Argus Corporation Limited: Status Update Report.TORONTO -- Argus Corporation Argus Corporation, based in Toronto, Ontario, is an investment and holding company founded in 1945 by its President E. P. Taylor with minority partners Colonel W. Eric Phillips and Wallace McCutcheon and other investors. Limited ("Argus") (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :AR.PR.A)(TSX:AR.PR.D)(TSX:AR.PR.B) today provided a status update of developments since its last Status Update Report was filed on December 12, 2004. Argus is providing updates on its affairs on at least a bi-weekly basis. These reports are being made in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with certain guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. of the Ontario Securities Commission The Ontario Securities Commission (OSC) is a regulatory agency which administers and enforces securities legislation in the Canadian province of Ontario. The OSC is an Ontario Crown corporation which reports to the Ontario legislature through the Minister of Finance. (the "OSC O.S.C. n. short for Order to Show Cause. (See: Order to Show Cause) ") until Argus is able to meet its public filing obligations. These guidelines are pursuant to the Management and Insider Cease Trade Order that was issued by the OSC on June 3, 2004 with respect to the management and insiders of Argus. Argus' Status Update Reports that have been filed since the Order are available to review at www.sedar.com. This Report includes certain updates regarding Hollinger Inc. ("Hollinger") of which Argus owns or controls 61.8% of the Retractable re·tract v. re·tract·ed, re·tract·ing, re·tracts v.tr. 1. To take back; disavow: refused to retract the statement. 2. Common Shares ("Common Shares") and Hollinger International Inc. ("International") of which Hollinger owns 68% of the voting shares Voting Shares Shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors. Notes: Different classes of shares, such as preferred stock, sometimes don't allow for voting rights. and 18.2% of the equity. The Report further provides certain financial information and an update as to the preparation and filing of financial statements and other related matters by Argus. Argus is presently unable to file its statements in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting as it is required to consolidate its statements with those of Hollinger. Hollinger in turn has not been able to prepare its financial statements as, among other issues, International has not filed its audited annual financial statements for 2003. International announced on December 16, 2004 that it will be filing its audited financial statements (and related MD&A) for its fiscal year ended December 31, 2003 by the end of December, 2004. It further announced that it expects to complete and file its interim financial statements for the first three fiscal Quarters of 2004 as soon as practicable practicable adj. when something can be done or performed. in the first Quarter of 2005. International announced that appropriate filings with respect to these financial statements would be made on Forms 10-K, 10-Q and 8-K with the U.S. Securities and Exchange Commission (the "SEC") and in Canada. Hollinger's financial statements can not be completed and audited until International's 2003 financial statements are completed. This is a necessary but not sufficient condition for Hollinger to be able to complete and file its financial statements. The completion and audit of Hollinger's 2003 financial statements will require a level of cooperation from International and its auditors. Negotiations with respect to such cooperation are underway between Hollinger and International. On December 13, 2004, Hollinger announced that it will consider what, if any additional financial information and/or alternative financial statements it will be in a position to publicly disclosure and/or complete following the filing by International of its financial statements. Hollinger further announced that it and International continue to pursue the conclusion of mutually-acceptable arrangements to permit the audit of Hollinger's 2003 annual financial statements to begin as soon as possible. Argus will be unable to prepare financial statements consolidated with those of Hollinger and bring its financial reporting up to date until Hollinger has prepared its financial statements. Argus is however unable to determine when it may commence or complete its financial statements consolidated with those of Hollinger. Argus prepared financial statements for the first three Quarters of 2004 that were not consolidated with those of Hollinger. In order to provide certain disclosure of its financial results, Argus has filed these statements with its Status Update Reports by way of alternative financial information. These statements may be reviewed online at www.sedar.com with Argus' Status Update Reports dated at August 19 and November 15, 2004. Argus presently contemplates that it may need to continue to