ARGUS CORPORATION LIMITED

March 04, 2005 23:04 ET

Argus Corporation Limited: Status Update Report


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: ARGUS CORPORATION LIMITED

TSX SYMBOL: AR.PR.A
TSX SYMBOL: AR.PR.D
TSX SYMBOL: AR.PR.B

MARCH 4, 2005 - 23:04 ET

Argus Corporation Limited: Status Update Report

TORONTO, ONTARIO--(CCNMatthews - March 4, 2005) - Argus Corporation
Limited ("Argus") (TSX: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 February 18, 2005.

Argus provides updates on its affairs on at least a bi-weekly basis
(each a "Report"), normally every second Friday. These Reports are to
continue until Argus is able to meet its public filing obligations. They
are made in accordance with certain guidelines of the Ontario Securities
Commission (the "OSC").

A Management and Insider Cease Trade Order was issued by the OSC with
respect to the management and insiders of Argus on June 3, 2004 (the
"Order"). The Reports that have been filed since then, including certain
alternative financial reporting, are available to review at
www.sedar.com.

The Order was issued as Argus did not file its financial statements and
related information when required, dating back to those required for the
First Quarter of 2004. Argus was unable to prepare and file this
information as it is required to consolidate its financial statements
with those of Hollinger Inc. ("Hollinger") which were not available.

Hollinger in turn was unable to prepare and file its financial
statements as the financial statements of Hollinger International Inc.
("International") were not available.

Argus owns or controls 61.8% of the Retractable Common Shares (the
"Common Shares") of Hollinger. Hollinger in turn owns 66.8% of the
voting shares and 17.4% of the equity of International.

As the Common Shares of Hollinger held by Argus are its only significant
asset, developments of Hollinger and International are material to
Argus. Accordingly, certain financial information and an update as to
the preparation and filing of financial statements and other related
matters by Argus and its subsidiary Hollinger and, in turn,
International is included in this Report.

Hollinger and International are each also subject to Management and
Insider Cease Trade Orders issued on June 1, 2004 for their failure to
file financial statements and related reports when required.

Proposed Privatization of Hollinger

Shareholders Meeting Status

On February 15, 2005, Hollinger announced that it would provide notice
of a proposed special meeting of shareholders to be held on March 31,
2005 to consider the proposed share consolidation going private
transaction involving Hollinger that had been announced on October 28,
2004.

Hollinger announced that it took that step on February 15, 2005 solely
to preserve the ability for it to convene a special meeting of
shareholders to approve the proposed transaction on March 31, 2005 from
a consideration of notice requirements.

Hollinger is currently reviewing these matters.

The Motion

The Independent Directors of Hollinger (the "Independent Directors") and
Hollinger have brought a Motion seeking advice and directions whether in
all circumstances the proposed privatization transaction should be put
to a vote of minority public shareholders of Hollinger before the Report
of Ernst & Young Inc. (the "Inspector") is made available (the "Motion").

The Inspector is presently conducting an inspection of Hollinger's
related party transactions (the "Inspection").

Certain additional relief has been requested by the Independent
Directors in the Motion including Orders approving (i) a payment of Cdn.
$10,000,000 to an indemnity fund of Hollinger to cover any costs
associated with potential litigation against them, (ii) a payment of
$500,000 to an indemnity fund of Hollinger to indemnify two Hollinger
financial executives, and (iii) the retention of the Independent
Directors involving some compensation without particulars being provided.

The Motion is to be heard before the Honourable Justice Colin L.
Campbell of the Superior Court of Ontario (the "Court") on Monday, March
7, 2005.

Argus is seeking the leave of the Court to have the right to comment on
the Motion as it has been previously granted the right with respect to
the Inspection proceedings.

Notices of Motion for leave to intervene and make submissions with
respect to the Motion have also been received from Lawrence & Company,
Inc. and Kenneth R. McLaren of Vancouver, British Columbia.

Proposed Privatization Transaction

The proposed going private transaction is to be structured as a share
consolidation and retirement of Hollinger shares held by parties other
than Argus and The Ravelston Corporation Limited ("Ravelston") directly
and indirectly.

Ravelston has agreed to support the proposed privatization on the basis
that (i) holders of Common Shares (other than Ravelston and certain of
its affiliated entities including Argus) would receive Cdn. $7.25 in
cash for each Common Share held by them, and (ii) 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.

Position of Argus

Argus intends to determine its position with respect to the proposed
privatization when it receives further terms and sufficient information
such as would be contained in a Proxy Circular with respect to any
meeting of shareholders of Hollinger.

