent must timely receive
(at one of its addresses set forth on the back cover of this Offering Circular)
a written or facsimile transmission notice of withdrawal. Any notice of
withdrawal must specify the name of the person having tendered the PRIDES to be
withdrawn, the number of PRIDES to be withdrawn and, if different from the name
of the person who tendered the PRIDES, the name of the registered owner of such
PRIDES. If the certificates have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates, the tendering
holder must also submit the serial numbers shown on the particular certificates
evidencing such PRIDES and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution (except in the case of PRIDES tendered by
an Eligible Institution). If PRIDES have been delivered pursuant to the
procedure for book-entry transfer set forth under "-- Procedure For Tendering
PRIDES," the notice of withdrawal must specify the name and the number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
PRIDES and otherwise comply with the procedures of such facility.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Company, in its sole discretion,
which determination shall be final and binding on all parties. None of the
Company, the Exchange Agent, the Information Agent or any other person is or
will be
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<PAGE> 21
obligated to give any notice of any defects or irregularities in any notice of
withdrawal, and none of them will incur any liability for failure to give any
such notice. A withdrawal of a tender may not be rescinded and PRIDES properly
withdrawn shall thereafter be deemed not to be validly tendered for purposes of
the Exchange Offer. Withdrawn PRIDES, however, may be retendered before the
Expiration Date by again following one of the procedures described under "--
Procedure For Tendering PRIDES."
ACCEPTANCE OF PRIDES FOR EXCHANGE; DELIVERY OF CLASS A COMMON STOCK
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance of PRIDES validly tendered under the Exchange Offer and not
withdrawn, and delivery of the shares of Class A Common Stock (and cash in lieu
of fractional shares) in exchange therefor will be made promptly after the
Expiration Date.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly-tendered PRIDES when, as and if the Company has given oral or
written notice thereof to the Exchange Agent. The Exchange Agent will act as
agent for the tendering holders of PRIDES for the purposes of receiving the
Class A Common Stock (and cash in lieu of fractional shares) from the Company.
If any tendered PRIDES are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
certificates for any such unaccepted PRIDES will be returned, without expense,
to the tendering holder thereof (or, in the case of PRIDES tendered by book
entry transfer, to an account maintained at such Book Entry Transfer Facility),
promptly after the expiration or termination of the Exchange Offer.
CERTAIN CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, and in addition
to (and not in limitation of) the Company's right to extend, amend or terminate
the Exchange Offer as set forth under "-- Extension of Tender Period;
Termination; Amendments," the Company shall not be required to accept for
exchange, or exchange shares of Class A Common Stock for, any PRIDES tendered,
and may terminate or amend the Exchange Offer if, before acceptance for payment
of or payment for any such PRIDES, any of the following shall have occurred (or
shall have been determined by the Company to have occurred):
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, before any court or governmental, regulatory or
administrative authority, agency or tribunal, domestic or foreign, which
(i) challenges the making of the Exchange Offer or the acquisition of
PRIDES pursuant to the Exchange Offer, or otherwise, directly or
indirectly, relates in any manner to the Exchange Offer; or (ii) in the
reasonable good faith judgment of the Company, could materially affect the
business, condition (financial or otherwise), income, operations or
prospects of the Company and its subsidiaries, taken as a whole, or
otherwise materially impair in any way the contemplated future conduct of
the business of the Company or any of its subsidiaries or materially impair
the Exchange Offer's contemplated benefits to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Exchange Offer or the
Company or any of its subsidiaries, by any court or any government or
governmental, regulatory or administrative authority, agency or tribunal,
domestic or foreign, which, in the Company's reasonable good faith
judgment, would or might directly or indirectly (i) make the acceptance for
exchange, or exchange of Class A Common Stock for, some or all the PRIDES
illegal or otherwise restrict or prohibit consummation of the Exchange
Offer; (ii) delay or restrict the ability of the Company, or render the
Company unable, to accept for exchange, or exchange Class A Common Stock
for, some or all the PRIDES; (iii) materially impair the contemplated
benefits of the Exchange Offer to the Company; or (iv) materially affect
the business, condition (financial or otherwise), income, operations or
prospects of the Company and its subsidiaries, taken as a whole, or
otherwise materially impair in any way the contemplated future conduct of
the business of the Company or any of its subsidiaries;
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<PAGE> 22
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any United States national
securities exchange or in the over-the-counter market (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index); (ii) the declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States;
(iii) the commencement of a war, armed hostilities or other international
or national crisis directly or indirectly involving the United States; (iv)
any limitation (whether or not mandatory) by any governmental, regulatory
or administrative agency or authority on, or any event which, in the
reasonable good faith judgment of the Company, might affect, the extension
of credit by banks or other lending institutions in the United States; (v)
any significant decrease in the market price of the PRIDES or the Class A
Common Stock; (vi) any change in the general political, market, economic or
financial conditions in the United States or abroad that could, in the
reasonable good faith judgment of the Company, have a material adverse
effect on the business, condition (financial or otherwise), income,
operations or prospects of the Company and its subsidiaries, taken as a
whole, or the trading in the PRIDES or the Class A Common Stock; (vii) in
the case of any of the foregoing existing at the time of the commencement
of the Exchange Offer, in the reasonable good faith judgment of the
Company, a material escalation, acceleration or worsening thereof; or
(viii) any decline in either the Dow Jones Industrial Average (9085.04 at
the close of business on July 7, 1998) or the Standard and Poor's Index of
500 Industrial Companies (1154.65 at the close of business on July 7, 1998)
by an amount in excess of 10% measured from the close of business on July
7, 1998;
(d) after July 7, 1998, any tender or exchange offer with respect to
the PRIDES or the Class A Common Stock (other than the Exchange Offer), or
any merger, acquisition, business combination or other similar transaction
with or involving the Company or any subsidiary, shall have been proposed,
announced or made by any person or entity other than the Company or an
affiliate;
(e) after July 7, 1998, any change shall occur or be threatened in the
business, condition (financial or otherwise), income, operations or
prospects of the Company and its subsidiaries, taken as a whole, which, in
the reasonable judgment of the Company, is or may be material to the
Company or affects the anticipated benefits to the Company of acquiring
PRIDES pursuant to the Exchange Offer; or
(f) (i) any person, entity or "group" (as that term is used in Section
13(d)(3) of the Exchange Act) shall have acquired, or proposed to acquire,
beneficial ownership of more than 5% of the outstanding PRIDES or the Class
A Common Stock (other than a person, entity or group which had publicly
disclosed such ownership in a Schedule 13D or 13G (or an amendment thereto)
on file with the SEC prior to July 7, 1998), (ii) any new group shall have
been formed which beneficially owns more than 5% of the outstanding PRIDES;
or (iii) any person, entity or group shall have filed a Notification and
Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
or made a public announcement reflecting an intent to acquire the Company
or any of its subsidiaries or any of their respective assets or securities;
which, in the reasonable judgment of the Company, in any such case and
regardless of the circumstances (including any action or inaction by the
Company) giving rise to such condition, makes it inadvisable to proceed with the
Exchange Offer or with such acceptance for exchange or exchange.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition and any such
condition may be waived by the Company, in whole or in part, at any time and
from time to time in its sole discretion. In certain cases, waiver of a
condition to the Exchange Offer would require an extension of the Exchange
Offer. See "-- Extension of Tender Period; Termination; Amendments."
The Company's failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right; the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts or circumstances; and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
Any determination by the Company concerning the events described above and any
related judgment by the Company regarding the inadvisability
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<PAGE> 23
of proceeding with the acceptance for payment or payment for any tendered PRIDES
will be final and binding on all parties.
CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS
The Company is not aware of any license or regulatory permit that appears
to be material to its business that might be adversely affected by its
acquisition of PRIDES as contemplated in the Exchange Offer or of any approval
or other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
Company's acquisition or ownership of PRIDES pursuant to the Exchange Offer.
Should any such approval or other action be required, the Company currently
contemplates that it will seek such approval or other action. The Company cannot
predict whether it may determine that it is required to delay the acceptance for
exchange of PRIDES tendered pursuant to the Exchange Offer pending the outcome
of any such matter. There can be no assurance that any such approval or other
action, if needed, would be obtained or would be obtained without substantial
conditions or that the failure to obtain any such approval or other action might
not result in adverse consequences to the Company's business. The Company
intends to make all required filings under the Exchange Act. The Company's
obligation under the Exchange Offer to accept PRIDES for exchange is subject to
certain conditions. See "-- Certain Conditions of the Exchange Offer."
