<PAGE>

                                 HOLLINGER INC.
                         NOTICE OF SPECIAL MEETING AND
                           MANAGEMENT PROXY CIRCULAR

                                (HOLLINGER LOGO)

                               IN CONNECTION WITH
                     THE SPECIAL MEETING OF THE HOLDERS OF
                           RETRACTABLE COMMON SHARES
                        AND SERIES II PREFERENCE SHARES
                     TO BE HELD ON THURSDAY, MARCH 31, 2005

                                 TO CONSIDER A
                       PROPOSED GOING PRIVATE TRANSACTION
                           BY WAY OF A CONSOLIDATION

                                 MARCH 4, 2005

The information contained herein is given as of March 4, 2005 except where
otherwise indicated. The information contained herein concerning Hollinger
International Inc. and its subsidiaries and/or The Ravelston Corporation Limited
and its subsidiaries was supplied by such companies or has been taken from or is
based on publicly available documents or records on file with Canadian
securities regulatory authorities and other public sources and has not been
independently verified by Hollinger Inc.

The proposed transaction described herein involves a consolidation in respect of
the securities of a Canadian company. The consolidation is subject to disclosure
requirements of Canada which are different from those of the United States.
<PAGE>

                                (HOLLINGER LOGO)

                                 HOLLINGER INC.
                               10 Toronto Street
                                Toronto, Ontario
                                    M5C 2B7

                         ------------------------------
                  NOTICE OF SPECIAL MEETING OF THE HOLDERS OF
           RETRACTABLE COMMON SHARES AND SERIES II PREFERENCE SHARES
                                 MARCH 31, 2005

                         ------------------------------

     NOTICE IS HEREBY GIVEN that a special meeting (the "MEETING") of the
holders of retractable common shares (the "COMMON SHARES") and exchangeable
non-voting preference shares Series II (the "SERIES II PREFERENCE SHARES") of
Hollinger Inc. (the "CORPORATION") will be held at The Gallery, TSX Broadcast &
Conference Centre, The Exchange Tower, 130 King Street West, Toronto, Ontario,
Canada, on THURSDAY, MARCH 31, 2005 AT 10:00 A.M. (TORONTO TIME), for the
following purposes:

     1.    to consider and, if deemed appropriate, to pass, with or without
           amendment, a special resolution (the "CS CONSOLIDATION RESOLUTION")
           of the holders of the Common Shares to amend the articles of the
           Corporation to effect; (a) a consolidation (the "CS CONSOLIDATION")
           of all of the issued and outstanding Common Shares on the basis of
           one post-CS Consolidation Common Share for every 5,766,783 pre-CS
           Consolidation Common Shares; and (b) the PS Consolidation (as defined
           below), all as more particularly described in the accompanying
           Management Proxy Circular of the Corporation;

     2.    to consider and, if deemed appropriate, to pass, with or without
           amendment, a special resolution (the "PS CONSOLIDATION RESOLUTION")
           of the holders of the Series II Preference Shares to amend the
           articles of the Corporation to effect a consolidation (the "PS
           CONSOLIDATION") of all of the issued and outstanding Series II
           Preference Shares on the basis of one post-PS Consolidation Series II
           Preference Share for every 1,701,995 pre-PS Consolidation Series II
           Preference Shares, all as more particularly described in the
           accompanying Management Proxy Circular of the Corporation; and

     3.    to transact such further or other business as may properly come
           before the Meeting or any adjournment(s) or postponement(s) thereof.

     A copy of the Management Proxy Circular and forms of proxy for use at the
Meeting accompany this notice. The full text of the CS Consolidation Resolution
and the PS Consolidation Resolution are set out in Appendices A and B,
respectively, to the Management Proxy Circular.

     The board of directors of the Corporation has fixed the close of business
on Tuesday, March 1, 2005 as the record date for determining the holders of
record of Common Shares and Series II Preference Shares who are entitled to
receive notice of the Meeting and to attend and vote at the Meeting and any
adjournment(s) or postponement(s) thereof.

     If you do not attend the Meeting in person, you may appoint a proxyholder
or one or more alternate proxyholders to attend and act at the Meeting in the
manner and to the extent authorized by the proxy and with the authority
conferred by the proxy. Shareholders are asked to promptly complete, sign, date
and return the enclosed applicable form of proxy in the envelope provided and
mail it to, or deposit it by hand with, the Proxy Department at Computershare
Trust Company of Canada, 100 University Avenue, 11th floor, Toronto, Ontario M5J
2Y1. TO BE EFFECTIVE, PROXIES MUST BE RECEIVED BY THE CORPORATION, OR BY
COMPUTERSHARE TRUST COMPANY OF CANADA AT ITS ADDRESS SET OUT IN THE PRECEDING
SENTENCE, NOT LATER THAN 10:00 A.M. (TORONTO TIME) ON TUESDAY, MARCH 29, 2005,
OR, IF IN THE CASE OF ANY ADJOURNMENT(S) OR POSTPONEMENT(S) OF THE MEETING, NOT
LATER THAN THE CLOSE OF BUSINESS ON THE LAST BUSINESS DAY PRECEDING THE DAY OF
THE ADJOURNED OR POSTPONED MEETING.
<PAGE>