It is contemplated that Argus would hold a greater percentage of the
Common Shares of Hollinger following the proposed going private
transaction. Hollinger would be a private company without the public
company liquidity that currently exists.

Current Status of Financial Reporting

Hollinger's Current Financial Reporting

Hollinger today released financial information in the form of an
unaudited consolidated balance sheet as at September 30, 2004, together
with notes, prepared on an alternative basis (the "Hollinger Alternative
Financial Information").

The Hollinger Alternative Financial Information includes the accounts of
Hollinger and those wholly-owned subsidiaries which carry out head
office functions and which do not represent investments.

Investments in other companies and subsidiaries such as International
are not consolidated but rather are carried as investments and are
accounted for at their market value.

The Hollinger Alternative Financial Information was prepared by
management of Hollinger. It was not audited or reviewed by Zeifman and
Company LLP, Hollinger's auditors.

Hollinger has been unable to file its statutory financial statements as
at and for the year ended December 31, 2003 and the first three quarters
of 2004 as a result of a series of difficulties Hollinger has
experienced, including Hollinger's loss of control of Hollinger in or
about November, 2003 and continued insufficient co-operation by
International and its auditors.

The financial statements that Hollinger released may be reviewed online
at www.sedar.com.

International's Current Financial Reporting

International has filed its audited financial statements for the fiscal
year ended December 31, 2003 with a Form 10-K with the U.S. Securities
and Exchange Commission (the "SEC") and with an Annual Information Form
with Canadian securities regulatory authorities.

International has not yet filed statements for the first three Quarters
of 2004 or for the year ended December 31, 2004.

Hollinger's Current Financial Reporting

Hollinger has been unable to prepare and file its audited financial
statements for 2003 and its related Management's Discussion and analysis
("MD&A") as generally accepted accounting principles ("GAAP") require
the consolidation of Hollinger's operations to the date of Hollinger's
loss of control of International, and Hollinger has not yet been able to
arrange for International's cooperation to facilitate such consolidation.

Hollinger has therefore also been unable to prepare its statements for
the first three Quarters of 2004 and the related MD&As other than the
Hollinger Alternative Financial Information that it filed today.

Argus' Current Financial Reporting

Argus filed its 2003 audited financial statements on a market valuation
basis as it had done 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 and as Hollinger has not
prepared its financial statements for each of the first three Quarters
of 2004, Argus has been unable to prepare financial statements in
compliance with GAAP for each of those Quarters. Argus has instead
provided its Reports pursuant to the Order.

Argus has filed financial statements for the first three Quarters of
2004 that were presented as alternative financial information. These
statements were appended to its Reports dated August 19 and November 12,
2004 and may be reviewed online at www.sedar.com.

Future Financial Reporting

Each of International, Hollinger and Argus need to prepare and file
their financial statements as required by GAAP and related MD&As in
order to normalize its financial reporting and to have its respective
Management and Insider Cease Trade Order lifted.

International's Future Financial Reporting

International has stated that it intends to file its financial
statements for the first three Quarters in 2004 with the SEC within two
months and that it will be working expeditiously to file Form 10-K with
its financial statements for the fiscal year ended December 31, 2004
(the "2004 10-K").

International stated that its 2004 Form 10-K is due to be filed with the
SEC on March 16, 2005 but that it intended to file a request with the
SEC for a fifteen-day extension to March 31, 2005. International noted,
however that it may not be able to complete and file its 2004 10-K by
March 31, 2005 due to the anticipated work involved in the audit.

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 Future Financial Reporting

Hollinger and International continue to negotiate with respect to
arrangements that would permit Hollinger to complete and file its
financial statements for the year ended December 31, 2003 and the first
three Quarters of 2004.

Argus' Future 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 with
those of Hollinger as soon as practicable after Hollinger files its
statements.

Argus anticipates next filing such alternative financial information for
the fiscal year ended December 31, 2004.

Argus further contemplates that it will need to continue to file
alternative financial information for current and upcoming financial
periods that do not consolidate Hollinger.

Financial Position of Argus

Argus had Cdn. $131,068 of cash as of the close of business on March 4,
2005.

Argus indirectly owns 21,596,387 Common Shares of Hollinger with a
market value at the close of trading on March 4, 2005 on the Toronto
Stock Exchange of Cdn. $6.35 per share or an aggregate of Cdn.
$137,137,057.