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time and regardless of whether or not any of the events set
forth under "-- Certain Conditions of the Exchange Offer" shall have occurred or
shall be deemed by the Company to have occurred, to extend the period of time
during which the Exchange Offer is open and thereby delay acceptance for
exchange of any PRIDES by giving oral or written notice of such extension to the
Exchange Agent and making a public announcement thereof. During any such
extension, all PRIDES previously tendered and not exchanged or withdrawn will
remain subject to the Exchange Offer, except to the extent that such PRIDES may
be withdrawn as set forth under "-- Withdrawal Rights." The Company also
expressly reserves the right, in its sole discretion, to withdraw or terminate
the Exchange Offer and not accept for exchange or exchange shares of Class A
Common Stock for any PRIDES not theretofore accepted for exchange or exchanged
or, subject to applicable law, to postpone the exchange of Class A Common Stock
for PRIDES under circumstances including but not limited to the occurrence of
any of the conditions specified under "-- Certain Conditions of the Exchange
Offer" by giving oral or written notice of such termination or postponement to
the Exchange Agent and making a public announcement thereof. The Company's
reservation of the right to delay the exchange of Class A Common Stock for
PRIDES which it has accepted for exchange is limited by Rule 13e-4(f)(5)
promulgated under the Exchange Act, which requires that the Company must pay the
consideration offered or return the PRIDES tendered promptly after termination
or withdrawal of a tender offer. Subject to compliance with applicable law, the
Company further reserves the right, in its sole discretion, and regardless of
whether or not any of the events set forth under "-- Certain Conditions of the
Exchange Offer" shall have occurred or shall be deemed by the Company to have
occurred, to amend the Exchange Offer in any respect (including, without
limitation, by decreasing or increasing the consideration offered in the
Exchange Offer to owners of PRIDES or by decreasing the number of PRIDES being
sought in the Exchange Offer). Amendments to the Exchange Offer may be made at
any time or from time to time effected by public announcement thereof, such
announcement, in the case of an extension, to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Any disclosure of a material change in the information
published, sent or given to holders of PRIDES will be disseminated promptly to
holders of PRIDES in a manner reasonably calculated to inform holders of such
change to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated
under the Exchange Act. Without limiting the manner in which the Company may
choose to make a public announcement pursuant to or concerning the Exchange
Offer, except as required by applicable law, the Company shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service.
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If the Company makes a material change in the terms of the Exchange Offer
or the information concerning the Exchange Offer or waives a material condition
of the Exchange Offer, the Company will extend the Exchange Offer to the extent
required by applicable rules or regulations promulgated under the Exchange Act.
The minimum period during which an offer must remain open following material
changes in the terms of the offer or information concerning the offer (other
than a change in price or a change in percentage of securities sought) will
depend on the facts and circumstances then existing, including the relative
materiality of the changed terms or information. If (a) the Company (i)
increases or decreases the price at which PRIDES may be properly tendered or
(ii) decreases the number of PRIDES being sought, and (b) the Exchange Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from and including the date that notice of such
increase or decrease is first published, sent or given, the Exchange Offer will
be extended until the expiration of such ten business day period.
FEES AND EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer, and will not pay any fees or commissions to
any broker, dealer, commercial bank, trust company or other person for
soliciting PRIDES pursuant to the Exchange Offer. The Company will, however, on
request, reimburse such persons for customary handling and mailing expenses
incurred in forwarding materials in respect of the Exchange Offer to the
beneficial owners for which they act as nominees. No broker, dealer, commercial
bank or trust company has been authorized to act as an agent for the Company for
the purpose of the Exchange Offer. The Company will pay (or cause to be paid)
any stock transfer taxes on its purchase of PRIDES pursuant to the Exchange
Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
First Chicago Trust Company of New York ("First Chicago") has been retained
by the Company as Exchange Agent and Information Agent in connection with the
Exchange Offer. The Information Agent will assist shareholders who request
assistance in connection with the Exchange Offer. The Information Agent may
contact holders of PRIDES by mail, telephone, telex, telegraph or fax and may
request brokers, dealers and other nominee shareholders to forward materials
relating to the Exchange Offer to beneficial owners for whom they act as
nominee. First Chicago will receive reasonable and customary compensation for
its services in connection with the Exchange Offer and will be reimbursed for
reasonable expenses, including the reasonable fees and expenses of counsel. The
Company has agreed to indemnify First Chicago against certain liabilities which
could occur in connection with the Exchange Offer, including certain liabilities
under the Federal securities laws. First Chicago has not been retained to, or
authorized to, make solicitations or recommendations in connection with the
Exchange Offer in its role as Exchange Agent or Information Agent.
The cash expenses to be incurred in connection with the Exchange Offer,
including the fees and expenses of the Exchange Agent and the Information Agent,
and printing, accounting and legal fees, will be paid by the Company and are
estimated at approximately $105,000.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the anticipated Federal income tax
consequences to holders of PRIDES who exchange their PRIDES for Class A Common
Stock pursuant to the Exchange Offer. This discussion is based upon the Internal
Revenue Code of 1986, as amended (the "Code"), regulations of the Treasury
Department, administrative rulings and pronouncements of the Internal Revenue
Service (the "IRS") and judicial decisions, all as of the date hereof. All of
the foregoing are subject to change and any such change may be retroactively
applied. This discussion does not purport to address all of the Federal income
tax consequences that may be applicable to particular categories of holders of
PRIDES, some of which may be subject to special rules.
INCOME, GAIN OR LOSS. The exchange of PRIDES for Class A Common Stock
pursuant to the Exchange Offer should qualify as a "recapitalization" under
Section 368(a)(1)(E) of the Code. Although the IRS could take a contrary
position, the premium received on the exchange of PRIDES for Class A Common
Stock, based on the respective market prices of the PRIDES and Class A Common
Stock prior to the
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announcement of the Exchange Offer, should not result in taxable income to the
holders of PRIDES. Accordingly, holders of PRIDES should not be required to
recognize any income, gain or loss on the exchange, except that cash received,
if any, in lieu of fractional shares of Class A Common Stock should be treated
as though received in a redemption of the fractional PRIDES (the character of
the gain or loss on such redemption would be determined under the rules of
Section 302 of the Code which would generally result in capital gain or loss
treatment).
BASIS AND HOLDING PERIOD. The aggregate tax basis of the Class A Common
Stock received pursuant to the Exchange Offer should be equal to the tax basis
of the exchanging holder of PRIDES' tax basis in the PRIDES exchanged therefor
but with a possible adjustment to the extent of the tax basis of the fractional
shares of Class A Common Stock that are treated as redeemed. Provided that an
exchanging holder of PRIDES holds its PRIDES as a capital asset on the date of
the exchange, the holding period of the Class A Common Stock received by such
exchanging holder of PRIDES should include the period during which it held the
PRIDES exchanged therefor.
STATE, LOCAL AND FOREIGN TAXES. The foregoing discussion relates only to
Federal income tax consequences of the Exchange Offer. Holders of PRIDES should
consult their own tax advisors regarding the possible state, local and foreign
tax consequences of the Exchange Offer.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SALES MADE
BY THEM PURSUANT TO THE OFFER IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 250,000,000 shares
of Class A Common Stock, $.01 par value per share, 50,000,000 shares of Class B
Common Stock, $.01 par value per share ("Class B Common Stock"), and 20,000,000
shares of Preferred Stock ("Preferred Stock"). As of June 30, 1998 there were
approximately 71,689,899 shares of Class A Common Stock outstanding, 14,990,000
shares of Class B Common Stock and 11,918,909 shares of Preferred Stock
outstanding.
CLASS A AND CLASS B COMMON STOCK
VOTING RIGHTS
Holders of Class A Common Stock are entitled to one vote per share and
holders of Class B Common Stock are entitled to ten votes per share. Holders of
Class A Common Stock and Class B Common Stock are not entitled to vote
cumulatively for the election of Directors. Hollinger Inc. presently retains, by
virtue of its beneficial ownership of all outstanding shares of Class B Common
Stock, effective control of the Company through its beneficial ownership of
approximately 79.2% of the combined voting power of the outstanding Common
Stock.
Directors may be removed with or without cause by the holders of the Common
Stock. A vacancy on the Board of Directors created by the removal or resignation
of a director or by the expansion of the authorized number of directors may be
filled by the remaining directors then in office.
The holders of Class A Common Stock and Class B Common Stock vote together
as a single class on all matters on which stockholders may vote, except when
class voting is required by applicable law.
DIVIDENDS
Each share of Class A Common Stock and Class B Common Stock is entitled to
receive dividends if, as and when declared by the Board of Directors. Under the
Delaware General Corporation Law, the Company may declare and pay dividends only
out of its surplus, or in case there shall be no such surplus, out of its net
profits for the fiscal year in which the dividend is declared and/or the
preceding year. Under the Delaware
21
<PAGE> 26
General Corporation Law, surplus is defined as the excess, if any, at any given
time, of the net assets of the Company over the amount determined to be capital.