     Under Section 190 of the Canada Business Corporations Act (the "CBCA"), a
registered holder of: (a) Common Shares may dissent in respect of the CS
Consolidation Resolution approving the CS Consolidation described in the
accompanying Management Proxy Circular; and (b) Series II Preference Shares may
dissent in respect of the CS Consolidation Resolution and the PS Consolidation
Resolution approving the CS Consolidation and the PS Consolidation,
respectively, described in the accompanying Management Proxy Circular. If the CS
Consolidation and the PS Consolidation are completed, dissenting shareholders
who comply with procedures set forth in the CBCA will be entitled to be paid the
fair value of their shares. This dissent right is summarized in Appendix D to
the Management Proxy Circular and Section 190 of the CBCA is set forth in
Appendix E to the Management Proxy Circular. FAILURE TO STRICTLY COMPLY WITH THE
REQUIREMENTS SET FORTH IN SECTION 190 OF THE CBCA MAY RESULT IN THE LOSS OR
UNAVAILABILITY OF ANY RIGHT OF DISSENT. PERSONS WHO ARE BENEFICIAL OWNERS OF
COMMON SHARES AND/OR SERIES II PREFERENCE SHARES REGISTERED IN THE NAME OF A
BROKER, CUSTODIAN, NOMINEE OR OTHER INTERMEDIARY WHO WISH TO DISSENT SHOULD BE
AWARE THAT ONLY THE REGISTERED HOLDERS OF SUCH SHARES ARE ENTITLED TO DISSENT.
ACCORDINGLY, IF YOU ARE SUCH A BENEFICIAL OWNER OF COMMON SHARES AND/OR SERIES
II PREFERENCE SHARES DESIRING TO EXERCISE YOUR RIGHT OF DISSENT, YOU MUST MAKE
ARRANGEMENTS FOR THE COMMON SHARES AND/OR SERIES II PREFERENCE SHARES
BENEFICIALLY OWNED BY YOU TO BE REGISTERED IN YOUR NAME PRIOR TO THE TIME THAT
THE WRITTEN OBJECTION TO THE CS CONSOLIDATION RESOLUTION AND/OR THE PS
CONSOLIDATION RESOLUTION, AS APPLICABLE, IS REQUIRED TO BE RECEIVED BY THE
CORPORATION OR, ALTERNATIVELY, MAKE ARRANGEMENTS FOR THE REGISTERED HOLDER OF
YOUR COMMON SHARES AND/OR SERIES II PREFERENCE SHARES TO DISSENT ON YOUR BEHALF.
SHAREHOLDERS WHO PREVIOUSLY SUBMITTED THEIR COMMON SHARES AND/OR SERIES II
PREFERENCE SHARES FOR RETRACTION WHO WISH TO DISSENT SHOULD BE AWARE THAT
SECTION 190 OF THE CBCA REQUIRES, AMONG OTHER THINGS, THAT A DISSENTING
SHAREHOLDER HAVE A SHARE CERTIFICATE. ACCORDINGLY, IF YOU ARE SUCH A
SHAREHOLDER, YOU MUST MAKE ARRANGEMENTS TO WITHDRAW YOUR RETRACTION REQUEST AND
OBTAIN THE RETURN OF YOUR SHARE CERTIFICATE(S). IN ORDER TO EXERCISE YOUR
WITHDRAWAL RIGHT, SHAREHOLDERS SHOULD CONTACT THE COMPUTERSHARE CALL CENTRE --
SHAREHOLDER SERVICES AT 1 (800) 564-6253.

DATED at Toronto, Ontario, as of the 4th day of March, 2005.

                                         BY ORDER OF THE BOARD OF DIRECTORS

                                         (Signed) DONALD M.J. VALE
                                                   President
<PAGE>

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                  PAGE
                                                  ----
<S>                                               <C>
INFORMATION FOR U.S. SHAREHOLDERS...............    3
FORWARD-LOOKING STATEMENTS......................    4
IMPORTANT CONSIDERATIONS FOR SHAREHOLDERS.......    4
GLOSSARY OF TERMS...............................    6
SUMMARY OF CIRCULAR.............................   12
GENERAL PROXY INFORMATION.......................   17
  Solicitation of Proxies.......................   17
  Appointment and Revocation of Proxies.........   17
  Advice to Non-Registered Holders..............   17
  Voting of Proxies.............................   18
  Authorized Capital, Voting Shares and
    Principal Holders Thereof...................   19
INFORMATION REGARDING THE CONSOLIDATION AND
  GOING PRIVATE TRANSACTION.....................   20
  Background and Purpose of the Meeting.........   20
  Terms and Effect of the Common Share
    Consolidation...............................   21
  Terms and Effect of the Series II Preference
    Share Consolidation.........................   22
  CCPRs.........................................   23
  Anticipated Dividend on the Outstanding Series
    II Preference Shares........................   29
  Retraction Status of Common Shares............   29
  Shareholder Approvals.........................   29
  Regulatory Matters............................   30
  Independent Privatization Committee...........   31
  Board of Directors -- Recommendations.........   37
  Motion to the Court...........................   37
  Valuation.....................................   37
  Prior Valuations..............................   39
  Updated Valuation.............................   39
  Procedure for Receipt of Consideration........   39
  Judicial Developments.........................   43
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS......   43
  Residents of Canada...........................   44
  Non-Residents of Canada.......................   47
CERTAIN U.S. TAX CONSEQUENCES FOR SHAREHOLDERS
  THAT ARE NOT U.S. PERSONS OF OWNING
  INTERNATIONAL A SHARES AS A RESULT OF THE PS
  CONSOLIDATION.................................   48
  Dividends.....................................   48
  Disposition of International A Shares.........   48
  Backup Withholding and Information
    Reporting...................................   49
  Federal Estate Taxes..........................   49
RIGHT OF DISSENT................................   49
EXPENSES OF THE CONSOLIDATION AND SOURCE OF
  FUNDS.........................................   49
INTEREST OF CERTAIN PERSONS IN THE
  CONSOLIDATION.................................   49
EFFECT OF THE CONSOLIDATION ON MARKETS AND
  LISTING.......................................   50
</Table>

<Table>
<Caption>
                                                  PAGE
                                                  ----
<S>                                               <C>
INFORMATION REGARDING THE CORPORATION...........   50
  General.......................................   50
  Capital Structure.............................   50
  Senior Secured Notes..........................   50
  Ownership of Securities of the Corporation....   51
  Management and Insider Cease Trade Orders.....   51
  Inspection....................................   51
  Commitments to Acquire Securities of the
    Corporation.................................   51
  Benefits from the Consolidation...............   52
  Price Range and Trading Volumes of the
    Shares......................................   52
  Dividend Policy...............................   52
  Previous Purchases, Sales and Distributions...   53
  Interests of Informed Persons in Material
    Transactions................................   53
  Executive Compensation........................   56
  Summary Compensation Table....................   57
  Options/Stock Appreciation Rights.............   58
  Management Contracts..........................   59
  Management Services...........................   59
  Securities Authorized for Issuance under
    Equity Compensation Plans...................   60
  Indebtedness of Directors and Executive
    Officers....................................   60
  Arrangements Between the Corporation and
    Securityholders.............................   61
  Arrangements with Directors and Executive
    Officers....................................   61
  Composition of the Compensation Committee.....   62
  Report on Executive Compensation..............   62
  Shareholder Return Performance Graph..........   63
  Material Changes in the Affairs of the
    Corporation and Other Material Facts
    Concerning the Corporation..................   63
STATEMENT OF CORPORATE GOVERNANCE PRACTICES.....   64
INFORMATION IN RESPECT OF INTERNATIONAL.........   69
  General.......................................   69
  Capital Structure.............................   69
  Material Changes in the Affairs of
    International and Other Material Facts
    Concerning International....................   69
INFORMATION IN RESPECT OF RCL...................   69
ADDITIONAL INFORMATION..........................   70
CONSENT OF GMP..................................   70
APPROVAL OF NOTICE AND CIRCULAR.................   70
APPENDIX A -- CS CONSOLIDATION RESOLUTION.......  A-1
APPENDIX B -- PS CONSOLIDATION RESOLUTION.......  B-1
APPENDIX C -- GMP VALUATION.....................  C-1
APPENDIX D -- SUMMARY OF PROCEDURE TO EXERCISE
  DISSENT RIGHT.................................  D-1
APPENDIX E -- SECTION 190 OF THE CANADA BUSINESS
  CORPORATIONS ACT..............................  E-1
</Table>

