Sun-Times Media Group: K Capital Requests Sale, Board Changes and Buyback

by: Lon Juricic

In a 13D filing on Sun-Times Media Group (NYSE: SVN), 9.9% holder K Capital Partners disclosed they changed their filing status from 13G 'passive' to 13D 'active', saying the company is trading at a significant discount to its intrinsic value and that immediate action must be taken to preserve shareholder value. The firm said management's operational plan must be implemented concurrently with a strategic review and sale of the Company.

K Capital recommended the following actions to be taken IMMEDIATELY: Hire a strategic advisor and put the Company up for sale; Raymond Seitz should step down as Chairman of the Board; Gordon Paris should step down as a member of the Board; The Company should appoint two institutional shareholders to the Board; The Company should execute a share buyback with the remaining unused capacity under the existing buyback program.

From the 'Purpose of Transaction' section of the filing:

While the Reporting Persons are supportive of management's current operational plan over the short-term, the Reporting Persons believe management's plan must be implemented concurrently with a strategic review and sale of the Company. Specifically, the Reporting Persons recommend the following actions to be taken IMMEDIATELY:

- The Company should hire a strategic advisor and put the Company up for sale.

- Raymond Seitz should step down as Chairman of the Board. While the reporting Persons have great respect for Mr. Seitz as an individual, his personal travel schedule and other interests do not allow him to provide present and active leadership.

- Gordon Paris should step down as a member of the Board. Mr. Paris was CEO of the Company during its deterioration and during its costly decision to invest in Canadian commercial paper; given these facts, there is no justification for allowing Mr. Paris to remain on the Board.

- The Company should appoint two institutional shareholders to the Board, so that the Board has greater shareholder representation. The current Board has minimal ownership, as has been evident in its decisions and actions.

- The Company should execute a share buyback with the remaining unused capacity under the existing buyback program, which the Reporting Persons believe to be in excess of twenty million dollars. The Reporting Persons believe a twenty million dollar buyback is very conservative and prudent given the Company's potential financial liabilities and operational requirements.

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