Capital represents the aggregate par value of the Company's capital stock. No
dividends may be declared, however, if the capital of the Company has been
diminished by depreciation, losses or otherwise to any amount less than the
aggregate of capital represented by any issued and outstanding stock having a
preference on distribution. Dividends must be paid on both the Class A Common
Stock and the Class B Common Stock at any time that dividends are paid on
either. Any dividend so declared and payable in cash, capital stock of the
Company (other than Class A Common Stock or Class B Common Stock) or other
property will be paid equally, share for share, on the Class A Common Stock and
Class B Common Stock. Dividends and distributions payable in shares of Class A
Common Stock may be paid only on shares of Class A Common Stock and dividends
and distributions payable in shares of Class B Common Stock may be paid only on
shares of Class B Common Stock. If a dividend or distribution payable in Class A
Common Stock is made on the Class A Common Stock, the Company must also make a
simultaneous dividend or distribution on the Class B Common Stock. If a dividend
or distribution payable in Class B Common Stock is made on the Class B Common
Stock, the Company must also make a simultaneous dividend or distribution on the
Class A Common Stock. Pursuant to any such dividend or distribution, each share
of Class B Common Stock will receive a number of shares of Class B Common Stock
equal to the number of shares of Class A Common Stock payable on each share of
Class A Common Stock.
TRANSFERABILITY AND CONVERTIBILITY OF CLASS B COMMON STOCK
Each share of Class B Common Stock is convertible at any time at the option
of the holder into one share of Class A Common Stock and is transferable by
Hollinger Inc. to a subsidiary or an affiliate. In addition, each share of Class
B Common Stock is automatically convertible into a share of Class A Common Stock
at the time it is sold, transferred or otherwise disposed of by Hollinger Inc.
or a subsequent permitted transferee to any third party (other than a subsidiary
or an affiliate of Hollinger Inc. or such subsequent permitted transferee)
unless 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 the holder of the Class B Common Stock. Any such
offer shall be subject to the requirements of applicable securities laws.
Any holder of Class B Common Stock may pledge his or its shares of Class B
Common Stock to a pledgee pursuant to a bona fide pledge of such shares as
collateral security for indebtedness due to the pledgee, provided that such
shares shall not be transferred to or registered in the name of the pledgee and
shall remain subject to the transfer restrictions described in the foregoing
paragraph. In the event that shares of Class B Common Stock are so pledged, the
pledged shares shall not be converted automatically into Class A Common Stock.
However, if any such pledged shares become subject to any foreclosure,
realization or other similar action of the pledgee, they shall be converted
automatically into shares of Class A Common Stock unless they are sold in a
permitted transaction. Hollinger Inc. has pledged all shares of Class A Common
Stock, Class B Common Stock, Series C Preferred Stock and Series D Preferred
Stock beneficially owned by it to Canadian chartered banks as collateral for
outstanding indebtedness of Hollinger Inc. and its subsidiaries.
OTHER PROVISIONS
There are no preemptive rights to subscribe for any additional securities
which the Company may issue, and there are no redemption provisions or sinking
fund provisions applicable to either class, nor is the Class A Common Stock or
the Class B Common Stock subject to calls or assessments by the Company.
In the event of the liquidation, dissolution or winding up of the Company,
holders of the shares of Class A Common Stock and Class B Common Stock are
entitled to share equally, share for share, in the assets available for
distribution.
PREFERRED STOCK
The Company's Restated Certificate of Incorporation authorizes the issuance
of up to 20,000,000 shares of Preferred Stock. The Board of Directors has the
authority under the Restated Certificate of Incorporation
22
<PAGE> 27
to establish voting rights, liquidation preferences, redemption rights,
conversion rights and other rights with respect to such Preferred Stock without
the approval of the Company's stockholders.
PRIDES
As of June 30, 1998, there were 20,700,000 PRIDES outstanding. The PRIDES
are depositary shares, each of which represents one half share of Series B
Convertible Preferred Stock (the "Convertible Preferred Stock"). The Convertible
Preferred Stock ranks (i) senior in right and priority of payment to the Common
Stock as to dividends and upon liquidation, (ii) pari passu to the Company's
outstanding Series C Preferred Stock as to dividends and upon liquidation and
(iii) junior to the Company's outstanding Series D Preferred Stock as to
dividends and upon liquidation. The Convertible Preferred Stock is convertible
into shares of Class A Common Stock, as described below. In addition, the
Company has the option to redeem the shares of Convertible Preferred Stock, in
whole or in part, at any time on or after August 1, 1999 and prior to the
Mandatory Conversion Date.
Holders of PRIDES are entitled to receive quarterly cumulative dividends on
the Convertible Preferred Stock represented thereby at a rate of 9 3/4% per
annum for each PRIDES. Dividends cease to accrue on the earlier of (i) the day
immediately prior to the Mandatory Conversion Date or (ii) the day immediately
prior to the earlier redemption of the Convertible Preferred Stock.
On the Mandatory Conversion Date, unless previously redeemed or converted,
each half share of Convertible Preferred Stock represented by outstanding PRIDES
will mandatorily convert into (i) one share of Class A Common Stock, subject to
adjustment in certain events, (ii) cash in lieu of fractional shares of Class A
Common Stock and (iii) the right to receive cash in an amount equal to all
accrued and unpaid dividends thereon (other than previously declared dividends
payable to a holder of record on a prior date).
Shares of Convertible Preferred Stock represented by PRIDES are not
redeemable prior to August 1, 1999. At any time and from time to time on or
after August 1, 1999 until immediately prior to the Mandatory Conversion Date,
the Company may redeem any or all of the outstanding shares of Convertible
Preferred Stock represented by PRIDES. Upon any such redemption, each holder
will receive, in exchange for each half share of Convertible Preferred Stock
represented by PRIDES, a number of shares of Class A Common Stock equal to the
sum of (i) $9.988 declining to $9.750 on the Mandatory Conversion Date, and (ii)
all accrued and unpaid dividends thereon (other than previously declared
dividends payable to a holder of record as of a prior date) divided by the
current market price for shares of Class A Common Stock on the applicable date
of determination, but in no event less than 0.8439 of a share of Class A Common
Stock, subject to adjustment.
At any time prior to the Mandatory Conversion Date, unless previously
redeemed, each half share of Convertible Preferred Stock represented by PRIDES
is convertible at the option of the holder thereof into 0.8439 of a share of
Class A Common Stock, equivalent to a conversion price of $11.55 per share of
Class A Common Stock, subject to adjustment.
SERIES C PREFERRED STOCK
The Company's Series C Convertible Preferred Stock (the "Series C Preferred
Stock") consists of 829,409 outstanding shares of Series C Preferred Stock, all
of which are beneficially held by Hollinger Inc. The Series C Preferred Stock
ranks senior in right and priority of payment to the Class A and Class B Common
Stock, on a parity with the Convertible Preferred Stock and junior to the Series
D Preferred Stock as to dividends and upon liquidation. Holders of Series C
Preferred Stock are entitled to receive cumulative dividends at a rate of 9 1/2%
per annum of the stated liquidation amount of $108.51 per share of Series C
Preferred Stock, payable quarterly.
The Series C Preferred Stock is mandatorily convertible into shares of
Class A Common Stock on June 1, 2001, and the Company has the option to redeem
the shares of Series C Preferred Stock, in whole or in part, at any item on or
after June 1, 2000, and prior to June 1, 2001. At any time prior to June 1,
2001, unless previously redeemed, each share of Series C Preferred Stock is
convertible at the option of the holder thereof into 8.503 shares of Class A
Common Stock. On June 1, 2001, unless previously redeemed or
23
<PAGE> 28
converted, each share of Series C Preferred Stock will mandatorily convert into
(i) 9.8646 shares of Class A Common Stock, subject to adjustment in certain
events, and (ii) the right to receive cash in an amount equal to all accrued and
unpaid dividends thereon.
The holders of Series C Preferred Stock have the right to vote together as
a single class with the holders of Class A Common Stock and Class B Common Stock
and Convertible Preferred Stock in the election of Directors and upon each other
matter coming before the stockholders of the Company on the basis of ten votes
per share of Series C Preferred Stock, except as otherwise provided by law or
the Company's Restated Certificate of Incorporation. In addition, (i) whenever
dividends on the Series C Preferred Stock or any other series of Preferred Stock
with like voting rights are in arrears and unpaid for six quarterly dividend
periods, and in certain other circumstances, the holders of all Series C
Preferred Stock (voting separately as a class) will be entitled to vote, on the
basis of ten votes for each share of Series C Preferred Stock, for the election
of two directors of the Company, such directors to be in addition to the number
of directors constituting the Board of Directors immediately prior to the
accrual of such right, and (ii) the holders of Series C Preferred Stock may have
voting rights with respect to certain alterations of the Restated Certificate of
Incorporation and certain other matters, voting on the same basis or separately
as a class.