file additional financial statements that are not consolidated with those of Hollinger for current and upcoming financial periods on such an alternative financial basis until financial statements of Hollinger are available on which it may prepare consolidated statements. Financial Position of Argus Argus had Cdn. $263,950 of cash as of the close of business on December 23, 2004. Argus requires additional funds to be able to continue to pay dividends on its Class A and Class B Preference Shares on an uninterrupted basis, including approximately $251,703 of dividends that are due to be paid on February 1, 2005. Argus intends to make efforts to ensure that such dividend payments can be made when due. Argus indirectly owns 21,596,387 Retractable Common Shares of Hollinger (each a "Share") with a market value at the close of trading on December 23, 2004 on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. of Cdn. $6.60 per share or an aggregate of Cdn. $142, 536,150. The market value of its shareholdings is subject to the minority interest of The Ravelston Corporation Limited Ravelston Corporation Limited is a Canadian holding company that was largely controlled by Conrad Black and business partner David Radler. It held shares in Black's other holding companies, such as Hollinger International, now known as Sun-Times Media Group. ("Ravelston"), the parent of Argus. 11,862,342 of the Shares, being approximately fifty-five percent of the Shares, are owned by a subsidiary of Argus in which Ravelston has a significant minority interest. The amount of that minority interest was stated to be $20,585,670 in the financial statements that Argus publicly filed as alternative financial information for the Quarter of 2004 ended September 30, 2004. The financial statements of Argus have further set out a liability for an amount on account of future income taxes on unrealized net capital gains. The amount of that liability was stated to be $14,793,176 in Argus' financial statements for the Third Quarter of 2004. Proposed Privatization privatization: see nationalization. privatization Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned of Hollinger Ravelston proposed a going private transaction involving Hollinger on October 28, 2004. The proposed going private transaction is to be structured as a share consolidation and retirement of Hollinger's shares held by parties other than by Argus and Ravelston directly and indirectly. On November 16, 2004, Ravelston announced that it will support the proposed privatization on the basis that holders of Shares (other than Ravelston and certain of its affiliated entities) would receive Cdn. $7.25 in cash for each Share held by them and holders of Series II Preference Shares of Hollinger (each a "Series II Share") would receive 0.46 of a share of Class A Common Stock of International for each Series II Share held by them. The Hollinger going private transaction would result in Argus holding a greater percentage of the Shares of Hollinger but that Hollinger would then be a private company without the public company liquidity that currently exists. Argus has announced that it will review and consider whether the terms of the proposal are acceptable when they are announced. Argus has established an Independent Committee to make recommendations to the Board of Directors of Argus and is to retain such independent professional advisers as it deems necessary. Hollinger has established a Privatization Committee to review the proposed transaction. The Privatization Committee has engaged GMP GMP (guanosine monophosphate): see guanine. Securities Ltd. as independent financial advisors and Wildeboer Dellelce LLP LLP - Lower Layer Protocol as independent legal advisors to assist it in that review. No further terms have yet been announced. Hollinger's Financial Position Hollinger announced on December 13, 2004 that it and its subsidiaries excluding International and its subsidiaries had approximately US $10.3 million of cash or cash equivalents at that date. Hollinger has previously reported that it has approximately US $10.5 million of cash deposited as collateral for its borrowings and that it is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to apply this amount towards future interest payments on certain secured borrowings. Hollinger commenced honouring retractions of its Series II Shares on October 28, 2004. Such retractions are effected by Hollinger delivering .46 of a share of Class A Common Stock of International to the holder of the Series II Shares being retracted re·tract v. re·tract·ed, re·tract·ing, re·tracts v.tr. 1. To take back; disavow: refused to retract the statement. 