                                        2
<PAGE>

                       INFORMATION FOR U.S. SHAREHOLDERS

     THE SECURITIES TO BE ISSUED OR DELIVERED IN CONNECTION WITH OR UPON
COMPLETION OF THE CONSOLIDATION HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY STATE OR THE
SECURITIES LAWS OF ANY OTHER JURISDICTION, NOR IS SUCH REGISTRATION
CONTEMPLATED. THE SECURITIES TO BE ISSUED OR DELIVERED IN CONNECTION WITH OR
UPON COMPLETION OF THE CONSOLIDATION HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS MANAGEMENT PROXY CIRCULAR. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

     NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS MANAGEMENT PROXY CIRCULAR, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS MANAGEMENT PROXY CIRCULAR DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES TO BE ISSUED OR
DELIVERED IN CONNECTION WITH OR UPON COMPLETION OF THE CONSOLIDATION, OR THE
SOLICITATION OF A PROXY, IN ANY JURISDICTION, TO OR FROM ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION
IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS MANAGEMENT PROXY CIRCULAR NOR
ANY ISSUANCE OR DELIVERY OF THE SECURITIES CONTEMPLATED IN CONNECTION WITH OR
UPON COMPLETION OF THE CONSOLIDATION SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN
SINCE THE DATE OF THIS MANAGEMENT PROXY CIRCULAR.

     SHAREHOLDERS SHOULD NOT CONSTRUE THE CONTENTS OF THIS MANAGEMENT PROXY
CIRCULAR AS LEGAL, TAX OR FINANCIAL ADVICE AND SHOULD CONSULT WITH THEIR OWN
PROFESSIONAL ADVISORS AS TO RELEVANT LEGAL, TAX, FINANCIAL OR OTHER MATTERS IN
CONNECTION HEREWITH. IN PARTICULAR, THE U.S. TAX TREATMENT OF THE CONSOLIDATION
AND THE RECEIPT OF CCPRS AND INTERNATIONAL A SHARES FOR SHAREHOLDERS THAT ARE
U.S. PERSONS IS COMPLEX AND WILL DEPEND UPON THE SHAREHOLDER'S INDIVIDUAL
CIRCUMSTANCES. SUCH U.S. PERSONS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS.

     The Corporation is a corporation existing under the laws of Canada. Some or
all of the directors and officers of the Corporation, as well as experts named
in this Management Proxy Circular, are residents of Canada or of another country
other than the United States and all or a substantial portion of their assets
and a portion of the assets of the Corporation are located outside the United
States. As a result, it may be difficult for shareholders to effect service
within the United States upon the directors, officers and experts who are not
residents of the United States, to enforce their rights or any claims they may
have arising under United States federal securities laws, or to realize in the
United States upon judgments of courts of the United States predicated upon
civil liability under United States federal securities laws. There is some doubt
as to the enforceability in Canada against the Corporation or any of its
directors, officers or experts who are not residents of the United States in
original actions or in actions for enforcement of judgments of United States
courts, of liabilities predicated solely upon United States federal securities
laws.

     The Corporation is subject to the informational requirements of the United
States Securities Exchange Act of 1934, as amended, and, in accordance
therewith, files reports, management proxy circulars and other information with
the SEC. Such reports, management proxy circulars and other information can be
inspected and copied at prescribed rates at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and free copies thereof may be obtained at the SEC's Internet
website (www.sec.gov). Copies of such material can also be obtained by mail,
upon payment of the SEC's customary charges, by writing to the principal office
of the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.

                                        3
<PAGE>

                           FORWARD-LOOKING STATEMENTS

     This Management Proxy Circular contains certain forward-looking statements.
Words such as "will", "expects", "anticipates", "intends", "plans", "believes",
"seeks", "estimates" and variations of such words and similar expressions are
intended to identify these forward-looking statements. Specifically, and without
limiting the generality of the foregoing, all statements included in this
Management Proxy Circular that address activities, events or developments that
the Corporation expects or anticipates will or may occur in the future,
including such items as future capital (including the amounts and nature
thereof), business strategies and measures to implement such strategies,
competitive strengths, goals, expansion and growth, or references to the
litigation or future success of the Corporation, its subsidiaries and the
companies, joint ventures or partnerships in which the Corporation has equity
investments are forward-looking statements. Actual results could differ
materially from those reflected in the forward-looking statements as a result
of: (i) general economic market or business conditions; (ii) the opportunities
(or lack thereof) that may be presented to and pursued by the Corporation; (iii)
competitive actions by other companies; (iv) changes in laws; and (vi) other
factors, many of which are beyond the control of the Corporation.

     ALL WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE
CORPORATION, OR PERSONS ACTING ON ITS BEHALF, ARE EXPRESSLY QUALIFIED IN THEIR
ENTIRETY BY THE CAUTIONARY STATEMENTS SET FORTH ABOVE. READERS OF THIS
MANAGEMENT PROXY CIRCULAR ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS MANAGEMENT PROXY CIRCULAR, WHICH
REFLECT THE ANALYSIS OF MANAGEMENT ONLY AS OF THE DATE OF THIS MANAGEMENT PROXY
CIRCULAR, OR SUCH EARLIER DATE AS IS OTHERWISE INDICATED. THE CORPORATION
UNDERTAKES NO OBLIGATION TO RELEASE PUBLICLY THE RESULTS OF ANY REVISION TO
THESE FORWARD-LOOKING STATEMENTS WHICH MAY BE MADE TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE OF THIS MANAGEMENT PROXY CIRCULAR OR TO REFLECT THE
OCCURRENCE OF UNANTICIPATED EVENTS.

                   IMPORTANT CONSIDERATIONS FOR SHAREHOLDERS

     In considering the consolidation resolutions set forth herein, shareholders
of the Corporation should carefully regard the following important
considerations.