SERIES D PREFERRED STOCK
The Company's Series D Preferred Stock (the "Series D Preferred Stock")
consists of 739,500 outstanding shares of Series D Preferred Stock, all of which
is held by 504468 N.B., Inc., an affiliate of Hollinger Inc. The shares of the
Series D Preferred Stock are 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 of the Southam Inc. common shares
directly or indirectly owned by Hollinger Inc. and its affiliates 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 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 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 or 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 are 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. 504468 N.B., Inc., the holder of all of the outstanding shares of Series
D Preferred Stock, has agreed pursuant to a Share Exchange Agreement dated as of
July 19, 1995 between the Company and Hollinger Inc., a Second Amended and
Restated Second Exchange Agreement dated as of July 21, 1997, among the Company,
Hollinger Inc., UniMedia Holding Company and 1159670 Ontario Limited, and a
letter agreement dated as of July 29, 1997, among the Company, Hollinger Inc.
and Hollinger Canadian Publishing Holdings Inc. to limit the exercise of its
redemption rights to a number of Hollinger-Telegraph Holdings Inc. shares or
Southam Inc. common shares that at the time of such exercise have been delivered
to First DT Holdings Limited free and clear of encumbrances other than certain
permitted 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 Inc. common shares on the Toronto
Stock Exchange during the 20 business days preceding July 19, 1995) plus an
amount equal to accrued and unpaid dividends. A holder exercising redemption
rights must give notice to the Company not less than 180 and not
24
<PAGE> 29
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. 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 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 may 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 distributions 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
distribution paid in cash out of consolidated current or retained earnings per
the Company's books, and not including rights or warrants mentioned above. 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 is to 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 are 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 are subject to certain
restrictions on transfer.
Any holder of Series D Preferred Stock may 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 shares
shall remain subject to, and upon foreclosure, realization or other similar
action by the pledgee, shall be transferred only in accordance with, the
transfer restrictions set forth in the Restated Certificate of Incorporation.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock and the PRIDES is the
First Chicago Trust Company of New York.
HOLLINGER INTERNATIONAL INC.
July 8, 1998
25
<PAGE> 30
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for PRIDES
and any other required documents should be sent or delivered by each holder of
the PRIDES or such holder's broker, dealer, commercial bank, trust company or
other nominee to the Exchange Agent at one of its addresses set forth below.
The Exchange Agent and the Information Agent for the Exchange Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Facsimile Transmission:
(For Eligible Institutions Only)
201-222-4720
or
201-222-4721
By Mail:
---------
Tenders & Exchanges
Suite 4660 - HLR
P.O. Box 2569
Jersey City, NJ
07303-2569
By Hand:
----------
Tenders & Exchanges
c/o The Depository Trust Company
55 Water Street
DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
By Overnight Courier:
-----------------------
Tenders & Exchanges
Suite 4680 - HLR
14 Wall Street -- 8th Floor
New York, NY 10005
For Information:
1-800-251-4215
- --------------------------------------------------------------------------------
Any questions or requests for assistance or for additional copies of this
Offering Circular, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent. Holders of PRIDES may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Exchange Offer.
- --------------------------------------------------------------------------------
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER 9 3/4% PRIDES DEPOSITARY SHARES
REPRESENTING SERIES B CONVERTIBLE PREFERRED STOCK
OF
HOLLINGER INTERNATIONAL INC.
PURSUANT TO THE OFFERING CIRCULAR
DATED JULY 8, 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, AUGUST 4, 1998, UNLESS THE
EXCHANGE OFFER IS EXTENDED.
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK, EXCHANGE AGENT
<TABLE>
<CAPTION>
By Mail: By Hand: By Overnight Courier:
-------- -------- ---------------------
<S> <C> <C>
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 -- HLR c/o The Depository Trust Company Suite 4680 -- HLR
P.O. Box 2569 55 Water Street 14 Wall Street -- 8th
Jersey City, NJ 07303-2569 DTC TAD Floor
Vietnam Veterans Memorial Plaza New York, NY 10005
New York, NY 10041
</TABLE>
------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
This Letter of Transmittal is to be used only if (a) certificates for
PRIDES (as defined below) are to be delivered with it or (b) PRIDES are being
delivered by book-entry transfer to the account maintained by the Exchange Agent
at The Depository Trust Company ("DTC" or the "Book-Entry Transfer Facility") as
set forth under the "The Exchange Offer -- Procedure for Tendering Prides" in
the Offering Circular (as defined below).
Holders whose certificates for PRIDES are not immediately available (or who
cannot follow the procedure for book-entry transfer on a timely basis) or who
cannot transmit this Letter of Transmittal and all other required documents to
the Exchange Agent before the Expiration Date (as defined in the Offering
Circular) may nevertheless tender their PRIDES according to the guaranteed
delivery procedure set forth under "The Exchange Offer -- Procedure for
Tendering PRIDES" in the Offering Circular. See Instruction 2.
DELIVERY OF THE LETTER OF TRANSMITTAL AND THE OTHER REQUIRED DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------
DESCRIPTION OF PRIDES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
- -----------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON PRIDES TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
PRIDES NUMBER OF
CERTIFICATE REPRESENTED BY PRIDES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
TOTAL PRIDES
- -----------------------------------------------------------
* Need not be completed if PRIDES are delivered by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all PRIDES represented by any certificates delivered to the
Exchange Agent are being tendered. See Instruction 4.
- -----------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED PRIDES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AT THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
-----------------------------------------------------------------------------
DTC Account Number:
-----------------------------------------------------------------------------
Transaction Code Number:
-----------------------------------------------------------------------------
[ ]CHECK HERE IF CERTIFICATES FOR TENDERED PRIDES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of the Tendering Holder(s):
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------------------------------------------
Name of Institution Which Guaranteed Delivery:
-----------------------------------------------------------------
Check Box of Book-Entry Transfer Facility and Give Account Number if
Delivered By Book-Entry Transfer:
[ ] DTC
Account Number:
------------------------------------------------------------------------------
Transaction Code Number:
------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
------------------------------
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Hollinger International Inc., a Delaware
corporation (the "Company"), the above-described 9 3/4% PRIDES Depositary Shares
("PRIDES") of the Company, each representing one-half share of the Company's
Series B Convertible Preferred Stock, par value $0.01 per share (the
"Convertible Preferred Stock"), in exchange for 0.92 shares of Class A Common
Stock, par value $0.01 per share (the "Class A Common Stock"), of the Company
for each PRIDES, upon the terms and subject to the conditions set forth in the
Offering Circular dated July 8, 1998 (the "Offering Circular"), receipt of which
is hereby acknowledged, and in this Letter of Transmittal (which together
constitute the "Exchange Offer").
Subject to and effective upon acceptance for exchange of the PRIDES
tendered herewith in accordance with the terms of the Exchange Offer (including,
if the Exchange Offer is extended or amended, the terms or conditions of any
such extension or amendment), the undersigned hereby sells, assigns and
transfers to or upon the order of the Company all right, title and interest in
and to all the PRIDES tendered hereby, or orders the registration of such PRIDES
delivered by book-entry transfer, that are exchanged pursuant to the Exchange
Offer and hereby irrevocably constitutes and appoints the Exchange Agent for the
Exchange Offer (the "Exchange Agent") the true and lawful agent and
attorney-in-fact of the undersigned with respect to such PRIDES, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to:
(a) deliver certificates for such PRIDES, or transfer ownership of such
PRIDES on the account books maintained by the Book-Entry Transfer
Facility, together, in any such case, with all accompanying evidence of
transfer and authenticity, to or upon the order of the Company, upon
receipt by the Exchange Agent, as the undersigned's agent, of the Class
A Common Stock to which the undersigned is entitled upon the acceptance
by the Company of such PRIDES under the Exchange Offer with respect to
such PRIDES;
(b) present certificates for such PRIDES for cancellation and transfer of
such PRIDES on the Company's books; and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such PRIDES, all in accordance with the terms of the
Exchange Offer.
The undersigned hereby represents and warrants that:
(a) the undersigned "owns" the PRIDES tendered hereby within the meaning of
Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as
amended, and has full power and authority to validly tender, sell,
assign and transfer the PRIDES tendered hereby;
(b) the tender of PRIDES by the undersigned complies with Rule 14e-4;
(c) when and to the extent the Company accepts the PRIDES for exchange, the
Company will acquire good, marketable and unencumbered title thereto,
free and clear of all security interests, liens, charges, encumbrances,
conditional sales agreements or other obligations relating to their
sale or transfer, and not subject to any adverse claim;
(d) on request, the undersigned will execute and deliver any additional
documents the Exchange Agent or the Company deems necessary or
desirable to complete the assignment, transfer and exchange of the
PRIDES tendered hereby; and
(e) the undersigned has read and agrees to all the terms of the Exchange
Offer.
The undersigned understands that, upon acceptance by the Company of the
PRIDES tendered hereby, the undersigned will be deemed to have waived all right
with respect to any dividends which accrued on the Convertible Preferred Stock
represented by the PRIDES on and after August 1, 1998.
