Hollinger unit tenders for 9% notes

New York, June 24 - Hollinger International Inc. said its Hollinger International Publishing Inc. (B2/B-) subsidiary has begun a cash tender offer for any and all of its $300 million principal amount of 9% senior notes due 2010 and is also soliciting noteholder consents to proposed indenture changes that would eliminate substantially all of the restrictive covenants and certain events of default.

It set a consent deadline of 5 p.m. ET on July 8 and said the tender offer would expire at midnight ET on July 30, subject to possible extension.

Hollinger, a Chicago-based international publisher whose holdings include the Chicago Sun-Times and the Daily Telegraph and Sunday Telegraph in London, said that holders validly tendering their notes by the consent deadline would receive total consideration, which is to be determined, using a formula based on a fixed spread of 100 basis points over the bid-side yield to maturity on the pricing date of the reference security, the 2 5/8% U.S. Treasury note due Nov. 15, 2006.

The total consideration will be equal to the present value on the applicable payment date of $1,045, (which is the amount payable on the first date on which the notes may be redeemed, plus the present value of interest that would accrue from the applicable payment date until such redemption date), as determined by the formula. Total consideration will also include a consent payment of $30 per $1,000 principal amount of notes tendered and accepted for purchase by the company. Noteholders tendering their notes after the consent deadline will not receive the consent payment.

All tendering noteholders will also receive accrued and unpaid interest up to but not including the applicable payment date.

Notes may not be tendered without the holder also delivering consents to the proposed indenture amendments. Tendered notes may be withdrawn and related consents revoked at any time before the earlier of either the consent deadline or the time Hollinger obtains consents from holders of a majority of the outstanding notes, but not after that.

Hollinger plans to pay for the repurchase of the 9% notes out of the proceeds of the planned sale of its Telegraph Group Ltd. subsidiary, which publishes the Telegraph newspapers in Britain, to Press Acquisitions Ltd. for £729.5 million/$1.327.4 billion. The after-tax proceeds of the transaction are expected to be about £625.3 million/$1.137.7 billion. Besides repurchasing the 9% notes, Hollinger International plans to apply proceeds from the Telegraph sale to the repayment of outstanding debt of its subsidiaries' bank credit agreement.

Conditions of the tender offer include the consummation of the Telegraph sale on terms producing sufficient proceeds to Hollinger to allow it to repurchase the notes and to repay all of its borrowings under its existing bank credit facility; the receipt by the company of the required consents to the indenture changes from holders of at least a majority of the outstanding principal amount of the notes, and Hollinger's execution of a supplemental indenture incorporating the proposed amendments; and certain other customary conditions.

Wachovia Securities is the exclusive dealer manager and solicitation agent for the tender offer and consent solicitation (call 704 715-8341 or 866 309-6316). Global Bondholder Services Corp. is the depositary and information agent for the offer (call 212 430-3774 or 866 470-3800).

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