2. in exchange for each retracted Series II Share. Since October 28, 2004 and up until December 17, 2004, Hollinger has delivered 9,637 Class A Common Stock of International pursuant to the retractions of its Series II Shares. Hollinger announced on December 17, 2004 that it directly or indirectly owned 782,923 shares of Class A Common Stock and 14,990,000 shares of Class B Common Stock of International. Based on the closing price of the shares of Class A Common Stock of International on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. (the "NYSE NYSE See: New York Stock Exchange ") at the close of business on December 23, 2004 of US $18.15 and the number of shares of Class A Common Stock and Class B Common Stock of International owned by Hollinger at December 17, 2004, the market value of Hollinger's direct and indirect holdings in International is US $286,278,555. All of Hollinger's interest in the shares of Class A Common Stock of International is being held in escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. with a licensed trust company in support of future retractions of its Series II Shares. All of Hollinger's interest in the shares of Class B Common Stock of International is pledged as security in connection with US $78 million of Senior Secured Notes and US $15 million of Second Priority Notes issued by it. On December 13, 2004, Hollinger announced that, on the basis of the closing price on the shares of International on the NYSE on December 10, 2004, it then had currently in excess of US $292 million aggregate collateral securing the US$78 million principal amount of the Senior Secured Notes and the US$15 million principal amount of the Second Priority Notes outstanding. Hollinger to Receive Certain Telegraph Proceeds Special Dividend On December 16, 2004, International announced that it is to pay out on January 18, 2005 a special dividend of US $2.50 per Class A and Class B share to its shareholders of record on January 3, 2005 (the "Special Dividend"). By the Special Dividend payment, International is distributing approximately US $227 million of the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the sale of International's Telegraph properties after the repayment of certain debt and taxes (the "Proceeds"). Hollinger announced on December 17, 2004 that it is to receive approximately US $39,432,307.50 in respect of the Special Dividend on the shares it holds of International. Hollinger also announced on December 17, 2004 that it is obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to transfer US $37,475,000 of the amount it is to receive on account of the Special Dividend to the trustee and collateral agent (the "Trustee") with respect to the outstanding US $93 million of Senior Secured Notes and Second Priority Notes to hold as collateral in support of those Notes. Hollinger has announced that the US $1,957,307 balance of the amount that it receives on account of the Special Dividend after transferring US $37,475,000 to the Trustee will be retained by Hollinger and applied for corporate purposes. Second Distribution International further announced on December 16, 2004 that it would be returning a total of approximately US $500 million of the Proceeds to its shareholders. It stated that the balance of approximately US $273 million will likely be distributed through a buy-back of its Class A Common Stock. The final decision on whether such a tender offer will be made is to be deferred until after International files its 2003 annual audited statements, the first three quarterly reports for 2004 and a pro forma financial statement pro forma financial statement A financial statement constructed from projected amounts. A firm might construct a pro forma income statement based on projected revenues and costs for the following year. following the sale of the Telegraph properties. International stated that it expects that these statements will all be filed as early in the first Quarter of 2005 as is practical. International announced that it might also consider another special dividend instead of the share buy-back. It further stated, however, that there is no assurance that the second distribution will be made and, if made, whether it will be a special dividend or tender offer and what would be the terms of any such tender offer. Agreement Between Hollinger and International International and Hollinger had earlier agreed that any payment to be received by Hollinger is to be proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. to its shareholdings of International or, in the case of a self tender, to the number of shares tendered. International has further agreed not to block any payment to Hollinger unless that is required by a court order (which it will not seek), statute or regulation. There is to be no reduction or set-off. Hollinger in turn has agreed that the injunction granted by Vice-Chancellor Strine in Delaware limiting Hollinger's control of International is to be extended beyond its original October 31, 2004 expiration date Expiration Date The day on which an options or futures contract is no longer valid and, therefore, ceases to exist. Notes: The expiration date for all listed stock options in the U.S. to the earlier of the date the Proceeds have been distributed to International's shareholders and January 31, 2005. International