The undersigned understands that tenders of PRIDES pursuant to any one of
the procedures described under "The Tender Offer -- Procedure for Tendering
PRIDES" in the Offering Circular and in the
<PAGE> 4
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offering Circular, the Company may terminate or amend the Exchange Offer or
may not be required to accept for exchange any of the PRIDES.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
stated in the Offering Circular, this tender is irrevocable.
Unless otherwise indicated under "Special Issuance Instructions", please
deliver shares of Class A Common Stock and any check for cash in lieu of
fractional shares of Class A Common Stock and/or return or issue the
certificate(s) evidencing any PRIDES not tendered or not accepted for exchange
in the name(s) of the registered holder(s) appearing under "Description of
PRIDES Tendered". Similarly, unless otherwise indicated under "Special Delivery
Instructions", please deliver shares of Class A Common Stock and any check for
cash in lieu of fractional shares of Class A Common Stock and/or the
certificate(s) evidencing any PRIDES not tendered or not accepted for exchange
(and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under "Description of PRIDES Tendered". In the
event that both the "Special Delivery Instructions" and the "Special Issuance
Instructions" are completed, please issue the shares of Class A Common Stock and
any check for cash in lieu of fractional shares of Class A Common Stock and/or
issue or return the certificate(s) evidencing any PRIDES not tendered or
accepted for exchange in the name(s) of, and deliver said check and/or
certificate(s) to, the person or persons so indicated. In the case of book-entry
delivery of PRIDES, please credit the account maintained at the Book-Entry
Transfer Facility with any PRIDES not accepted for exchange. The undersigned
recognizes that the Company has no obligation pursuant to the "Special Issuance
Instructions" to transfer any PRIDES from the name(s) of the registered
holder(s) thereof if the Company does not accept for exchange any of the PRIDES
so tendered.
<PAGE> 5
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 8)
To be completed ONLY if certificates for Class A Common Stock and any check for
cash in lieu of fractional shares of Class A Common Stock and/or certificates
for PRIDES not tendered or not exchanged are to be mailed to someone other than
the undersigned or to the undersigned at an address other than that shown below
the undersigned's signature.
Mail certificates and check to:
Name:
- ------------------------------------------------
(PLEASE PRINT)
Address:
- ----------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
(ZIP CODE)
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6, 7, AND 8)
To be completed ONLY if certificates for Class A Common Stock and any check for
cash in lieu of fractional shares of Class A Common Stock and/or certificates
for PRIDES not tendered or not exchanged are to be registered and issued in the
name of someone other than the undersigned.
Issue any certificates and check to:
Name:
- ------------------------------------------------
(PLEASE PRINT)
Address:
- ----------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
(ZIP CODE)
- -------------------------------------------------------
(TAXPAYER IDENTIFICATION NUMBER)
<PAGE> 6
SIGN HERE
(See Instructions 1 and 5)
(Please complete Substitute Form W-9 below)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
Name(s):
- --------------------------------------------------------------------------------
(Please Print)
- --------------------------------------------------------------------------------
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
- -------------------------------------------------------------------------------
Taxpayer Identification Number:
- --------------------------------------------------------------------------------
(See Instruction 10)
Dated:
- --------------------------------------------------------------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for PRIDES or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation
or other person acting in a fiduciary or representative capacity, please
set forth full title. See Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
(Please Print)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
- -------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
<PAGE> 7
IMPORTANT TAX INFORMATION
Under U.S. Federal income tax law, a holder whose tendered PRIDES are
accepted for exchange is required by law to provide the Exchange Agent with such
holder's correct taxpayer identification number ("TIN") on the Substitute Form
W-9 below. If the Exchange Agent is not provided with the correct TIN, the
Internal Revenue Service may subject the holder or other payee to a $50 penalty.
In addition, cash payments that are made to such holder or other payee with
respect to PRIDES exchanged pursuant to the Exchange Offer may be subject to 31%
backup withholding.
Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing "exempt" across the
face of the Substitute Form W-9. In order for a foreign individual to qualify as
an exempt recipient, the holder must submit a Form W-8, signed under penalties
of perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Exchange Agent. See the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any such cash payments to be made to the holder or other payee. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% on all cash payments made prior to the time a properly certified
TIN is provided to the Exchange Agent.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the record owner of the
PRIDES or of the last transferee appearing on the transfers attached to, or
endorsed on, the certificates evidencing the PRIDES. If the PRIDES are
registered in more than one name or are not registered in the name of the actual
owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
<PAGE> 8
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT SOCIAL SECURITY NUMBER(S)
SUBSTITUTE RIGHT AND CERTIFY BY SIGNING AND DATING BELOW.
FORM W-9 / /
-------------------------------
OR
EMPLOYER IDENTIFICATION
NUMBER(S)
/
-------------------------------
-------------------------------------------------------------------------------------
PART 2 --
PAYER'S REQUEST FOR AWAITING TIN [ ]
TAXPAYER IDENTIFICATION
NUMBER (TIN) CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION
PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
Name
----------------------------------------------------------------------------
(Please print)
Address
--------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Including zip code)
SIGNATURE--------------------------------------------------------------------
DATE---------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and
either (a) I have mailed or delivered an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to
mail or deliver an application in the near future. I understand that, notwithstanding that I have checked
the box in Part 2 (and completed this Certificate of Awaiting Taxpayer Identification Number), all
reportable cash payments made to me before the time I provide the Exchange Agent with a properly certified
taxpayer identification number will be subject to a 31% backup withholding tax.
---------------------------------------------------------------
------------------------------------
Signature Date
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENT MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL
DETAILS.
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations, and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchanges Medallion Program (each such entity being hereinafter referred to as
an "Eligible Institution"). Signatures on this Letter of Transmittal need not be
guaranteed if (a) this Letter of Transmittal is signed by the registered owner
of the PRIDES (which term, for purposes of this document, shall include any
participant in the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of PRIDES) tendered herewith and such owner has
not completed either of the boxes entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on this Letter of Transmittal or (b) such PRIDES
are tendered for the account of an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and PRIDES; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be used only if (a) certificates
are to be forwarded with it to the Exchange Agent or (b) delivery of PRIDES is
to be made by book-entry transfer pursuant to the procedure set forth under "The
Exchange Offer -- Procedure for Tendering PRIDES" in the Offering Circular.
Certificates for all physically delivered PRIDES, or a confirmation of a
book-entry transfer of all PRIDES delivered electronically into the Exchange
Agent's account at the Book-Entry Transfer Facility, together in each case with
a properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), with any required signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at one of its addresses set forth on the front page of this Letter of
Transmittal before the Expiration Date (as defined in the Offering Circular).
Delivery of documents to the Book-Entry Transfer Facility does not constitute
delivery to the Exchange Agent.
Holders whose certificates are not immediately available (or who cannot
follow the procedures for book-entry transfer on a timely basis) or who cannot
transmit this Letter of Transmittal and all other required documents to reach
the Exchange Agent before the Expiration Date, may nevertheless tender their
PRIDES pursuant to the guaranteed delivery procedure set forth under "The
Exchange Offer -- Procedure for Tendering PRIDES" in the Offering Circular.
Pursuant to such procedure: (a) such tender must be made by or through an
Eligible Institution, (b) the Exchange Agent must receive (by hand, mail or
facsimile transmission), before the Expiration Date, a properly completed and
duly executed Notice of Guaranteed Delivery substantially in the form the
Company has provided with the Offering Circular and (c) the certificates for all
tendered PRIDES in proper form for transfer (or confirmation of a book-entry
transfer of all such PRIDES into the Exchange Agent's account at the Book-Entry
Transfer Facility), together with a properly completed and duly executed Letter
of Transmittal (or facsimile thereof) and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided under "The Exchange Offer -- Procedure for
Tendering PRIDES" in the Offering Circular.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR PRIDES,
THIS LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION
AND RISK OF THE TENDERING HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted, and no
fractional PRIDES will be exchanged. By executing this Letter of Transmittal (or
a facsimile thereof), each tendering holder waives any right to receive any
notice of the acceptance of such holder's tender.
3. Inadequate Space. If the space provided in the box entitled "Description
of PRIDES Tendered" is inadequate, the certificate numbers and/or the number of
PRIDES should be listed on a separate signed schedule and attached to this
Letter of Transmittal.
4. Partial Tenders and Unexchanged PRIDES. (Not applicable to holders who
deliver PRIDES by book-entry transfer). If fewer than all the PRIDES evidenced
by any certificate delivered to the Exchange
<PAGE> 10
Agent are to be tendered, fill in the number of PRIDES that are to be tendered
in the box entitled "Number of PRIDES Tendered". If such PRIDES are exchanged, a
new certificate for the remainder of the PRIDES evidenced by the old
certificate(s) will be sent to and in the name of the registered holder(s)
(unless otherwise specified by such holder(s) having completed either or both of
the boxes entitled "Special Delivery Instructions" or "Special Issuance
Instructions" on this Letter of Transmittal) as soon as practicable following
the expiration or termination of the Exchange Offer. All PRIDES represented by
the certificate(s) listed and delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers; and Endorsements.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the PRIDES tendered herewith, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificates without any change
whatsoever.
