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 24, 2004. Argus is providing updates on its affairs on at least a bi-weekly basis (each a "Report"). 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. 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 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") of Hollinger Inc. ("Hollinger"). Hollinger in turn 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 of Hollinger International Inc. ("International"). As the shares Argus owns of Hollinger are the primary asset held by Argus and the shares of International in turn are the primary asset held by Hollinger, this Report includes certain updates regarding each of Hollinger and International. Hollinger and International have both also been subject to Management and Insider Cease Trade Orders for their failure to file financial statements and related reports when required. Those orders were issued on June 1, 2004. Current Status of Financial Reporting of International and Hollinger International has not filed its audited financial statements for 2003 or its financial statements for the first three Quarters in 2004 and related Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial ("MD&A") reports. As a result, Hollinger has been unable to prepare and file its audited financial statements for 2003 and its related MD&A as 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 ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") require consolidation with those of International. Hollinger is therefore also unable to prepare its statements for the first three Quarters of 2004 and the related MD&As. Current Status of Financial Reporting of Argus Argus filed its 2003 audited financial statements on a market valuation basis as it had historically which was then in compliance with GAAP. However, Argus is now required to consolidate its financial statements with those of Hollinger for fiscal periods beginning after January 1, 2004 due to a change in GAAP. As a result of the change in accounting policy, Argus has been unable to prepare financial statements in compliance with GAAP for each of the first three Quarters of 2004. Argus has instead provided its Reports pursuant to the Order. In order to inform the marketplace of key economic developments, Argus has additionally prepared and released financial statements for the first three Quarters of 2004. These statements have been presented as alternative financial information and were appended to its Reports dated August 19 and November 12, 2004. These statements may be reviewed online at www.sedar.com. Future Financial Reporting In order for each of International, Hollinger and Argus to normalize normalize to convert a set of data by, for example, converting them to logarithms or reciprocals so that their previous non-normal distribution is converted to a normal one. its financial reporting and to have its respective Management and Cease Trade Order lifted, they each need to prepare and file their financial statements as required by GAAP and related MD&As. International's 2003 audited financial statements need to be filed first. International's Financial Reporting International had earlier announced that it would be filing its audited financial statements (and related MD&A) for its fiscal year ended December 31, 2003 by the end of December, 2004. 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. On December 24, 2004, International amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. its reporting timetable. It announced that it required additional time to review the report of the Special Committee of the Board of Directors of International that had been filed with the U.S. District Court in Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. on August 30, 2004 and to assess its impact, if any, on the results of operations of International. International then announced on December 29, 2004 that its outside auditor is conducting its final review of its 2003 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and that it expects to file the report with the U.S. Securities and Exchange Commission no later than mid-January, 2005. International further announced on December 29, 2004 that it expects to become current on its quarterly reports for 2004 within approximately two months of the filing of its 2003 Annual Report. Hollinger's Financial Reporting On December 31, 2004, Hollinger announced that the filing by International of its 2003 Annual Report and its 2004 quarterly reports is a necessary but not sufficient condition to permit Hollinger to complete and file its financial statements for the same periods. Hollinger further noted on December 31, 2004 that the completion and audit of its financial statements will require a level of co-operation from International and its auditors which is still in negotiation. It stated that its Audit Committee will consider what, if any, additional financial information and/or alternative financial statements Hollinger will be in a position to publicly disclose and/or complete following the filing of International's financial statements. The completion and audit of Hollinger's 2003 financial statements will require a level of cooperation from International and its auditors. Hollinger advised on December 31, 2004 that it and International continue to pursue, on a without prejudice Without any loss or waiver of rights or privileges. When a lawsuit is dismissed, the court may enter a judgment against the plaintiff with or without prejudice. When a lawsuit is dismissed without prejudice basis, the conclusion of mutually-acceptable arrangements to permit the audit of Hollinger's 2003 annual financial statements to begin as soon as possible. Argus' Financial Reporting 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 