Hollinger Inc., Hollinger International Inc., And Its Affiliates Announce The Sale Of CDN $3.5 Billion Of Canadian Assets To CanWest Global Communications Corp

Business Wire, July 31, 2000

Business Editors

TORONTO--(BUSINESS WIRE)--July 31, 2000

Hollinger Inc. (TSE:HLG.C), Hollinger International Inc. ("Hollinger") (NYSE: HLR), Southam Inc. and Hollinger Canadian Newspapers, Limited Partnership ("Hollinger L.P.") (TSE: HCN.UN) announce that an agreement has been entered into to sell to CanWest Global Communications Corp. ("CanWest") (NYSE: CWG; TSE, WSE: CGS.S and CGS.A) for approximately CDN $3.5 billion, subject to adjustments, the following assets:

- a 50% interest in the National Post, while continuing as managing
  partner;
- their metropolitan and a large number of their community newspapers
  in Canada (including the Ottawa Citizen, Vancouver Sun, the
  Province, the Calgary Herald, the Edmonton Journal, the Montreal
  Gazette, The Windsor Star, The Regina Leader Post, the Star Phoenix
  and The Victoria Times-Colonist);
- the Southam Magazine and Information Group, and
- their operating Canadian Internet properties including canada.com.

The purchase price will be payable as to approximately CDN$700 million in shares of CanWest and as to the balance, 75% in cash and 25% in subordinated debentures of a senior company in the CanWest group. Hollinger will nominate two directors to the CanWest Board, commensurate with its opening equity interest of 15%. Conrad Black, Hollinger's Chairman and CEO, will be the Chairman of the National Post. With respect to the other newspaper assets being sold to CanWest, Mr. Black and his associates will enter into a management services agreement for at least 17 months in order to ensure operating continuity and to facilitate a smooth transition to the new arrangements.

The sale is expected to be completed at the end of September. Hollinger will use the cash proceeds to eliminate bank debt and possibly to cancel debentures and shares and create a substantial reserve of liquid assets.

The properties to be sold by Hollinger L.P. do not include the UniMedia group in Quebec and many community papers based in Ontario and British Columbia. A list of the businesses being sold is attached to this press release.

This transaction is consistent with Hollinger's stated objective for its Canadian restructuring initiative launched earlier this year. The sale price reflects the full enterprise value of the assets to be sold with the newspapers being valued at approximately 10 times EBITDA. Through its 15% shareholding in CanWest, its 50% direct interest in the National Post and as continuing manager of these assets, Hollinger will continue to participate in the future growth and exploitation of the franchise value of the assets in conjunction with CanWest's television, cable channel, radio and other Canadian and international media assets. Mr. Black stated: "Since gaining control of Southam in 1996, Hollinger has made great strides in improving the editorial quality as well as the profitability of its newspapers in Canada. Commencing with the Ottawa Citizen in 1997 and thereafter throughout its metropolitan and many of its community newspapers, Hollinger has enhanced editorial content and enlarged opportunities for Canadian print journalists. The launch of the National Post 21 months ago has thoroughly revitalized the Canadian newspaper industry. Nevertheless, there continues to be an audible body of opinion that holds that the newspaper industry has entered a period of stagnation or even decline. We strenuously disagree with this and look forward to demonstrating both the fallacy of this view and the enduring vitality of quality newspaper assets intelligently managed and imaginatively linked with other media. Hollinger believes this intimate association with a highly successful telecaster built by an entrepreneurial spirit compatible with Hollinger is the best possible assurance of the strength of the newspaper franchises and of the prospects and security of all who work in them. With CanWest we look forward to new and profitable convergence opportunities on a scale that is unique in the world. We retain complete flexibility to hold, reduce or increase to fuller partnership our interest in CanWest Global".

In addition to its interests in CanWest, the National Post, other Canadian newspapers and The Jerusalem Post, Hollinger will continue to own The Telegraph Group Limited in Britain, the Chicago Sun-Times, a large number of community newspapers in the Chicago area and Hollinger Ventures (Hollinger's new media investment subsidiary), none of which were offered for sale.

Mr. Black added, "This transaction and some smaller anticipated disposals of U.S. community newspapers not in the Chicago area represent a significant step toward what we committed to undertake last April in an effort to demonstrate the enterprise value of Hollinger's assets, both as traditional newspaper properties and as content and transactional Internet platforms. As I have stated over the last several months, Hollinger International expects to emerge from this process with a drastically reduced debt level and smaller number of outstanding shares, a stronger strategic position in relation to other media (and especially new media), appreciably higher earnings per share, and a large cash reserve with which to take the company forward to the next stage of its development. The demonstrable realization of the company's underlying values fully supports management's predictions."