(b) If any of the PRIDES tendered herewith are registered in the names of
two or more joint owners, each such owner must sign this Letter of Transmittal.
(c) If any of the PRIDES tendered herewith are registered in different
names on different certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal as there are different
registrations of certificates.
(d) If this Letter of Transmittal is signed by the registered holder(s) of
the PRIDES tendered herewith, no endorsements of certificates or separate stock
powers are required unless shares of Class A Common Stock are to be issued
and/or certificates for PRIDES not tendered or not exchanged are to be issued to
a person other than the registered holder(s). If this Letter of Transmittal is
signed by a person other than the registered holder(s) of the PRIDES tendered
herewith, however, the certificates must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the name(s) of the
registered holder(s) appear on the certificates for such PRIDES. Signatures on
any such certificates or stock powers must be guaranteed by an Eligible
Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing and proper evidence
satisfactory to the Company of the authority of such person so to act must be
submitted.
6. Stock Transfer Taxes. The Company will pay any stock transfer taxes with
respect to the transfer of PRIDES to it or its order pursuant to the Exchange
Offer. If, however, shares of Class A Common Stock are to be issued to, or
certificates for PRIDES not tendered or accepted for exchange are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder or such person) payable on
account of the transfer to such person will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
7. Irregularities. All questions as to the number of PRIDES to be accepted
and the validity, form, eligibility (including time of receipt) and acceptance
for exchange of any tender of PRIDES will be determined by the Company, in its
sole discretion, which determination shall be final and binding on all parties.
The Company reserves the absolute right to reject any or all tenders determined
by it not to be in proper form or the acceptance for exchange of which may, in
the opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any of the conditions of the Exchange Offer and any
defect or irregularity in the tender of any particular PRIDES. The Company's
interpretation of the terms and conditions of the Exchange Offer (including
these instructions) shall be final and binding on all parties. No tender of
PRIDES will be deemed properly made until all defects or irregularities have
been cured or waived. None of the Company, the Exchange Agent, the Information
Agent or any other person is or will be obligated to give notice of any defects
or irregularities in tenders, and none of them will incur any liability for
failure to give any such notice.
<PAGE> 11
8. Special Issuance and Delivery Instructions. If the shares of Class A
Common Stock and any check for cash in lieu of fractional shares of Class A
Common Stock are to be issued to, or any PRIDES not tendered or not exchanged
are to be returned in the name of, a person other than the person(s) signing
this Letter of Transmittal or if the shares of Class A Common Stock and any
check for cash in lieu of fractional shares of Class A Common Stock or any
certificates for PRIDES not tendered or not exchanged are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that shown
in the box entitled "Description of PRIDES Tendered", the boxes entitled
"Special Issuance Instructions" and/or "Special Delivery Instructions" on this
Letter of Transmittal should be completed.
9. Request for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offering Circular, this Letter of Transmittal or the
Notice of Guaranteed Delivery may be directed to the Information Agent at its
addresses or telephone numbers set forth below.
10. Substitute Form W-9. Except as provided above under "Important Tax
Information", each tendering holder is required to provide the Exchange Agent
with a correct TIN on Substitute Form W-9 which is provided under "Important Tax
Information" above. Failure to provide the information on the form may subject
the tendering holder to a $50 penalty and a 31% Federal back-up withholding tax
may be imposed on the cash payments made to the holder or other payee with
respect to PRIDES exchanged pursuant to the Exchange Offer.
Facsimile copies of this Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for PRIDES
and any other required documents should be sent or delivered by each holder of
PRIDES or such holder's broker, dealer, commercial bank, trust company or other
nominee to the Exchange Agent at one of its addresses set forth below.
The Exchange Agent and the Information Agent for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Mail: By Hand: By Overnight Courier:
-------- -------- ---------------------
<S> <C> <C>
Tenders & Exchange Tenders & Exchange Tenders & Exchange
Suite 4660 -- HLR c/o The Depository Trust Suite 4680 -- HLR
P.O. Box 2569 Company 14 Wall Street - 8th Floor
Jersey City, NJ 07303-2569 55 Water Street New York, NY 10005
DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
</TABLE>
For Information:
1-800-251-4215
- --------------------------------------------------------------------------------
Any questions or requests for assistance or for additional copies of the
Offering Circular, this Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent. Holders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Exchange Offer.
- --------------------------------------------------------------------------------
<PAGE> 12
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL SECURITY
NUMBER OF --
- ----------------------------------------------------
<S> <C>
1. An individual's The individual
account:
2. Two or more The actual owner of the
individuals account or, if combined
(joint account) funds, any one of the
individuals(1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint
funds, either person(1)
4. Custodian account of The minor(2)
a minor (Uniform Gift
to Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the
minor(1)
6. Account in the name The ward, minor, or
of guardian or incompetent person(3)
committee for a
designated ward,
minor, or incompetent
person
7. a. The usual The grantor-trustee(1)
revocable savings
trust account
(grantor is also
trustee)
b. So-called trust The actual owner(4)
account that is
not a legal or
valid trust under
State law
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
EMPLOYER
IDENTIFICATION
NUMBER OF --
<S> <C>
8. Sole proprietorship The owner(4)
account
9. A valid trust, The legal entity (Do
estate, or pension not furnish the
trust identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
held in the name of
the partnership
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or The broker or
registered nominee registered nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or prison)
that receives
agricultural program
payments.
</TABLE>
- ------------------------------------------------------------
- ------------------------------------------------------------
(1) List all names first and circle the name of the person whose number you
furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Provide the name of the owner.
(5) List all names first and circle the name of the legal trust, estate, or
pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 13
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A state, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a) of the Code.
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
PAYMENTS NOT GENERALLY SUBJECT TO BACKUP WITHHOLDING
- - Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding including
the following:
- - Payments of interest on obligations issued by individuals.
NOTE: A Payee may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and such payee
has not provided its correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- - Payments described in section 6049(b)(5) of the Code to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9 TO
AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE SUBSTITUTE FORM W-9 WITH THE
PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE
OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST,
DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050(A) of the Code.
PRIVACY ACT NOTICE.--Section 6109 of the Code requires most recipients of
dividends, interest or other payments to give taxpayer identification numbers to
payers who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividends and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis that results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
(4) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to
include any portion of an includible payment for interest, dividends or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of an underpayment attributable to that
failure.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
9 3/4% PRIDES DEPOSITARY SHARES
REPRESENTING SERIES B CONVERTIBLE PREFERRED STOCK
OF
HOLLINGER INTERNATIONAL INC.
This form or a facsimile hereof must be used to accept the Exchange Offer
(as defined below) if:
(a) certificates for 9 3/4% PRIDES Depositary Shares ("PRIDES")
representing Series B Convertible Preferred Stock of Hollinger
International Inc., a Delaware corporation (the "Company"), are not
immediately available; or
(b) the procedure for book-entry transfer (set forth under "The
Exchange Offer -- Procedure for Tendering PRIDES" in the Company's Offering
Circular dated July 8, 1998 (the "Offering Circular")) cannot be followed
on a timely basis; or
(c) time will not permit the Letter of Transmittal and all other
required documents to be delivered to the exchange agent for the Exchange
Offer (the "Exchange Agent") before the Expiration Date (as defined in the
Offering Circular).
This form, properly completed and duly executed, may be delivered by hand,
mail or facsimile transmission to the Exchange Agent. See "The Exchange Offer --
Procedure for Tendering PRIDES" in the Offering Circular.
To:
FIRST CHICAGO TRUST COMPANY OF NEW YORK, Exchange Agent
<TABLE>
<CAPTION>
By Mail: By Hand: By Overnight Courier:
<S> <C> <C>
Tender & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 -- HLR c/o The Depository Trust Suite 4680 -- HLR
P.O. Box 2569 Company 14 Wall Street - 8th Floor
Jersey City, NJ 07303-2569 55 Water Street New York, New York 10005
DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
Facsimile Transmission:
(For Eligible Institutions only)
Tenders & Exchanges
(201) 222-4720
or
(201) 222-4721
To Confirm Receipt of
Notice of Guaranteed Delivery:
(201) 222-4707
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
(as defined in the Offering Circular) under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Offering Circular and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, ________ PRIDES pursuant to the guaranteed delivery
procedure set forth under "The Exchange Offer -- Procedure for Tendering PRIDES"
in the Offering Circular.
No. of PRIDES tendered:
-------------------------
Certificate No(s) (if available):
-----------------------------------------------------
-----------------------------------------------------
If PRIDES will be delivered by
book-entry transfer:
--------------------------------
Name of Tendering Institution:
-----------------------------------------------------
Account No.:
----------------------------------- at The Depository Trust Company
SIGN HERE
- -----------------------------------------------------
(Signature(s))
- -----------------------------------------------------
(Signature(s))
- -----------------------------------------------------
(Names) (Please Print)
- -----------------------------------------------------
(Address)
- -----------------------------------------------------
(Zip Code)
- -----------------------------------------------------
(Area Code and Telephone No.)