complete its financial statements consolidated with those of Hollinger. Argus' intention is to prepare consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge with those of Hollinger as soon as practicable practicable adj. when something can be done or performed. after Hollinger files its statements. Argus presently contemplates, however, that it will need to continue to file additional financial statements that are not consolidated with those of Hollinger for current and upcoming financial periods on an alternative financial basis. Financial Position of Argus Argus had Cdn. $263,950 of cash as of the close of business on January 7, 2005. Argus indirectly owns 21,596,387 Retractable Common Shares of Hollinger (each a "Share") with a market value at the close of trading on January 7, 2005 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. $142,536,154. 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 as at September 30, 2004. Argus has 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' alternative financial information as at September 30, 2004. Dividends Argus will require additional funds to be able to continue to pay dividends on its Class A and Class B Preference Shares on an uninterrupted basis, including an additional amount of approximately $251,703 for dividends that are scheduled to be paid on February 1, 2005. Argus intends to make efforts to ensure that such dividend payments can be made on February 1, 2005 and continue to be made thereafter on an uninterrupted basis. 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 including Argus) 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. No further terms have yet been announced. The Hollinger going private transaction would result in Argus holding a greater percentage of the Shares of Hollinger. Hollinger would then be a private company without the public company liquidity that currently exists. Argus will review and consider whether the terms of the proposal are acceptable when they are announced. Argus' Independent Committee comprised of Jonathan H. Marler and Robert E. Tyrrell will retain such independent professional advisers as it deems necessary and make recommendations to the Board of Directors of Argus. Hollinger has established a Privatization Committee to review the proposed transaction. That committee has retained independent financial and legal advisors to assist it. Hollinger's Financial Position Hollinger announced on December 30, 2004 that it and its subsidiaries (excluding International and its subsidiaries) had approximately US $9.44 million of cash or cash equivalents at the close of business on December 24, 2004. Hollinger reported on December 30, 2004 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. In addition, Hollinger is to receive dividends from International in the aggregate amount of approximately US $40,218,953.65 that are to be paid by International on January 18, 2005. Further details about these dividends are provided later in this Report. 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. In the period since October 28, 2004 until December 30, 2004, Hollinger has delivered 9,637 shares of Class A Common Stock of International pursuant to the retractions of its Series II Shares. Retractions of Hollinger's outstanding Shares submitted after May 31, 2004 continue to be suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. until further notice. Hollinger announced on December 30, 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 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 January 7, 2005 of US $15.07 and the number of shares of Class A Common Stock and Class B Common Stock of International owned by Hollinger at December 30, 2004, the market value of Hollinger's direct and indirect holdings in International is US $237,697,950. 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 30, 2004, Hollinger announced that, on the basis of the closing price of the Class A Common Stock of International on the NYSE on December 29, 2004 of US $18.31 per share and its cash position at December 24, 2004, it then had in excess of US $284.9 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 that were outstanding. It should be noted, however, that the trading price Trading price The price at which a security is currently selling. of the Class A Common Stock of International at the close of business on January 7, 2005 was US $3.24 less per share than it was on December 29, 2004. This, in part, reflects the dividends, including the US $2.50 Special Dividend, that International is to pay on its Class A and Class B Common Stock on January 18, 2005 to holders of record as at January 3, 2005 as described below. Hollinger to Receive Dividends Shareholders of International as at January 3, 2005, including Hollinger, are to receive two dividends that are to be paid on January 18, 2005 to the holders of its Class A and Class B Common Stock. The dividends to be received by Hollinger include a regular quarterly dividend of US $0.05 per Class A and Class B share of International estimated to be an aggregate of US $786,646.15 and a special dividend of US $2.50 per Class A and Class B share (the "Special Dividend") estimated to be an aggregate of US $39,432,307.50. The Special Dividend that is to be paid to all holders of International's Class A and Class B shares is intended to distribute 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 telegraph, term originally applied to any device or system for distant communication by means of visible or audible signals, now commonly restricted to electrically operated devices. Attempts at long-distance communication date back thousands of years (see signaling). properties after the repayment of certain debt and taxes (the "Proceeds"). International announced on December 16, 2004 that it would be returning a total of approximately US $500 million of the Proceeds to its shareholders as part of the Strategic Process that it announced in November, 2003. International further stated on December 16, 2004 that the balance of approximately US $273 million after the Special Dividend will likely be distributed through a buy-back of its Class A Common Stock. 