Hollinger Inc.
TSX : HLG.C
TSX : HLG.PR.B

Hollinger Inc.

January 26, 2007 18:09 ET

Hollinger Inc. Status Update: January 26, 2007

TORONTO, ONTARIO--(CCNMatthews - Jan. 26, 2007) - Hollinger Inc. ("Hollinger" or the "Company") (TSX:HLG.C) (TSX:HLG.PR.B) provides the following update in accordance with the guidelines pursuant to which the June 1, 2004 management and insider cease trade order, as amended (the "MCTO"), was issued. These guidelines contemplate that Hollinger will provide bi-weekly updates on its affairs until such time as the MCTO is revoked. Reference should be made to Status Updates and other press releases that have been previously filed by Hollinger and which are available on SEDAR at www.sedar.com.

Recent Events

On January 16, 2007, Hollinger announced that Randall Benson will step down as Chief Restructuring Officer and as a Director of the Company, after a short transition period at which time G. Wesley Voorheis, a member of the Board of Directors and Chair of its Litigation Committee, will be appointed Chief Executive Officer of the Company.

On January 22, 2007, Hollinger and its wholly owned subsidiary Domgroup Ltd. ("Domgroup") served a motion in the insolvency proceedings regarding The Ravelston Corporation Limited ("Ravelston") and others. In the motion, Hollinger and Domgroup seek an order confirming the secured obligations owed by Ravelston to the Company and Domgroup and declaring that the applicable security agreements are valid, perfected and enforceable in accordance with their terms. Sun-Times Media Group, Inc. (formerly Hollinger International Inc.) ("Sun-Times") has advised that it intends to bring a motion to stay the motion. In the motion, Hollinger and Domgroup claim that the secured obligations owing by Ravelston total more than $25,000,000.

On January 25, 2007, the Ontario Superior Court of Justice commenced a hearing into a motion brought by RSM Richter Inc. ("Richter" or the "Receiver") in its capacity as Receiver of the Ravelston Entities (as defined below) whereby the Receiver seeks, among other things, approval of a plea agreement negotiated with the U.S. Attorney's office in respect of indictments laid in the United States against Ravelston. The motion is supported by Hollinger and Sun-Times and is opposed by Conrad Black Capital Corporation, Peter G. White and Peter G. White Management Limited.

The Board of Directors of Hollinger has set Monday, May 7, 2007 as the date of the Company's Annual Meeting of shareholders. The time and location of the meeting will be announced in due course.

Financial Statements

Hollinger has been unable to file its annual financial statements, Management's Discussion & Analysis and Annual Information Form for the fiscal years ended December 31, 2003, 2004 and 2005 and for its new fiscal year ended March 31, 2006 on a timely basis as required by Canadian securities legislation. Hollinger has not filed its interim financial statements for the fiscal quarters ended March 31, June 30 and September 30 in each of its 2004 and 2005 fiscal years and for the fiscal quarters ended June 30 and September 30, 2006. The Company has obtained a decision dated December 7, 2006 from certain Canadian securities regulatory authorities which, among other things, permits the Company to file financial statements for periods ending on or after December 31, 2003 using the fair value basis. The Company intends to finalize and file financial statements for the financial years ended December 31, 2003, 2004, and 2005 and March 31, 2006 as well as interim financial statements for the current fiscal year and other continuous disclosure documents with a view to bringing its disclosure filings current and compliant with applicable law. Once these documents are filed, the Company will apply to the Ontario Securities Commission for the revocation of the MCTO. The Company is required by the recent decision to complete its filings within 90 days of the date of the decision.

Supplemental Financial Information

As of the close of business January 19, 2007, Hollinger and its subsidiaries - other than Sun-Times and its subsidiaries - had approximately US$29.5 million of cash or cash equivalents on hand, including restricted cash, other than as described separately below. At that date, Hollinger owned, directly or indirectly, 782,923 shares of Class A Common Stock and 14,990,000 shares of Class B Common Stock of Sun-Times. Based on the January 19, 2007 closing price of the shares of Class A Common Stock of Sun-Times on the NYSE of US$4.49, the market value of Hollinger's direct and indirect holdings in Sun-Times was US$70.8 million. All of Hollinger's direct and indirect interest in the shares of Class A Common Stock of Sun-Times is being held in escrow in support of future retractions of its Series II Preference Shares. All of Hollinger's direct and indirect interest in the shares of Class B Common Stock of Sun-Times is pledged as security in connection with the senior notes (the "Senior Notes") and the second senior notes (the "Second Senior Notes"). In addition to the cash or cash equivalents on hand noted above, Hollinger has previously deposited approximately C$8.8 million in trust with the law firm of Aird & Berlis LLP, as trustee, in support of certain obligations Hollinger may have indemnified to six former independent directors and two current officers. In addition, C$759,000 has been deposited in escrow with the law firm of Davies Ward Phillips & Vineberg LLP in support of the obligations of a certain Hollinger subsidiary.

As of January 19, 2007, there was approximately US$67.3 million aggregate collateral securing the US$78 million principal amount of the Senior Notes and the US$15 million principal amount of the Second Senior Notes outstanding. Hollinger is current on all payments due under its outstanding Senior Notes and Second Senior Notes (collectively, the "Notes"). However, it is non-compliant under the Indentures governing the Notes with respect to certain financial reporting obligations and other covenants arising from the insolvency proceedings of the Ravelston Entities (as defined below). Neither the trustee under the Indentures nor the holders of the Notes have taken any action as a result of such defaults.

Ravelston Receivership and CCAA Proceedings

On April 20, 2005, the Court issued two orders by which Ravelston and Ravelston Management Inc. ("RMI") were: (i) placed in receivership pursuant to the Bankruptcy & Insolvency Act (Canada) and the Courts of Justice Act (Ontario) (the "Receivership Order"); and (ii) granted protection pursuant to the Companies' Creditors Arrangement Act (Canada) (the "CCAA Order"). Pursuant thereto, Richter was appointed receiver and manager of all of the property, assets and undertakings of Ravelston and RMI. Ravelston holds approximately 16.5% of the outstanding Retractable Common Shares of Hollinger. On May 18, 2005, the Court further ordered that the Receivership Order and the CCAA Order be extended to include Argus Corporation Limited and its five subsidiary companies which collectively own, directly or indirectly, 61.8% of the outstanding Retractable Common Shares and approximately 4% of the Series II Preference Shares of Hollinger (collectively, Argus Corporation Limited and its five subsidiary companies, as well as Ravelston and RMI are referred to as the "Ravelston Entities"). On June 12, 2006, the Court appointed Richter as receiver and manager and interim receiver of all the property, assets and undertaking of Argent News Inc., a wholly owned subsidiary of Ravelston. The Ravelston Entities own, in aggregate, approximately 78% of the outstanding Retractable Common Shares and approximately 4% of the Series II Preference Shares of Hollinger. The Court has extended the stay of proceedings against the Ravelston Entities to June 8, 2007.

Company Profile

Hollinger's principal asset is its direct and indirect holdings of approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group, Inc. (formerly Hollinger International Inc.), a media company with assets which include the Chicago Sun-Times newspaper and Suntimes.com and a number of community newspapers and websites serving communities in the Chicago area. Further information can be obtained at www.hollingerinc.com.

Contact Information