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an "Eligible Institution", guarantees that (a) the above
named person(s) "own(s)" the PRIDES tendered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, as amended, (b) such tender
of PRIDES complies with Rule 14e-4 and (c) the Exchange Agent will receive
either the certificates representing the PRIDES tendered hereby, in proper
form for transfer, or confirmation of the book-entry transfer of such PRIDES
into the Exchange Agent's account at The Depository Trust Company, in any such
case together with a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and any other required documents, all
within three New York Stock Exchange trading days after the date of execution
of this notice.
Name of Firm:
------------------------------------
-----------------------------------------------------
(Authorized Signature)
Name:
---------------------------------------------
(Please Print or Type)
Title:
-----------------------------------------------
Address:
- -------------------------------------------
- -----------------------------------------------------
(Zip Code)
Area Code and Telephone No.:
- -------------------
Dated:
- ---------------------------------------------
DO NOT SEND CERTIFICATES WITH THIS FORM. YOUR PRIDES CERTIFICATES MUST BE SENT
WITH THE LETTER OF TRANSMITTAL
<PAGE> 1
HOLLINGER INTERNATIONAL INC. LOGO
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
TELEPHONE (312) 321-2299; FACSIMILE (312) 321-0629
July 8, 1998
TO: Holders of 9 3/4% PRIDES Depositary
Shares representing Series B Convertible Preferred Stock of Hollinger
International Inc.
DEAR HOLDER OF PRIDES:
We are pleased to enclose a copy of the Company's offer to exchange 0.92
shares of its Class A Common Stock for each outstanding 9 3/4% PRIDES Depositary
Share (the "PRIDES") representing Series B Convertible Preferred Stock of the
Company.
The Exchange Offer provides holders of PRIDES with the opportunity to
convert PRIDES into a greater number of shares of Class A Common Stock than they
would obtain if they were to exercise the optional conversion feature of the
PRIDES. Exchanging holders will obtain Class A Common Stock having a market
price in excess of the recent market price of the PRIDES prior to the initial
public announcement of the Exchange Offer and the market price of the 0.8439
shares of Class A Common Stock into which each PRIDES may be converted at the
option of its holder prior to August 1, 2000.
The principal purposes of the Exchange Offer are to simplify the Company's
capital structure and to reduce the Company's dividend requirements on the
Convertible Preferred Stock represented by the PRIDES resulting in increased
future earnings on its Common Stock. The Company also believes that the Exchange
Offer should provide greater market liquidity for the Class A Common Stock to
the extent that it results in a greater number of publicly held shares of Class
A Common Stock outstanding following the consummation of the Exchange Offer.
A complete description of the terms of the Exchange Offer and important
financial information with respect to the Company appear in the accompanying
Offering Circular. You are urged to read it carefully.
Very truly yours,
/s/ CONRAD M. BLACK
Conrad M. Black
Chairman of the Board
and Chief Executive Officer
<PAGE> 1
HOLLINGER INTERNATIONAL INC.
OFFER TO EXCHANGE SHARES OF ITS CLASS A COMMON STOCK
FOR ANY AND ALL 9-3/4% PRIDES DEPOSITARY SHARES
REPRESENTING SERIES B CONVERTIBLE PREFERRED STOCK
July 8, 1998
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
Hollinger International Inc., a Delaware corporation (the "Company"), is
offering to exchange 0.92 shares of its Class A Common Stock, par value $0.01
per share (the "Class A Common Stock") for each outstanding 9 3/4% PRIDES
Depositary Share ("PRIDES") representing Series B Convertible Preferred Stock of
the Company, upon the terms and subject to the conditions set forth in the
Offering Circular dated July 8, 1998 (the "Offering Circular"), and in the
related Letter of Transmittal (which together constitute the "Exchange Offer").
The Company encloses herewith the materials listed below relating to the
Exchange Offer.
THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF PRIDES BEING
VALIDLY TENDERED. THE EXCHANGE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE "THE EXCHANGE OFFER -- CERTAIN CONDITIONS OF THE EXCHANGE OFFER"
IN THE OFFERING CIRCULAR.
For your information and for forwarding to your clients for whom you hold PRIDES
registered in your name or in the name of your nominee, we are enclosing the
following documents:
(1) Offering Circular dated July 8, 1998;
(2) Letter of Transmittal for your use and for the information of your clients
(together with "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9");
(3) Notice of Guaranteed Delivery to be used to accept the Exchange Offer if
certificates for PRIDES are not immediately available (or the procedure for
book-entry transfer cannot be followed on a timely basis) or time will not
permit the Letter of Transmittal and all other required documents to reach
the exchange agent for the Exchange Offer (the "Exchange Agent") before the
Expiration Date (as defined in the Offering Circular);
(4) Letter to Clients which may be sent to your clients for whose accounts you
hold PRIDES registered in your name (or in the name of your nominee), with
space provided for obtaining such clients' instructions with regard to the
Exchange Offer;
(5) Letter from The Hon. Conrad M. Black, P.C., O.C., Chairman of the Board and
Chief Executive Officer of the Company, dated July 8, 1998, to holders of
PRIDES; and
(6) Return envelope addressed to First Chicago Trust Company of New York, the
Exchange Agent.
PLEASE BRING THE OFFER TO THE ATTENTION OF YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, AUGUST 4, 1998, UNLESS THE EXCHANGE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or other persons for
soliciting tenders of PRIDES pursuant to the Exchange Offer. The Company will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients. The
Company will pay any stock transfer taxes with respect to the transfer and sale
of PRIDES to it or its order pursuant to the Exchange Offer, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
In order to take advantage of the Exchange Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Exchange Agent with either certificate(s)
<PAGE> 2
representing the tendered PRIDES or confirmation of their book-entry transfer,
all in accordance with the instructions set forth in the Letter of Transmittal
and the Offering Circular.
As described under "The Exchange Offer -- Procedure for Tendering PRIDES" in the
Offering Circular, tenders may be made even though certificates are not
immediately available (or the procedure for book-entry transfer cannot be
followed on a timely basis) or time will not permit the Letter of Transmittal
and all other required documents to reach the Exchange Agent before the
Expiration Date, if such tenders are made by or through an "Eligible
Institution" (as defined in the Offering Circular). Certificates for PRIDES so
tendered in proper form for transfer (or a confirmation of a book-entry transfer
of such PRIDES into the Exchange Agent's account at the "Book-Entry Transfer
Facility" described in the Offering Circular), together with a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) and
any other documents required by the Letter of Transmittal, must be received by
the Exchange Agent within three New York Stock Exchange trading days after the
date of execution of a properly completed and duly executed Notice of Guaranteed
Delivery.
Any questions you have or requests for additional copies of the enclosed
material may be directed to the Information Agent at its addresses and telephone
numbers set forth on the back cover of the enclosed Offering Circular.
Very truly yours,
Hollinger International Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE COMPANY, THE EXCHANGE AGENT OR THE INFORMATION
AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY
MATERIAL ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER, OTHER THAN
THE MATERIAL ENCLOSED HEREWITH AND THE STATEMENTS SPECIFICALLY CONTAINED IN SUCH
MATERIAL.
<PAGE> 1
HOLLINGER INTERNATIONAL INC.
OFFER TO EXCHANGE SHARES OF ITS CLASS A COMMON STOCK
FOR ANY AND ALL 9 3/4% PRIDES DEPOSITARY SHARES
REPRESENTING SERIES B CONVERTIBLE PREFERRED STOCK
To Our Clients: July 8, 1998
Enclosed for your consideration are the Offering Circular dated July 8, 1998,
and the related Letter of Transmittal (which together constitute the "Exchange
Offer") in connection with the offer by Hollinger International Inc., a Delaware
corporation (the "Company"), pursuant to which the Company is offering to
exchange 0.92 shares of its Class A Common Stock, par value $0.01 per share (the
"Class A Common Stock"), for each outstanding 9 3/4% PRIDES Depositary Share
("PRIDES") representing Series B Convertible Preferred Stock of the Company,
upon the terms and subject to the conditions of the Exchange Offer.
All PRIDES properly tendered and not withdrawn will be exchanged, upon the terms
and subject to the conditions of the Exchange Offer. All PRIDES not exchanged
pursuant to the Exchange Offer will be returned to the tendering holders at the
Company's expense as promptly as practicable following the Expiration Date (as
defined in the Offering Circular).
We are the holder of record of PRIDES held for your account. As such, we are the
only ones who can tender your PRIDES, and then only pursuant to your
instructions. THE LETTER OF TRANSMITTAL IS FOR YOUR INFORMATION ONLY AND CANNOT
BE USED BY YOU TO TENDER PRIDES WE HOLD FOR YOUR ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the PRIDES
we hold for your account upon the terms and subject to the conditions of the
Exchange Offer.