     AS OF THE DATE OF THIS MANAGEMENT PROXY CIRCULAR, THE CORPORATION IS NOT
CURRENT IN ALL FILINGS IT IS REQUIRED TO MAKE PURSUANT TO APPLICABLE CANADIAN
SECURITIES LAWS. In particular, the Corporation has failed to file: (i) its
interim financial statements (and interim management's discussion & analysis
related thereto) for the three-month period ended March 31, 2004; (ii) its
interim financial statements (and interim management's discussion & analysis
related thereto) for the six-month period ended June 30, 2004; (iii) its interim
financial statements (and interim management's discussion & analysis related
thereto) for the nine-month period ended September 30, 2004; (iv) its annual
financial statements (and annual management's discussion & analysis related
thereto) for the year ended December 31, 2003; and (v) its annual information
form for the year ended December 31, 2003. As the Corporation's 2003 annual
financial statements are not complete, the Corporation has obtained an order of
the Ontario Superior Court of Justice extending the time for calling the
Corporation's 2004 annual shareholders' meeting to a date not later than June
30, 2005.

     The Corporation's principal asset is its interest in Hollinger
International Inc. As of March 3, 2005, the Corporation owned, directly or
indirectly, approximately 17.4% of the equity and 66.8% of the voting interest
in Hollinger International Inc. AS OF THE DATE OF THIS MANAGEMENT PROXY
CIRCULAR, HOLLINGER INTERNATIONAL INC. IS NOT CURRENT IN ALL FILINGS IT IS
REQUIRED TO MAKE PURSUANT TO APPLICABLE CANADIAN SECURITIES LAWS. In particular,
Hollinger International Inc. has failed to file: (i) its interim financial
statements (and interim management's discussion & analysis related thereto) for
the three-month period ended March 31, 2004; (ii) its interim financial
statements (and interim management's discussion & analysis related thereto) for
the six-month period ended June 30, 2004; and (iii) its interim financial
statements (and interim management's discussion & analysis related thereto) for
the nine-month period ended September 30, 2004.

     In June, 2004, the Ontario Securities Commission and various other Canadian
securities regulatory authorities issued a cease trade order prohibiting certain
current and former directors, officers and insiders of the Corporation from
trading in securities of the Corporation, subject to certain exceptions. Such
order will remain in place until two full business days after the Corporation's
required filings with such regulators are brought up to date in compliance with
applicable Canadian securities law. Applicable policies and notices of the
Canadian securities regulatory authorities relating to management and insider
cease trade orders provide that if an issuer has not filed its delinquent
financial

                                        4
<PAGE>

statements within two months from an issuer first notifying such authorities of
its default, the issuer will generally be subject to a full issuer cease trade
order.

     On January 27, 2005, Hollinger International Inc. announced that the
Special Committee of its board of directors had determined that the Shareholder
Rights Plan (commonly known as a "poison pill") adopted on January 25, 2004 will
continue in effect by its terms until February 5, 2014. Under the Plan, if any
person or group acquires 20% or more of the voting power of Hollinger
International Inc.'s outstanding common stock without the approval of the board
of directors or the Corporate Review Committee of the board of directors of
Hollinger International Inc., there would be a triggering event potentially
causing significant dilution in the voting power of such person or group.
Although the Plan exempts the Corporation as the current holder of over 20% of
the voting power of Hollinger International Inc.'s common stock, it does not
exempt any direct or indirect transferee of that interest.

     Pursuant to an order of the Ontario Superior Court of Justice, Ernst &
Young Inc. was appointed as inspector pursuant to subsection 229(1) of the CBCA
to conduct an investigation of certain of the affairs of the Corporation. The
mandate of Ernst & Young Inc. is principally to investigate and report to the
Court upon the facts in relation to any "related party transaction" (as defined
in the Court order) between the Corporation (including any of its subsidiaries,
other than Hollinger International Inc. or its subsidiaries), and a "related
party" for the period January 1, 1997 to the date of the order. Although various
interim reports of Ernst & Young Inc. have been filed with the Court, a final
report of Ernst & Young Inc. has not been filed with the Court as of the date of
this Management Proxy Circular and it is not anticipated that such a final
report will be filed with the Court prior to the special meeting of shareholders
of the Corporation.

     The consolidation of the Corporation's outstanding shares being considered
by the Corporation's shareholders at the special meeting would not be permitted
under the Corporation's financing arrangements. However, pursuant to amendments
to the indentures governing the Corporation's 11.875% Senior Secured Notes due
2011 for which consents were previously obtained by the Corporation from holders
of a majority in aggregate principal amount of such senior notes, the
Corporation would be permitted to effect the proposed consolidation of its
shares. Such amendments will become effective if, and only if, all necessary
corporate, shareholder and regulatory approvals in connection with the
consolidation of the Corporation's outstanding retractable common shares have
been obtained on or prior to March 31, 2005. In the event that all such
approvals are not obtained by such date (including by reason of the meeting of
shareholders being adjourned or postponed to a date after March 31, 2005),
absent a further consent of the holders of a requisite amount of the
Corporation's senior notes, the Corporation would not be permitted, under its
financing arrangements, to implement the proposed consolidation. There can be no
assurances that any such consent, if sought, could be obtained.

                                        5
<PAGE>

                               GLOSSARY OF TERMS

     The following terms and expressions used herein have the following
meanings, unless the context otherwise requires.

     "ADDITIONAL AMOUNT PER SHARE" means an additional amount per Common Share
equal to the difference, if any, by which the mid-point of the Updated Valuation
Range (rounded to two decimal places) exceeds $7.39, being the mid-point of the
value range determined for the Common Shares in the Valuation;

     "ADDITIONAL CCPR FUNDING AMOUNT" has the meaning ascribed thereto under the
heading "Information Regarding the Consolidation and Going Private Transaction
-- CCPRs";

     "AFFILIATE" has the meaning ascribed thereto in the OSA;

     "ALTERNATIVE FINANCIAL INFORMATION" means the unaudited market value
balance sheet of the Corporation as at September 30, 2004 in which the
Corporation's investments in subsidiaries and other companies (other than those
that carry out head office functions) are not consolidated;

     "AMF" means the Autorite des marches financiers (Quebec);

     "ARGUS" means Argus Corporation Limited, a corporation existing under the
laws of Canada, all of the voting securities of which are owned by RCL;

     "ASSOCIATE" has the meaning ascribed thereto in the OSA;

     "BOARD OF DIRECTORS" or "BOARD" means the board of directors of the
Corporation;

