| [June 18, 2004] |
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Argus Corporation Limited: Status Update Report
TORONTO --(Business Wire)-- June 18, 2004 -- Argus Corporation Limited ("Argus") (TSX: AR.PR.A)(TSX: AR.PR.D)(TSX: AR.PR.B) today provided a status update on its preparation of financial statements to be filed and other related matters and additional information regarding its subsidiary Hollinger Inc.
Argus owns 61.8% of the Retractable Common Shares of Hollinger Inc.
This update is provided pursuant to the alternative information guidelines of the Ontario Securities Commission (the "OSC"). These guidelines contemplate that Argus will normally provide bi-weekly updates on its affairs until it is able to be current with its public filing obligations.
The OSC issued a permanent Management and Insider Cease Trade Order (the "Order") against Argus on June 3, 2004 following the issuance of a temporary Management and Insider Cease Trade Order on May 25, 2004. The last status update of Argus was included in its News Release of June 4, 2004 announcing the Order.
The Order was issued as a result of Argus not being able to complete and file its financial statements for the first Quarter of 2004 together with its related Management's Discussion and Analysis ("MD&A") when due on May 15, 2004.
This delay in filing resulted from a change in accounting guidelines. Argus is now required to file its financial statements on a basis of consolidation with those of Hollinger Inc. However, Hollinger Inc. has been unable to complete its financial statements due to a material change in its relationships with Hollinger International Inc. ("International").
The OSC issued Management and Insider Cease Trade Orders on June 1, 2004 against each of Hollinger Inc. and International for the failure of each to file their audited financial statements for the year ended on December 31, 2003, interim financial statements for the first Quarter of 2004 and related MD&A reports.
Argus is devoting significant resources to the completion and filing of its financial statements as soon as possible. The Audit Committee of Argus met today with Argus' new auditor Zeifman and Company LLP, Monique Delorme, the Chief Financial Officer of Argus, and accounting personnel to receive a status report and to ensure that everything possible was being done to complete and file the financial statements and related MD&A. PricewaterhouseCoopers LLP has been engaged by Argus as a consultant to assist in this matter.
Mr. Paul A. Carroll was appointed Chairman of the Audit Committee of Argus at that meeting. Another meeting of the Audit Committee has been scheduled for June 25, 2004 to review the progress in preparation of the required filing materials.
Sophisticated accounting issues have arisen as a result of the changed circumstances in the relationship between Hollinger Inc. and International and in the way that Argus is now required to prepare its statements. As Argus needs to prepare its financial statements consolidated with those of Hollinger Inc., it is reliant in turn on Hollinger Inc. being able to prepare and make its statements publicly available.
Argus continues to review with the OSC the financial and other disclosure that it requires to meet generally accepted accounting principles and to be current in its filings.
Since the last Status Report of Argus, Hollinger Inc. announced on June 11, 2004 the completion of the payments required following completion of the escrow conditions for its C$211 million Subscription Receipts Offering (the "Offering"). Its Series III Preference Shares have been redeemed by the payment of approximately C$96.6 million and delisted from the Toronto Stock Exchange. It is currently in a position to honour retraction requests of its 61,010 outstanding Series II Preference Shares made by June 7, 2004. It has deposited 10,981,538 shares of Class A Common Stock of International into escrow with a licensed trust company. These shares are to be released from escrow as required to satisfy retraction requests from the holders of its Series II Preference Shares.
Amongst other payments from the proceeds of the Offering, Hollinger Inc. further paid US$48.5 on the redemption by it of 35% of the principal amount of its 11.875% senior secured notes due 2011 (the "Notes") and US$10.4 million to cash collateralize US$6.3 million principal amount of Notes. No Notes were tendered to and purchased by Hollinger Inc. in connection with its further offer to purchase for cash any and all of its outstanding Notes. Approximately C$26 million is to be received by Hollinger Inc. from the Offering for general corporate purposes.
Hollinger Inc. announced on June 8, 2004 that Vice-Chancellor Strine of the Delaware Chancery Court has ruled that it will be ordered to repay US $16.55 million to International which it had received on account of non-competition payments, together with interest. A final Order is to be issued on or after June 21, 2004. It has announced that it believes there are meritorious grounds for appeal and is considering its options.
Hollinger Inc. further announced that it was served on June 8, 2004 with an Application to the Ontario Superior Court of Justice by Catalyst Fund General Partner I Inc., a Hollinger Inc. shareholder, seeking an order directing an investigation of Hollinger Inc. under the Canada Business Corporations Act. Hollinger Inc. announced that it considered the Application to be without merit and that it will vigorously oppose it.
There has been no other material change from the information contained in Argus' News Release on June 4, 2004.
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