Davidson Kempner Aims to Restructure Sun-Times Media

December 1, 2010 James Heinsman Hedge Fund News

The hedge fund Davidson Kempner Capital Management has initiated a proxy battle to remove the CEO and board of directors of the Sun-Times Media Group, publisher of the Chicago Sun-Times and several dozen other newspapers in Illinois and Indiana. The hedge fund, which owns a 5.9% stake in the group, nominated four new candidates for a proposed smaller five-member board.

Davidson Kempner wrote in a letter to SMTG shareholders that: “The harsh reality is that weakening consumer demand, rising input costs of ink and newsprint, and slowdown in advertising, and a long term secular trend away from print towards online readership have already resulted in negative normalized free cash flow for Sun-Times of roughly $20 million per quarter on average since 2006. In our view, the company must take dramatic steps to arrest the cash burn rate before it exhausts the remaining liquidity on the balance sheet.”

Davidson Kempner Capital Management, SMTG, Sun-Times,

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