     "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day that
is treated as a holiday at the Corporation's principal executive offices in
Toronto, Ontario;

     "CBCA" means the Canada Business Corporations Act, as amended, and all
regulations promulgated thereunder;

     "CATALYST" has the meaning ascribed thereto under the heading "Information
Regarding the Consolidation and Going Private Transaction -- Background and
Purpose of the Meeting";

     "CCPR" means one contingent cash payment right created and allocated by the
CCPR Trust;

     "CCPR AGREEMENT" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "CCPR DECLARATION OF TRUST" means the declaration of trust governing the
CCPR Trust to be entered into among the Corporation and the CCPR Trustees,
pursuant to which the CCPRs are to be created and allocated;

     "CCPR INITIAL TERM" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "CCPR TERM" has the meaning ascribed thereto under the heading "Information
Regarding the Consolidation and Going Private Transaction -- CCPRs";

     "CCPR TRUST" means a trust formed under the laws of the Province of Ontario
pursuant to the CCPR Declaration of Trust and known as the "Hollinger Inc.
Contingent Cash Payment Rights Trust";

     "CCPR TRUST CONSENT" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "CCPR TRUSTEES" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "CIRCULAR" means this Management Proxy Circular, including all appendices
thereof;

     "CLOSE OF BUSINESS" on any given date means the time on such date (or, if
such date is not a Business Day, the next following Business Day) at which the
office of the Depositary in Toronto, Ontario becomes closed to the public;

     "COMMON SHARE APPROVALS" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and the Going Private Transaction --
Background and Purpose of the Meeting";

     "COMMON SHARE CONSIDERATION" means $7.60 plus the Additional Amount per
Share, if any, in cash for each Common Share held by Common Shareholders
immediately prior to the Effective Date, as more fully described in this
Circular;
                                        6
<PAGE>

     "COMMON SHAREHOLDERS" means the holders of Common Shares, and "COMMON
SHAREHOLDER" means any one of them;

     "COMMON SHARES" means the retractable common shares in the capital of the
Corporation existing prior to the CS Consolidation;

     "CONSOLIDATION" means, collectively, the CS Consolidation and the PS
Consolidation;

     "CORPORATION" means Hollinger Inc., a corporation existing under the laws
of Canada;

     "COURT" means the Ontario Superior Court of Justice;

     "COURT ORDER" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "CRA" means the Canada Revenue Agency;

     "CS CONSOLIDATION" means the consolidation of all of the issued and
outstanding Common Shares on the basis of one New Common Share for every
5,766,783 Common Shares, as described in this Circular and the CS Consolidation
Resolution;

     "CS CONSOLIDATION RESOLUTION" means the special resolution of the Common
Shareholders to be considered at the Meeting to effect the CS Consolidation and
the PS Consolidation, substantially in the form set forth in Appendix A to this
Circular;

     "DEBT COMMITMENTS" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and the Going Private Transaction --
Background and Purpose of the Meeting";

     "DELAWARE ORDER" has the meaning ascribed thereto under the heading
"Information Regarding the Corporation -- Interests of Informed Persons in
Material Transactions";

     "DEPOSITARY" means Computershare Investor Services Inc.;

     "DIRECTORS' SHARE UNIT PLAN" has the meaning ascribed thereto under the
heading "Information Regarding the Corporation -- Executive Compensation --
Description of Directors' Remuneration";

     "DISSENTING SHAREHOLDER" means a Registered Shareholder who, in connection
with either the CS Consolidation Resolution and/or the PS Consolidation
Resolution, has exercised the right of dissent pursuant to Section 190 of the
CBCA in strict compliance with the provisions thereof and has thereby become
entitled to receive the fair value of the Common Shares and/or the Series II
Preference Shares held by that Common Shareholder and/or Preferred Shareholder,
as applicable, provided that a Registered Shareholder who fails to strictly
comply with the requirements of Section 190 of the CBCA shall be deemed not to
be a "Dissenting Shareholder";

     "E&Y REPORT" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "EFFECTIVE DATE" means, with respect to the CS Consolidation, the date
shown on the certificate of amendment to be issued in respect of the CS
Consolidation and, with respect to the PS Consolidation, the date shown on the
certificate of amendment to be issued in respect of the PS Consolidation, each
of which date is anticipated to be on or about April 8, 2005;

     "EFFECTIVE TIME" means 12:01 a.m. (Toronto time) on the Effective Date;

     "ENABLING TRANSACTIONS" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and the Going Private Transaction --
Background and Purpose of the Meeting";

     "FINAL ADJUDICATION" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "FINAL PAYMENT" means the payment of the Additional Amount per Share, if
any, in cash for each Common Share held by Common Shareholders immediately prior
to the Effective Date in connection with the Common Share Consideration;

     "GMP" means GMP Securities Ltd.;

     "HOLLINGER CONTROLLED LITIGATION" has the meaning ascribed thereto under
the heading "Information Regarding the Consolidation and Going Private
Transaction -- CCPRs";

                                        7
<PAGE>

     "HOLLINGER CONTROLLED LITIGATION PROCEEDS" has the meaning ascribed thereto
under the heading "Information Regarding the Consolidation and Going Private
Transaction -- CCPRs";

     "HOLLINGER CONTROLLED NET LITIGATION PROCEEDS" has the meaning ascribed
thereto under the heading "Information Regarding the Consolidation and Going
Private Transaction -- CCPRs";

     "HOLLINGER DEFENCE ACTIONS" has the meaning ascribed thereto under the
heading "Information Regarding the Consolidation and Going Private Transaction
-- CCPRs";

     "HOLLINGER ESCROW ACCOUNT" has the meaning ascribed thereto under the
heading "Information Regarding the Consolidation and Going Private Transaction
-- CCPRs";

     "HOLLINGER INDEPENDENT DIRECTORS' TRUST" has the meaning ascribed thereto
under the heading "Information Regarding the Corporation -- Interests of
Informed Persons in Material Transactions";

     "HOLLINGER L.P." means Hollinger Canadian Newspapers, Limited Partnership;

     "HOLLINGER MANAGEMENT AGREEMENT" has the meaning ascribed thereto under the
heading "Information Regarding the Corporation -- Management Contracts";

     "HOLLINGER MICTO" has the meaning ascribed thereto under the heading
"Information Regarding the Corporation -- Management and Insider Cease Trade
Orders";

     "INDENTURE DEFAULT" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "INDENTURES" means the indentures governing the Senior Secured Notes, as
amended, amended and restated, supplemented or otherwise modified from time to
time;