The market value of its shareholdings is subject to the minority
interest of Ravelston, the parent of Argus. The amount of that minority
interest was stated to be Cdn. $20,585,670 at September 30, 2004.

The market value of the shareholdings is also subject to future income
taxes on unrealized net capital gains. That amount was stated to be Cdn.
$14,793,176 at September 30, 2004. At that date, the value of Argus'
investment in Common Shares of Hollinger was Cdn. $86,385,548.

Ravelston holds all of the Common Shares and Class C Preference Shares
of Argus and 2,900 of Argus' 55,893 issued Class A Preference Shares
$2.60 Series.

Argus is indebted to Ravelston in the amount of Cdn. $251,703 in respect
of a loan provided by Ravelston to permit Argus to pay dividends on its
Class A and Class B Preference Shares.

The loan was made on January 31, 2005 pursuant to a promissory note. It
bears no interest and is due to be repaid on February 28, 2006.

Dividends

Argus intends to make efforts to ensure that it will be able to pay its
next scheduled regular quarterly dividends on its Class A and Class B
Preference Shares on May 1, 2005 which are currently estimated to be
Cdn. $251,703.

Argus presently requires additional funds to be able to pay the May 1,
2005 and future dividends on an uninterrupted basis.

Hollinger's Financial Position

Cash

Hollinger announced on February 21, 2005 that it and its subsidiaries
(excluding International and its subsidiaries) had approximately US
$42.6million of cash or cash equivalents at the close of business on
February 18, 2005.

Certain of these funds are subject to an escrow arrangement with the SEC.

Hollinger also had at that date approximately US $10.5 million of cash
that was deposited as collateral for its borrowings. It earlier reported
that it was entitled to apply this amount towards future interest
payments on certain secured borrowings.

On February 10, 2005, Hollinger directed that US $5,021,250 of that cash
be paid towards the payment of interest due on March 1, 2005 on its
outstanding US $78 million of Senior Notes.

Interest on Hollinger's US $15 million principal amount of outstanding
11.875% Second Priority Secured Notes due 2011 (the "Second Priority
Notes") which was also due on March 1, 2005 was to be paid from the
company's cash resources.

Shareholdings

Hollinger announced on February 21, 2005 that it continued to directly
or indirectly hold 782,923 shares of Class A Common Stock and 14,990,000
shares of Class B Common Stock of International as of February 18, 2005.

Based on the closing price of the Class A Common Stock of International
on the New York Stock Exchange (the "NYSE") at the close of business on
March 4, 2005 of US $11.50 and the number of shares of Class A Common
Stock and Class B Common Stock of International owned by Hollinger at
February 18, 2005, the market value of Hollinger's direct and indirect
holdings in International is US $ 181,388,615.

Security Given

All of Hollinger's interest in the shares of Class A Common Stock of
International is being held in escrow 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.

Current Excess of Collateral to Certain Security

On February 21, 2005, Hollinger announced that, on the basis of the
closing price of the Class A Common Stock of International on the NYSE
on February 18, 2005 of US $14.10 per share and its cash position at
February 18, 2005, it then had in excess of US $180.9 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.

Future Dividends

Hollinger was to receive US $47,318,769 on account of a special dividend
that International declared on January 27, 2005. The special dividend of
US $3.00 per share was to be paid on March 1, 2005 by International on
its Class A Common Stock and Class B Common Stock to the holders of
record on February 14, 2005.

Inspection of Hollinger

The Inspector is to inform the Court in the first week of March of a
date by the end of March by which it is to present to the Court its
priorities for the Inspection.

Hollinger announced on February 7, 2005 that its costs of the Inspection
(including those of the Inspector and legal counsel for the Inspector
and Hollinger) was then in excess of Cdn. $4.25 million.

Argus is a related party for purposes of the Inspection as it owns
approximately 61.8 percent of the Common Shares of Hollinger. Argus has
cooperated with the Inspector in connection with the Inspection and has
provided access to its documents and records to the Inspector.

Litigation Developments

Ravelston's Motion for Leave to appeal the earlier dismissal of its
Anti-Suit Motion with respect to the claims of International was
dismissed on February 28, 2005 by the Honourable Justice Power of the
Ontario Divisional Court.

Other International Developments

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.

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.

There has been no other material change from the information contained
in the Status Update Report of Argus issued on February 18, 2005.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Argus Corporation Limited
    Monique L. Delorme
    Chief Financial Officer
    (416) 363-8721
    or
    Argus Corporation Limited
    Peter G. White
    Executive Vice-President and Secretary
    (416) 363-8721