has stated that the intended total distribution of US $500 million is part of the strategic process that it began in November, 2003. International has further stated that it will continue to hold after these distributions "sufficient cash to fund our operations and obligations and to avail ourselves of strategic opportunities". Regular Quarterly Dividend On December 16, 2004, International further announced that its regular quarterly dividend of US $0.05 per share is to be paid on January 18, 2004 to the shareholders of record on January 3, 2005. Hollinger announced on December 16, 2004 that it will receive US $788,646.15 in respect of that regular dividend. Hollinger Inspection Ernst & Young Inc. ("the Inspector") is continuing the inspection of Hollinger's related party transactions pursuant to an Order of the Superior Court of Justice of Ontario (the "Superior Court") made pursuant to s. 229(1) of the Canada Business Corporations Act The Canada Business Corporations Act, also known as Bill C-44, is a Canadian act respecting Canadian business corporations. See also
The Inspector has now provided four interim Reports with respect to its inspection of Hollinger. The Fourth Interim Report dated December 22, 2004 is to be provided to the Court before the parties appear next before Justice Colin L. Campbell on January 6 and 7, 2005. The Inspector has brought a Motion to be heard on those dates to obtain orders to examine certain former and current Directors and Officers of Hollinger respecting certain transactions. A Notice of Constitutional Issue has been served by counsel for Lord Conrad M. Black on December 22, 2004 on the Attorney General of each of Canada and Ontario. The constitutional issue is whether certain provisions of the Canada Business Corporations Act considered alone and in conjunction with the Mutual Legal Assistance in Criminal Matters Act with respect to the examinations proposed by the Inspector breach certain provisions of the Canadian Charter of Rights and Freedoms The Canadian Charter of Rights and Freedoms (also known as The Charter of Rights and Freedoms or simply The Charter) is a bill of rights entrenched in the Constitution of Canada. It forms the first part of the Constitution Act, 1982. . Ravelston and Hollinger's Ontario Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Developments On August 11, 2004, the Superior Court denied a Motion brought by Ravelston and Ravelston Management Inc. ("RMI (Remote Method Invocation) A standard from Sun for distributed objects written in Java. RMI is a remote procedure call (RPC), which allows Java objects (software components) stored in the network to be run remotely. ") for an order enjoining en·join tr.v. en·joined, en·join·ing, en·joins 1. To direct or impose with authority and emphasis. 2. To prohibit or forbid. See Synonyms at forbid. International from commencing or continuing any action against them arising out of their management of International in any jurisdiction other than Ontario. At the time of the Motion, International had sued Ravelston and RMI in Illinois for damages arising out of their management of International and claimed treble damages A recovery of three times the amount of actual financial losses suffered which is provided by statute for certain kinds of cases. The statute authorizing treble damages directs the judge to multiply by three the amount of monetary damages awarded by the jury in those cases under U.S. federal law. The federal claims were subsequently dismissed by the federal District Court in Illinois. Also on August 11, 2004, the Superior Court stayed counterclaims of Hollinger, Ravelston and RMI against International for outstanding management fees and damages for oppression The offense, committed by a public official, of wrongfully inflicting injury, such as bodily harm or imprisonment, upon another individual under color of office. Oppression, which is a misdemeanor, is committed through any act of cruelty, severity, unlawful exaction, or of Hollinger and intentional in·ten·tion·al adj. 1. Done deliberately; intended: an intentional slight. See Synonyms at voluntary. 2. Having to do with intention. interference with Hollinger's economic relations. Hollinger, Ravelston and RMI respectively appealed those decisions of August 11, 2004 (the "Decisions") to the Ontario Court of Appeal The Court of Appeal for Ontario (frequently referred to as Ontario Court of Appeal) is headquartered in downtown Toronto, in historic Osgoode Hall. The Court is composed of 22 judges who hear over 1 500 appeals each year, on issues of private law, constitutional . On November 30, 2004, the Court of Appeal determined that the Orders of August 11, 2004 were interlocutory Provisional; interim; temporary; not final; that which intervenes between the beginning and the end of a lawsuit or proceeding to either decide a particular point or matter that is not the final issue of the entire controversy or prevent irreparable harm during the pendency of the and that it