     "INDEPENDENT COMMITTEE" means a committee of independent members of the
Board of Directors currently consisting of Paul A. Carroll, Q.C., Robert J.
Metcalfe, Donald M.J. Vale, Gordon W. Walker, Q.C. and Allan Wakefield;

     "INDEPENDENT VALUATOR" means a valuator with appropriate qualifications
selected by the Independent Privatization Committee that is independent of all
interested parties (as such term is defined in OSC Rule 61-501) in respect of
the Consolidation;

     "INDEPENDENT PRIVATIZATION COMMITTEE" means a committee of the Board of
Directors established by way of resolution dated October 28, 2004 and currently
consisting of Robert J. Metcalfe and Allan Wakefield, each of whom is
independent of the Corporation and RCL, with Mr. Metcalfe as Chairman thereof;

     "INITIAL CCPR FUNDING AMOUNT" has the meaning ascribed thereto under the
heading "Information Regarding the Consolidation and Going Private Transaction
-- CCPRs";

     "INITIAL DETERMINATION" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "INITIAL PAYMENT" means the payment of $7.60 in cash for each Common Share
held by Common Shareholders immediately prior to at the Effective Date in
connection with the Common Share Consideration;

     "INSPECTION" has the meaning ascribed thereto under the heading
"Information Regarding the Corporation -- Inspection";

     "INSPECTOR" has the meaning ascribed thereto under the heading "Information
Regarding the Corporation -- Inspection";

     "INTERNATIONAL" means Hollinger International Inc., a corporation existing
under the laws of the State of Delaware;

     "INTERNATIONAL A SHARES" means the shares of Class A Common Stock in the
capital of International;

     "INTERNATIONAL B SHARES" means the shares of Class B Common Stock in the
capital of International;

     "INTERNATIONAL MICTO" has the meaning ascribed thereto under the heading
"Information Regarding the Corporation -- Management and Insider Cease Trade
Orders";

     "INTERNATIONAL STATEMENTS" means the audited annual financial statements of
International for the year ended December 31, 2004;

                                        8
<PAGE>

     "LETTERS OF TRANSMITTAL" means the letters of transmittal (printed on
yellow and pink paper), to be completed by a Common Shareholder or Preferred
Shareholder, as applicable, in order to receive the Common Share Consideration
or the Preferred Share Consideration, respectively, in the forms accompanying
this Circular, or facsimiles thereof;

     "LITIGATION ACCOUNT" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "LITIGATION PANEL" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "LITIGATION PROCEEDS" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "MANAGEMENT" means the management of the Corporation;

     "MEETING" means the special meeting of Common Shareholders and Preferred
Shareholders to be held on Thursday, March 31, 2005 to consider and, if thought
advisable, approve the CS Consolidation Resolution and the PS Consolidation
Resolution, and any adjournment(s) or postponement(s) thereof;

     "MINORITY SHAREHOLDERS" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
Shareholder Approvals";

     "MOTION" means the motion filed on February 25, 2005 in the Ontario
Superior Court of Justice by the members of the Independent Committee for, among
other things, advice and direction as to whether in the circumstances the
Consolidation should be put to the Shareholders before the Inspector delivers
its final report;

     "NET LITIGATION PROCEEDS" has the meaning ascribed thereto under the
heading "Information Regarding the Consolidation and Going Private Transaction
-- CCPRs";

     "NEW COMMON SHARES" means the retractable common shares in the capital of
the Corporation following the CS Consolidation;

     "NEW SERIES II PREFERENCE SHARES" means the exchangeable non-voting
preference shares Series II in the capital of the Corporation following the PS
Consolidation;

     "NOTICE" means the notice of the Meeting accompanying this Circular;

     "OPTION PLAN" has the meaning ascribed thereto under the heading
"Information Regarding the Corporation -- Options/Stock Appreciation Rights";

     "OPTIONS" has the meaning ascribed thereto under the heading "Information
Regarding the Corporation -- Options/Stock Appreciation Rights";

     "OSA" means the Securities Act (Ontario), as amended, together with all
regulations, rules, instruments and policies promulgated thereunder;

     "OSC" means the Ontario Securities Commission;

     "OSC RULE 61-501" means OSC Rule 61-501 -- Insider Bids, Issuer Bids, Going
Private Transactions and Related Party Transactions;

     "PANEL CONTROLLED HOLDBACK" has the meaning ascribed thereto under the
heading "Information Regarding the Consolidation and Going Private Transaction
-- CCPRs";

     "PANEL CONTROLLED LITIGATION" has the meaning ascribed thereto under the
heading "Information Regarding the Consolidation and Going Private Transaction -
CCPRs";

     "PANEL CONTROLLED LITIGATION PAYMENTS" has the meaning ascribed thereto
under the heading "Information Regarding the Consolidation and Going Private
Transaction -- CCPRs";

     "PANEL CONTROLLED LITIGATION PROCEEDS" has the meaning ascribed thereto
under the heading "Information Regarding the Consolidation and Going Private
Transaction -- CCPRs";

     "PANEL CONTROLLED NET LITIGATION PROCEEDS" has the meaning ascribed thereto
under the heading "Information Regarding the Consolidation and Going Private
Transaction -- CCPRs";

     "POLICY Q-27" means Policy Statement No. Q-27 of the AMF;

                                        9
<PAGE>

     "PREFERRED SHARE CONSIDERATION" means 0.46 of an International A Share for
each Series II Preference Share held by Preferred Shareholders immediately prior
to the Effective Date, as more fully described in this Circular;

     "PREFERRED SHAREHOLDERS" means the holders of Series II Preference Shares,
and "PREFERRED SHAREHOLDER" means any one of them;

     "PS CONSOLIDATION" means the consolidation of all of the issued and
outstanding Series II Preference Shares on the basis of one New Series II
Preference Share for every 1,701,995 Series II Preference Shares, as described
in this Circular and the PS Consolidation Resolution;

     "PS CONSOLIDATION RESOLUTION" means the special resolution of the Preferred
Shareholders to be considered at the Meeting to effect the PS Consolidation,
substantially in the form set forth in Appendix B to this Circular;

     "PS DIVIDEND" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
Anticipated Dividend on the Outstanding Series II Preference Shares";

     "RCL" means The Ravelston Corporation Limited, a corporation existing under
the laws of the Province of Ontario;

     "RECORD DATE" means Tuesday, March 1, 2005, the record date for receiving
notice of and voting at the Meeting;

     "REGISTERED SHAREHOLDER" means a holder of Common Share(s) and/or Series II
Preference Share(s) shown as a holder on the books or records of the
Corporation;