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. 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 has further stated that it will continue to hold following these distributions "sufficient cash to fund our operations and obligations and to avail ourselves of strategic opportunities". Expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of Delaware Injunction injunction, in law, order of a court directing a party to perform a certain act or to refrain from an act or acts. The injunction, which developed as the main remedy in equity, is used especially where money damages would not satisfy a plaintiff's claim, or to International and Hollinger had earlier agreed that the injunction granted by Vice-Chancellor Leo Leo, in astronomy Leo [Lat.,=the lion], northern constellation lying S of Ursa Major and on the ecliptic (apparent path of the sun through the heavens) between Cancer and Virgo; it is one of the constellations of the zodiac. E. Strine in Delaware on February 26, 2004 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. . The injunction is to now expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. on the earlier of the date the Proceeds have been distributed to International's shareholders and January 31, 2005. The injunction is accordingly expected to expire on January 31, 2005. Further Agreement Between Hollinger and International International has further agreed not to block any payment to Hollinger required by a court order (which it will not seek), statute or regulation. There is to be no reduction or set-off. 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. Hollinger Inspection Counsel for Ernst & Young Inc. as the court-appointed inspector of Hollinger ("the Inspector") and various parties, including individuals that the Inspector wishes to examine, appeared before Justice Colin L. Campbell of the Superior Court of Justice of Ontario (the "Court") on January 6, 2005. The next Hearing before Justice Campbell is to be held on January 11, 2005 at which time the Inspector is to provide an updated report to the Court. The Inspector continues to inspect Hollinger's related party transactions pursuant to an order of Justice Campbell 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
Orders were made at the Hearing on December 6, 2005 permitting the Inspector to examine two former Directors of Hollinger, Peter Y. Atkinson and Maureen Sabia. The Inspector wishes to examine other former Directors of Hollinger including Lord Black, Barbara Amiel-Black, F. David Radler F. David Radler (born 1944 in Montreal, Quebec) is a Canadian executive and close associate of Conrad Black for 36 years. Radler was once president of Ravelston Corporation, a privately owned corporation owned by Black and Radler to control their former newspaper empire. and J.A. Boultbee who are current Directors of Argus. Counsel for Lord Black and Messrs. Radler and Boultbee each submitted at the Hearing on January 6, 2005 that it is premature for the Inspector to take the position that it is essential for their examinations to be conducted in order to write its report. A Notice of Constitutional Issue was served by counsel for Lord Black on December 22, 2004 on the Attorney General of each of Canada and Ontario on the basis that certain of 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. . Other Hollinger Developments 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 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 January 5, 2004, Judge Blanche Manning of Illinois provided in an Order that she would rule expeditiously ex·pe·di·tious adj. Acting or done with speed and efficiency. See Synonyms at fast1. ex respecting various Motions of the defendants to dismiss the 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), of International. It is anticipated that she will making that ruling in writing. A Status Hearing that had been scheduled to be heard on January 7, 2005 is now to be held on February 25, 2005. International filed its Second Amended Complaint in Illinois on October 29, 2004 as against Hollinger, Ravelston and 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. , certain of their current and former directors and officers and others. The total amount sought by International pursuant to the Second Amended Complaint is approximately US $542 million including US $117 million of pre-judgment interest at the time of filing together with costs. International has further appealed the dismissal of its previous Complaint that included allegations pursuant to the Racketeer and Corrupt Influenced Organizations Act. This matter is also to be decided by Judge Manning. Other International Developments International announced on December 31, 2004 that the NYSE had granted a three-month further extension to International for it to file its 2003 Annual Report on Form 10-K with the SEC and that its shares would continue to be listed during this period. This extension is subject to a further review by the NYSE on an ongoing basis. International further announced that the NYSE will initiate suspension procedures if its 2003 Annual Report is not prepared by March 31, 2005. 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 24, 2004. Argus Corporation Limited (TSX:AR.PR.A) (TSX:AR.PR.D) (TSX:AR.PR.B) |
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