We call your attention to the following:
1. You may tender any portion or all of your PRIDES.
2. The Exchange Offer is not conditioned upon any minimum number of PRIDES being
tendered. The Exchange Offer is, however, subject to certain other
conditions. See "The Exchange Offer -- Certain Conditions of the Exchange
Offer" in the Offering Circular.
3. The Exchange Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, August 4, 1998, unless the Exchange Offer is
extended.
4. Tendering holders will not be obligated to pay any brokerage commissions,
solicitation fees, or, subject to Instruction 6 of the Letter of Transmittal,
any stock transfer taxes with respect to the transfer of PRIDES to the
Company pursuant to the Exchange Offer.
If you wish to have us tender any or all of your PRIDES, please so instruct us
by completing, executing and returning to us the attached instruction form. An
envelope to return your instruction form to us is enclosed. If you authorize us
to tender your PRIDES, we will tender all such PRIDES unless you specify
otherwise on the instruction form.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT
A TENDER ON YOUR BEHALF BEFORE THE EXPIRATION DATE. THE EXCHANGE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY,
AUGUST 4, 1998, UNLESS THE EXCHANGE OFFER IS EXTENDED.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT TENDERS
FROM OR ON BEHALF OF, OWNERS OF PRIDES RESIDING IN ANY JURISDICTION IN WHICH THE
MAKING OF THE EXCHANGE OFFER OR ITS ACCEPTANCE WOULD NOT BE IN COMPLIANCE WITH
THE LAWS OF SUCH JURISDICTION.
<PAGE> 2
INSTRUCTIONS
WITH RESPECT TO THE
OFFER TO EXCHANGE SHARES OF CLASS A COMMON STOCK
FOR ANY AND ALL 9 3/4% PRIDES DEPOSITARY SHARES
REPRESENTING SERIES B CONVERTIBLE PREFERRED STOCK
OF
HOLLINGER INTERNATIONAL INC.
The undersigned acknowledge(s) receipt of your letter and the Offering Circular
dated July 8, 1998, and the related Letter of Transmittal (which together
constitute the "Exchange Offer"), in connection with the offer by Hollinger
International Inc., a Delaware corporation (the "Company"), pursuant to which
the Company is offering to exchange 0.92 shares of its Class A Common Stock, par
value $0.01 per share (the "Class A Common Stock"), for each outstanding 9 3/4%
PRIDES Depositary Share ("PRIDES") representing Series B Convertible Preferred
Stock of the Company, upon the terms and subject to the conditions of the
Exchange Offer.
The undersigned hereby instruct(s) you to tender to the Company the number of
PRIDES indicated below or, if no number is indicated, all PRIDES you hold for
the account of the undersigned, upon the terms and subject to the conditions of
the Exchange Offer.
AGGREGATE NUMBER OF PRIDES TO BE TENDERED BY YOU FOR THE ACCOUNT OF THE
UNDERSIGNED:*
------------ PRIDES
*Unless otherwise indicated, all the PRIDES held for the account of the
undersigned will be tendered.
- ----------------------------------------------------------------
SIGNATURE BOX
Signature(s)
-------------------------------------------------
---------------------------------------------------------------
Dated
--------------------------------------------------------
Name(s) and Address(es)
---------------------------------
(Please Print)
---------------------------------------------------------------
---------------------------------------------------------------
Area Code and Telephone Number
------------------------
Taxpayer Identification or
Social Security Number
------------------------------------
- ----------------------------------------------------------------
<PAGE> 1
[Hollinger International Inc.]
FOR IMMEDIATE RELEASE
Contact:
<TABLE>
<S> <C>
Paul B. Healy, Vice President Jack A. Boultbee, Executive
Corporate Development and Vice President
Investor Relations and Chief Financial Officer
Hollinger International Inc. Hollinger International Inc.
(212) 586-5666 (416) 363-8721
</TABLE>
HOLLINGER INTERNATIONAL ANNOUNCES
A COMMON STOCK DIVIDEND INCREASE AND AN
EXCHANGE OFFER FOR ITS 9 3/4% PRIDES DEPOSITARY SHARES
CHICAGO, JUNE 29, 1998 -- HOLLINGER INTERNATIONAL INC. (NYSE: HLR)
announced today that its Board of Directors had approved a dividend increase to
$0.1375 (from $0.10) per issued and outstanding share of Common Stock (both
Class A and Class B) payable October 15, 1998 to stockholders of record on
October 1, 1998, and further approved the Company's making an exchange offer
for its outstanding 9 3/4% PRIDES Depositary Shares (NYSE: HLR PrP).
Holders tendering their PRIDES pursuant to the Exchange Offer would
receive 0.9200 shares of Class A Common Stock of the Company for each PRIDES.
The Exchange Offer will not be conditioned upon any minimum number of PRIDES
being tendered. There are currently 20,700,000 PRIDES and approximately
71,689,999 shares of Class A Common Stock outstanding.
The Exchange Offer enables holders of the Company's PRIDES to receive
shares of Class A Common Stock having an aggregate current market value
representing a premium over the recent market price for the PRIDES. The PRIDES
closed on June 29, 1998 at $14.50 per PRIDES and the Class A Common Stock
<PAGE> 2
2
closed on that date at $17.125 per share. Based on these closing prices, the
market price for 0.9200 shares of Class A Common Stock represents a premium of
approximately 8.7% over the market price for one PRIDES and 9.0% over the
conversion price of the 0.8439 shares of Class A Common Stock into which each
PRIDES may be converted at the option of its holder at any time prior to August
1, 2000.
The consummation of the Exchange Offer will reduce the Company's
dividend requirements on the Series B Convertible Preferred Stock represented
by the PRIDES resulting in increased future earnings per share on its Common
Stock. The Company hopes the Exchange Offer will provide greater market
liquidity for its Class A Common Stock.
The Exchange Offer will commence and be made only pursuant to the terms
and conditions set forth in documents to be filed shortly with the Securities
and Exchange Commission and mailed to holders of PRIDES.
OTHER
Hollinger International Inc., through subsidiaries and affiliated
companies, is a leading publisher of English-language newspapers in the United
States, the United Kingdom, Canada and Israel. Included among its paid daily
newspapers are the Chicago Sun-Times, The Daily Telegraph and the Ottawa
Citizen.
<PAGE> 1
3
[Hollinger International Inc.]
FOR IMMEDIATE RELEASE
Contact:
<TABLE>
<S> <C>
Paul B. Healy, Vice President Jack A. Boultbee, Executive
Corporate Development and Vice President
Investor Relations and Chief Financial Officer
Hollinger International Inc. Hollinger International Inc.
(212) 586-5666 (416) 363-8721
</TABLE>
HOLLINGER INTERNATIONAL INC. ANNOUNCES COMMENCEMENT OF
EXCHANGE OFFER FOR ANY AND ALL 9-3/4% PRIDES
DEPOSITARY SHARES
CHICAGO, JULY 8, 1998--HOLLINGER INTERNATIONAL INC. (NYSE:HLR) announced
today that it has commenced an Exchange Offer to exchange any and all its
outstanding 9-3/4% PRIDES Depositary Shares (NYSE:HLR PrP) representing Series
B Convertible Preferred Stock of Hollinger for shares of its Class A Common
Stock at an exchange ratio of 0.92 shares of Class A Common Stock for each
PRIDES. The Exchange Offer is not conditioned upon any minimum number of
PRIDES being tendered.
Hollinger said that the Exchange Offer materials are being mailed to
holders of PRIDES and that the Exchange Offer is scheduled to expire at 12:00
midnight, Eastern Standard Time, on Tuesday, August 4, 1998, unless extended.
The terms and conditions of the Exchange Offer are set forth in the Company's
Offering Circular dated July 8, 1998 and the related Letter of Transmittal and
the Exchange Offer is made only pursuant to such materials.
The Company first announced its intention to make the Exchange Offer on
June 29, 1998. The closing prices on June 29, 1998 for the Company's Class A
Common Stock and the PRIDES were $17.125 and $14.50, respectively. The
closing prices of the Class A Common Stock and the PRIDES on July 7, 1998,
were $17.1875 and $15.8125, respectively.
<PAGE> 2
There are currently 20,700,000 PRIDES and approximately 71,689,899 shares
of Class A Common Stock outstanding.
The First Chicago Trust Company of New York is acting as Information Agent
for the Exchange Offer.
Hollinger International Inc., through subsidiaries and affiliated
companies, is a leading publisher of English-language newspapers in the United
States, the United Kingdom, Canada and Israel. Included among its paid daily
newspapers are the Chicago Sun-Times, The Daily Telegraph and the Ottawa
Citizen.
For more information on Hollinger International Inc., please visit our
website at www.hollinger.com.