     "REQUIRED DEPOSIT" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

     "RMI" means Ravelston Management Inc., a corporation existing under the
laws of the Province of Ontario;

     "SEC" means the United States Securities and Exchange Commission;

     "SEC CLEARANCE" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
Regulatory Matters";

     "SENIOR SECURED NOTES" means the Corporation's 11.875% Senior Secured Notes
due 2011 issued pursuant to the Indentures;

     "SERIES II PREFERENCE SHARES" means the exchangeable non-voting preference
shares Series II in the capital of the Corporation existing prior to the PS
Consolidation;

     "SERIES III PREFERENCE SHARES" means the non-voting preference shares
Series III in the capital of the Corporation;

     "SERVICES AGREEMENTS" has the meaning ascribed thereto under the heading
"Information Regarding the Corporation -- Management Contracts";

     "SHARE ESCROW AGREEMENT" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and the Going Private Transaction --
Terms and Effect of the Series II Preference Share Consolidation";

     "SHAREHOLDER PAYMENT LITIGATION ACCOUNT" has the meaning ascribed thereto
under the heading "Information Regarding the Consolidation and Going Private
Transaction -- CCPRs";

     "SHAREHOLDERS" means, collectively, the Common Shareholders and the
Preferred Shareholders, and "SHAREHOLDER" means any one of them;

     "SHARES" means, collectively, the Common Shares and the Series II
Preference Shares;

     "SPECIFIED CLAIMS" means: (i) all causes of action or claims by the
Corporation against RCL and related parties (other than subsidiaries of the
Corporation) in respect of or in relation to related party transactions or
matters of the Corporation arising prior to the Effective Time, including
matters referred to in the E&Y Report other than any debts recorded in the books
and records of the Corporation reflected in the Alternative Financial
Information; and (ii) any payments received in connection with any causes of
action or claims referred to in (i) above regardless of whether or not any
proceedings have been commenced;

     "SPECIFIED LITIGATION" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
CCPRs";

                                        10
<PAGE>

     "SUBSCRIPTION RECEIPTS" has the meaning ascribed thereto under the heading
"Information Regarding the Corporation -- Interests of Informed Persons in
Material Transactions";

     "TAX ACT" means the Income Tax Act (Canada), including all regulations made
thereunder, and all amendments to such statute and regulations from time to
time;

     "TSX" means the Toronto Stock Exchange;

     "UNITED STATES" or "U.S." means the United States of America, its
territories and possessions, any State of the United States and the District of
Columbia;

     "UPDATED VALUATION" means the Valuation as it relates to the Common Shares,
as revised and updated in writing by an Independent Valuator (and delivered by
such Independent Valuator to the Independent Privatization Committee) solely to
reflect, to the extent necessary, new information set out in International's
Form 10-K filed with the SEC in respect of the International Statements (the
"UPDATED INFORMATION"), such Updated Valuation to be as of the effective date of
the Valuation, solely incorporating the Updated Information and, to the extent
possible, using the same methodology and assumptions used in the Valuation,
except to the extent the Independent Valuator determines, in its professional
judgment, that such methodology or assumptions must be adjusted in view of the
Updated Information;

     "UPDATED VALUATION DELIVERY DATE" means the date on which an Independent
Valuator delivers the Updated Valuation to the Independent Privatization
Committee;

     "UPDATED VALUATION RANGE" means the value range determined for the Common
Shares in the Updated Valuation;

     "U.S. EXCHANGE ACT" means the United States Securities Exchange Act of
1934, as amended;

     "U.S. HOLDERS" has the meaning ascribed thereto under the heading
"Information Regarding the Consolidation and Going Private Transaction --
Regulatory Matters";

     "U.S. SECURITIES ACT" means the United States Securities Act of 1933, as
amended;

     "VALUATION" means the formal written valuation of the Common Shares and the
Series II Preference Shares dated March 6, 2005 and effective as of March 1,
2005 delivered by GMP to the Independent Privatization Committee, a copy of
which is attached as Appendix C to this Circular; and

     "WHITE CONSULTING AGREEMENT" has the meaning ascribed thereto under the
heading "Information Regarding the Corporation -- Management Contracts".

                                        11
<PAGE>

                              SUMMARY OF CIRCULAR

     The following is a summary of certain significant information appearing
elsewhere in this Circular. Certain capitalized terms used in this summary are
defined in the Glossary of Terms. This summary is qualified in its entirety by
the more detailed information appearing elsewhere in this Circular, including
the Appendices hereto. Shareholders are urged to read this Circular and the
Appendices hereto in their entirety. All currency amounts herein unless
otherwise indicated are expressed in Canadian dollars.

DATE, TIME AND PLACE OF MEETING

     The Meeting will be held on Thursday, March 31, 2005, at 10:00 a.m.
(Toronto time) at The Gallery, TSX Broadcast & Conference Centre, The Exchange
Tower, 130 King Street West, Toronto, Ontario, Canada, unless otherwise
adjourned or postponed.

RECORD DATE

     The record date for the determination of Shareholders entitled to notice of
and to attend and vote at the Meeting is Tuesday, March 1, 2005. As of March 1,
2005, there were 34,945,776 Common Shares and 1,701,995 Series II Preference
Shares outstanding.

BACKGROUND AND PURPOSE OF THE MEETING

     The Meeting has been called at the instigation of RCL to ask Shareholders
to consider, and if thought advisable, to pass, with or without amendment, the
CS Consolidation Resolution and the PS Consolidation Resolution authorizing and
effecting the Consolidation, resulting in the Corporation becoming a direct and
indirect wholly-owned subsidiary of RCL.

     See the discussion under the heading "Information Regarding the
Consolidation and the Going Private Transaction -- Background and Purpose of the
Meeting".

TERMS AND EFFECT OF THE COMMON SHARE CONSOLIDATION

     If the CS Consolidation Resolution is passed, and certain other conditions
are satisfied, the CS Consolidation will become effective at the Effective Date,
which date is anticipated to be on or about April 8, 2005, upon the filing of
the articles of amendment and the issuance of a certificate of amendment giving
effect thereto.

     At the Effective Time, each Common Shareholder (other than a Dissenting
Shareholder) will be entitled to one New Common Share for every 5,766,783 Common
Shares held by the Common Shareholder immediately prior to the Effective Date.
Certificates representing fractional interests in a New Common Share will not be
issued. Those Common Shareholders holding fewer than 5,766,783 Common Shares
each, being all Common Shareholders other than, directly or indirectly, RCL,
will be entitled to be paid the sum of $7.60 and the Additional Amount per
Share, if any, in cash for each Common Share held immediately prior to the
Effective Date. A registered holder of Common Shares who becomes entitled to be
paid an amount including a fraction of $0.01 will be paid an amount rounded to
the nearest $0.01, the amount $0.005 being rounded upwards.

