December 31, 2001
Excerpt (page 12) - HOLLINGER
INTERNATIONAL YEAR END 10K REPORT 2001
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From Hollinger International year end 10-K report 2001 (page 12)
No longer available at http://www.hollinger.com/annual/annual.htm
Regulatory Matters. The publication, distribution and sale of newspapers and magazines in Canada is regarded as a"cultural business" under the Investment Canada Act and consequently, any acquisition of control of the Canadian Newspaper Group by a non-Canadian investor would be subject to the prior review and approval by the Minister of Industry of Canada. Because no such acquisition of control of Hollinger International Inc. or Hollinger Inc. has occurred, the current ownership is acceptable.
Relationship with Hollinger Inc. The Company and Hollinger Inc. directly own a combined 100% interest in HCPH Co. During 2001, HCPH Co. became the successor to the operations of XSTM Holdings (2000) Inc. (formerly Southam). Publishing and Hollinger Inc. own, directly or indirectly, the following interests; (i) Publishing and its subsidiaries own 100% of the non-voting equity shares and non-voting preference shares and (ii) Canadian Income Tax Act, there are limits on non-Canadian ownership of Canadian Newspapers. At present, the Company does not meet those limits and, if this continues beyond a specified cure each of Publishing and Hollinger Inc. (through its wholly-owned subsidiary) own 50% of the voting preference shares which have only nominal equity value. It is anticipated that Hollinger Inc. will pledge its interest in HCPH Co. as collateral for bank financing arrangements of the Company and its subsidiaries. The Company indirectly owns an 87.0% interest in Hollinger L.P. Under the period, there could be adverse effects on advertising revenue. The Company will take the necessary steps to ensure that it is in compliance before the cure period expires.