Hollinger Completes $211M Offering

On April 7, 2004, Hollinger Inc. completed an offering of 20,096,919 subscription receipts at $10.50 each for aggregate gross proceeds of $211 million.

Each subscription receipt represents the right to receive, without payment of any additional consideration, one series II preference share of Hollinger upon satisfaction of certain escrow conditions. All outstanding subscription receipts will be automatically exercised and the series II preference shares will be issued immediately following satisfaction by Hollinger of each of the escrow conditions.

The gross proceeds from the sale of the subscription receipts are being held in escrow by a licensed trust company. If the escrow conditions are not satisfied before 5pm (EST) on June 15, the escrow agent will return to the holders of the subscription receipts the issue price together with their pro rata share of interest thereon, less any applicable withholding taxes.

The escrow conditions are substantially as follows: (i) redemption by Hollinger of up to 35 per cent of the aggregate principal amount of its 11.875 per cent senior secured notes due 2011 in accordance with the terms of the indenture governing the notes, and release of 8,784,406 class A shares of Hollinger International Inc. currently pledged pursuant to the indenture; (ii) completion by Hollinger of a concurrent allocation offer to the holders of the notes, pursuant to the indenture, to purchase at par the remaining outstanding notes; (iii) redemption by Hollinger of all the issued and outstanding series III preference shares of Hollinger at $10 per share, plus an amount equal to all dividends accrued and unpaid thereon up to and including the redemption date; (iv) Hollinger having taken all steps necessary in order to cash collateralize or otherwise release from the pledge under the indenture all remaining class A shares of Hollinger International Inc. held, directly or indirectly, by Hollinger and which are pledged pursuant to the indenture; (v) a public announcement by Hollinger to the effect that retractions of its series II preference shares will be honoured, subject to the escrow agent making payment, out of the escrowed funds, pursuant to (a) the note redemptions, (b) the allocation amount, if any, (c) the redemptions of the series III preference shares, (d) the cash collateralization amounts, and (e) the commission payable to Westwind Partners Inc.; and (vi) receipt of any applicable regulatory, stock exchange and shareholder approvals.

After payment of the above-mentioned amounts, the remaining balance of the escrowed funds, expected to be approximately $27 million, will be released to Hollinger, to be used by it for general corporate purposes.

Hollinger has agreed, as soon as practicable following satisfaction of the escrow conditions and payment of the amounts mentioned above, to cause to be deposited into escrow, with a licensed trust company, 10,981,538 class A shares of Hollinger International Inc., to be held in escrow and to be released by the share escrow agent from time to time in order to satisfy retraction requests from the holders of all of the issued and outstanding series II preference shares.

Hollinger was represented in Canada by Fogler, Rubinoff LLP, with a team that included Norman May, Q.C., Avi Greenspoon, Elliott Vardin and David Oliver; and in the US by Sullivan & Cromwell LLP, with a team that included Benjamin Stapleton, John O’Brien, Melissa Sawyer and Andrew Bray.

Westwind Partners Inc., as agent, was represented by Rod Barrett, Mihkel Voore and Maurice Swan of Stikeman Elliott LLP, with US law advice provided by Shari Krouner of Kramer Levin Naftalis & Frankel LLP.