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Sun-Times Media Group Fires Back at Hedge Fund's Efforts to Oust Leadership

Magazine article Editor & Publisher

Sun-Times Media Group Fires Back at Hedge Fund's Efforts to Oust Leadership

Article excerpt

Sun-Times Media Group's board of directors hit back Wednesday at hedge fund Davidson Kempner Capital Management's efforts to oust the company's leadership. In a sharp letter to shareholders, the board wrote that Davidson Kempner's "ill-conceived" efforts have shrouded the company in uncertainty.

The hedge fund and major shareholder in STMG agitated for the board to resign and accept its slate of nominees. Three of STMG's directors agreed to give up their seats, but said earlier this week they were delaying their exit in order to find suitable replacements.

Davidson Kempner "condemned" the board for its decision in a Jan. 5 release. "This decision by the current board to further entrench itself, despite repeated previous commitments to board renewal, should leave every Sun-Times shareholder deeply concerned about the company's future," the release said.

The STMG board urges shareholders to vote against Davidson Kempner's proposed plan.

The letter from STMG follows:


January 7, 2009

Dear Sun-Times Media Group Stockholder:

For more than two months, your Company has operated under a cloud of uncertainty created by the ill-conceived efforts of Davidson Kempner Capital Management LLC to replace the existing, well-qualified Board of Sun-Times Media Group, Inc. with its proposed hand-picked slate of directors. Now, as three directors have agreed to delay temporarily their planned departure from the Board until qualified replacements can be recruited, Davidson Kempner has accused your Board of seeking to "further entrench" itself. DK's accusation ignores reality and insults your intelligence.

The three directors in question had already publicly announced their intentions to step down from the board not later than December 31, 2008. They have agreed to stay on only so that the board can be properly restructured one way or the other. DK's accusation of entrenchment is a willful and irresponsible distortion of the truth.

Consider the facts:

* Last November, we announced an expedited process to restructure your Board and invited DK and its nominees to join in that effort. Davidson Kempner instead chose to subvert that process and to impose on all stockholders a group of individuals with no apparent understanding of either your Company or the markets in which Sun-Times Media Group publications operate.

* DK has rejected reasonable compromise proposals that, subject to customary vetting, would have placed each of the current DK nominees on the Board immediately, without the need for a costly consent solicitation, together with a small contingent of existing directors with continuing knowledge of the Company and its markets. …

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