Posted by chicagomedia.org on November 02, 2008 at 19:05:09:
Halloween scare:
New York-based hedge fund Davidson Kempner Capital Management, the Sun-Times Media Group's third-largest shareholder, on Friday urged the Chicago Sun-Times parent to bounce Cyrus Freidheim Jr. as chief executive, overhaul its board and "address the very difficult task of arresting the cash burn rate before it exhausts the remaining liquidity on the balance sheet."
A Sun-Times Media spokeswoman declined to comment.
In a letter to Sun-Times Media Chairman Raymond Seitz, Davidson Kempner Managing Director Jame Donath said the company has been hemorrhaging roughly $20 million in cash per quarter since 2006 and now, like the entire newspaper industry, faces "unparalleled operating challenges" going forward.
"In order for Sun-Times to have a sound future, dramatic steps must be taken immediately," Donath wrote, noting Sun-Times Media's shares are now trading at a few cents. "The window of opportunity to accomplish this turnaround is narrow at best."
Davidson Kempner, which owns 5.9 percent of the company, or about 4.9 million shares, wants to ditch the current directors - except for lead portfolio strategist Robert Poile of Polar Securities, which holds a 10.7 percent stake - and reduce the reconstituted board from seven members to five at its Nov. 17 meeting. The new board would determine the fate of Freidheim, the Sun-Times' publisher.
Donath proposed that Poile be joined on the new board by Robert Schmitz of Quest Turnaround Advisors and former Bally Total Fitness Chief Executive Lee Hillman, as well as Jeremy Halbreich, former president and general manager of the Dallas Morning News and founder of American Consolidated Media, and RCN Corp. Chairman Michael Katzenstein, founder and principal of CXO LLC, a management firm specializing in restructuring and turnarounds.
(Phil Rosenthal, Chicago Tribune)