Sun-Times Media shareholder wants board shakeup

A hedge fund with a sizable stake in Sun-Times Media Group Inc. said Friday it has enough support from other investors to take over the company's board.

Davidson Kempner Capital Management LLC said it presented the company with "the required number of consents" from shareholders to remove all but one of Sun-Times Media's seven-member board, including Chief Executive Cyrus Freidheim Jr., and replace them with Davidson's three nominees.

"Through the provision of these consents, the stockholders have made clear their desire and support for a board of directors that is made up of professionals experienced in publishing and restructuring," the company said in a statement. "Given the operating and financial challenges before Sun-Times, we believe that the reconstituted board has the better potential to guide and lead Sun-Times."

With its affiliated entities, New York-based Davidson Kempner owns about 5.9 percent of Sun-Times Media Group.

Its proposed board includes one current director, lead portfolio strategist Robert Poile of Polar Securities. The three new directors would be Jeremy Halbreich, former president and general manager of The Dallas Morning News and founder of American Consolidated Media; Robert Schmitz, a partner at Quest Turnaround Advisors; and Michael Katzenstein, founder and principal of CXO LLC, a restructuring and turnaround management firm.

Sun-Times Media earlier this month urged shareholders to reject Davidson Kempner's "ill-conceived" ideas, but said it would accept whatever decision they make.

The company, which publishes the Chicago Sun-Times and community papers in the Chicago area, reported a $168 million loss in the third quarter. Earlier this month it closed 12 weekly newspapers and asked its union employees to take a cut in compensation as part of cost-cutting measures brought on by declining advertising revenue. Sun-Times Media said its goal was to cut expenses by as much as $50 million.

The New York Stock Exchange delisted the company's stock in May after it fell to well under a dollar a share. It now trades on the over-the-counter Pink Sheets, closing Friday unchanged at 8 cents.