Sun-Times News Group for The Post-Tribune
A dissident stockholder of Sun-Times Media Group said Friday it has received the support it needs to take over the company's board.
Davidson Kempner Capital Management LLC, owner of about 6 percent of Sun-Times shares, said it plans to replace all but one current director with three of its nominees. The company owns the Chicago Sun-Times and the Post-Tribune.
Among the six board members who would be ousted is Cyrus Freidheim Jr., also the company's chief executive. The new board could remove him as CEO and could order changes elsewhere in top management, but Davidson Kempner hasn't stated its plans.
Without disclosing specifics, Davidson Kempner said it has received consents for its takeover from owners of a majority of shares. The company will review the shareholder consent reforms, but must comply if they are valid.
The Sun-Times has been losing about $20 million per quarter and is burning through cash. Davidson Kempner argued the board wasn't addressing the situation fast enough and needed expertise in the media business and in corporate turnarounds.
Sun-Times had countered it was acting quickly by shuttering money-losing weekly newspapers, closing a printing plant and proposing wage cuts and job outsourcing to its unionized work force. The company has said it is trying to save around $50 million this year, on top of similar cuts made last year.
In an e-mail to employees, Freidheim thanked outgoing board members, some of whom he said "earned back the company's integrity" by investigating fraud by former Chairman Conrad Black.
"While I would no longer serve on the board, I remain as CEO until the new board determines the future leadership structure," Freidheim said. "I do not expect other major changes to the management team or our strategy in the short term.
"The cost reductions and other programs that we are implementing, while painful, are necessary to ensure our future. All newspaper companies, including ours, are battling the toughest print advertising market in 75 years."
The new board members would be: Jeremy Halbreich, former general manager of the Dallas Mornings News; restructuring expert Robert Schmitz; and Michael Katzenstein, who has restructured telecommunications firms and chairs cable company RCN Corp. They would join holdover Robert Poile, who represents Polar Securities, owner of 11 percent of the company.
Meanwhile, the chief financial officer of Tribune Co. said Friday that the media giant is still developing a business plan to help it emerge from bankruptcy.
Chandler Bigelow III told the Delaware bankruptcy court that Tribune is "facing very difficult cyclical and sector pressures in our key businesses."
Bigelow said Tribune, which publishes the Chicago Tribune, is making progress in efforts to sell the Chicago Cubs baseball team but gave no indication of when a deal might be announced.
The Associated Press contributed to this story.