accordingly did not have jurisdiction to hear the appeals. As a result of that finding, any appeal of the Decisions must be considered by the Divisional Court of Ontario. On December 20, 2004, a Motion of behalf of Ravelston and RMI was filed with the Divisional Court seeking leave to appeal the Decisions. A date for the Motion for leave has not yet been fixed but it is expected to be heard in February, 2005. Other Hollinger Developments Hollinger announced on December 16, 2004 that it has commissioned Carol Hansell Caroll Hansell sits on the Board of Directors of the Bank of Canada. She studied at the University of Western Ontario, then did an MA at the University of Toronto and then rose to success after taking the MBA/LLB degree at the prestigious Osgoode Hall Law School and Schulich School of , a Partner in the Toronto law firm Davies Ward Phillips & Vineberg LLP, and retired Major-General Richard Rohmer Major-General (Ret'd) Richard Heath Rohmer (born in 1924) OC, CMM, DFC, KStJ, O.Ont, CD, Officer of the Order of Leopold [OfL] Belg., Chevalier of the Legion of Honor (France) QC, LL. , a former Hollinger Director and Counsel to the law firm of Rohmer and Fenn, to review its corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. practices and to recommend changes. The report of Ms. Hansell and Major-General Rohmer is expected to be presented to Hollinger's Board in January, 2005. For additional information on developments respecting Hollinger, including a more-detailed review of the terms of the proposed share consolidation and privatization, reference can be made to its public filings online at www.hollingerinc.com, www.hollinger.com or www.sedar.com. International's Litigation Developments International filed its Second Amended Complaint amended complaint n. what results when the party suing (plaintiff or petitioner) changes the complaint he/she has filed. It must be in writing, and can be done before the complaint is served on any defendant, by agreement between the parties (usually their lawyers), in Illinois on October 29, 2004 as against Hollinger, Ravelston and RMI certain of their current and former directors and officers and others. The defendants filed various Motions to Dismiss the Second Amended Complaint on December 13, 2004. Motions were filed on behalf of the defendants generally, Lord Black, Daniel W. Colson, Richard Perle Richard N. Perle (born 16 September 1941 in New York City) is an American political advisor and lobbyist who worked for the Reagan administration as an assistant Secretary of Defense and worked on the Defense Policy Board Advisory Committee from 1987 to 2004. and Hollinger asserting various grounds. These Motions are to be brought before Judge Blanche Manning on January 7, 2005. The total amount of damages sought by International in the Second Amended Complaint is approximately US $542 million including US $117 million of pre-judgment interest together with costs. A Court Hearing was held on December 23, 2004 before Magistrate Any individual who has the power of a public civil officer or inferior judicial officer, such as a Justice of the Peace. The various state judicial systems provide for judicial officers who are often called magistrates, justices of the peace, or police justices. Judge Ann Nolan with respect to a Motion brought by the defendants for a Protective Order with respect to information provided and documents produced in that Complaint. Magistrate Judge Nolan advised that she would issue a ruling by mail. She also set briefing schedules on motions by International and the defendants to compel Compel - COMpute ParallEL or stay discovery. The next scheduled appearance before her is on February 17, 2005. International has appealed the dismissal of its previous Complaint including allegations pursuant to the Racketeer and Corrupt Influenced Organizations Act. International is expected to produce its reply in support of its Motion this week. This matter is to be decided by Judge Blanche Manning. Other International Developments On December 15, 2004, International closed the sale of the Jerusalem Post newspaper in Israel for US $13.2 million in cash. International's remaining publishing holdings consist of the Chicago Sun-Times This article is about the Chicago newspaper. For the Canadian newspaper, see Owen Sound Sun Times. The Chicago Sun-Times is an American daily newspaper published in Chicago. , a number of community newspapers in the Chicago area, some newspapers and trade publications in Canada and a portfolio of new media investments. For additional information on developments respecting International, reference can be made to its online public filings at either www.hollingerinternational.com or http://www.sec.gov/edgar.shtml. There has been no other material change from the information contained in the Status Update Report of Argus issued on December 12, 2004. ARGUS CORPORATION LIMITED (TSX:AR.PR.A) (TSX:AR.PR.D) (TSX:AR.PR.B) |
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