     In addition, immediately after the Effective Time, each Common Shareholder
(other than Dissenting Shareholders and, if the SEC Clearance is not obtained,
any U.S. Holders) will receive one CCPR for each outstanding Common Share held
by such Common Shareholder immediately prior to the Effective Time; provided
however, that if the SEC Clearance is not obtained, no Common Shareholder who
has not completed a Letter of Transmittal and certified therein that it is not a
U.S. Holder shall receive a CCPR until such time as the Depositary receives such
certification.

     See the discussion under the heading "Information Regarding the
Consolidation and the Going Private Transaction -- Terms and Effect of the
Common Share Consolidation".

     Dissenting Shareholders will be entitled to be paid the fair value for
their Common Shares in accordance with the provisions of the CBCA. See the
discussion under the heading "Right of Dissent".

TERMS AND EFFECT OF THE SERIES II PREFERENCE SHARE CONSOLIDATION

     If the PS Consolidation Resolution and the CS Consolidation Resolution are
passed, the PS Consolidation will become effective at the Effective Date, which
date is anticipated to be on or about April 8, 2005, upon the filing of the
articles of amendment and the issuance of a certificate of amendment giving
effect thereto.

                                        12
<PAGE>

     At the Effective Time, each Preferred Shareholder (other than a Dissenting
Shareholder) will be entitled to one New Series II Preference Share for every
1,701,995 Series II Preference Shares held by the Preferred Shareholder
immediately prior to the Effective Date. Certificates representing fractional
interests in a New Series II Preference Share will not be issued. Those
Preferred Shareholders holding fewer than 1,701,995 Series II Preference Shares
each, being all Preferred Shareholders, will be entitled to receive 0.46 of an
International A Share for each Series II Preference Share held immediately prior
to the Effective Date. A registered holder of Series II Preference Shares who
becomes entitled to receive a fractional interest in an International A Share
will receive such number of International A Shares rounded to the nearest whole
number, the number 0.5 being rounded upwards.

     In addition, prior to the Effective Time, it is anticipated that the Board
will declare and pay all outstanding accrued dividends on the Series II
Preference Shares prior to effecting the CS Consolidation.

     See the discussion under the heading "Information Regarding the
Consolidation and the Going Private Transaction -- Terms and Effect of the
Series II Preference Share Consolidation".

     Dissenting Shareholders will be entitled to be paid the fair value for
their Series II Preference Shares in accordance with the provisions of the CBCA.
See the discussion under the heading "Right of Dissent".

SHAREHOLDER APPROVALS

     In order to become effective, the CS Consolidation Resolution must be
approved by: (i) at least two-thirds of the votes cast by holders of Common
Shares present or represented by proxy at the Meeting and entitled to vote on
the CS Consolidation Resolution; and (ii) a majority of the votes cast by
Minority Shareholders.

     In order to become effective, the PS Consolidation Resolution must be
approved by at least two-thirds of the votes cast by holders of Series II
Preference Shares present or represented by proxy at the Meeting and entitled to
vote on the PS Consolidation Resolution. In addition, in order for the PS
Consolidation to be effected, the CS Consolidation Resolution must be approved
by at least two-thirds of the votes cast by holders of Common Shares present or
represented by proxy at the Meeting and entitled to vote on the CS Consolidation
Resolution.

     See the discussion under the heading "Information Regarding the
Consolidation and the Going Private Transaction -- Shareholder Approvals".

CCPRS

     The Independent Committee will, pursuant to a court order, cause the CCPR
Trust to be formed. In the event that such court order is not obtained, the
Independent Committee and the Corporation will explore mutually acceptable
alternatives pursuant to which the CCPR Trust can be formed. CCPRs will be
allocated or managed by the CCPR Trustees. The CCPR Trust will be established
prior to March 31, 2005.

     The CCPR Declaration of Trust will declare that one CCPR will be created
for each Common Share outstanding immediately prior to the Effective Time
(including for the avoidance of doubt, directly and indirectly, RCL), other than
Common Shares in respect of which holders have exercised dissent rights and, if
the SEC Clearance is not obtained, any U.S. Holders. If the CS Consolidation is
not implemented, the CCPR Trust will terminate. The CCPRs will represent a
beneficial interest in the CCPR Trust. The CCPRs will not represent obligations,
or security on the assets, of the Corporation. The CCPRs will not be assignable
or transferable except solely by operation of law or by testamentary will. No
certificate or other evidence of a CCPR will be issued other than an appropriate
notation in a register to be maintained by or on behalf of the CCPR Trustees.
Each CCPR will represent an entitlement to be paid a pro rata share of the Net
Litigation Proceeds, when such Net Litigation Proceeds can be transferred to or
held in an account owned by the CCPR Trust.

     See discussion under the heading "Information Regarding the Consolidation
and Going Private Transaction -- CCPRs"

ANTICIPATED DIVIDEND ON THE OUTSTANDING SERIES II PREFERENCE SHARES

     As a result of certain provisions in the articles of the Corporation
relating to the Series II Preference Shares, in order to proceed with the CS
Consolidation, the Board must declare and pay all outstanding accrued dividends
on the Series II Preference Shares (as at March 4, 2005, an aggregate of
approximately US$4.24 million or approximately US$2.49 per Series II Preference
Share) prior to effecting the CS Consolidation. Subject to obtaining the
requisite Common Shareholder approval in connection with the CS Consolidation,
the Corporation anticipates that the Board

                                        13
<PAGE>

will be in a position to declare and pay all accrued dividends on the Series II
Preference Shares outstanding by the Effective Date.

VALUATION

     GMP was engaged on November 23, 2004 by the Independent Privatization
Committee to prepare an independent valuation of the Corporation on a per share
basis. In the Valuation, GMP estimates that, as at March 1, 2005, the fair
market value of the outstanding Common Shares was in the range of $7.21 to $7.57
per Common Share. In addition, in the Valuation, GMP is of the view that the
value of an outstanding Series II Preference Share is equivalent to 0.46 of an
International A Share. In this regard, GMP determined that the appropriate
approach with respect to the valuation of the Series II Preference Shares was to
value them in relation to the retraction right to receive International A
Shares, rather than a range of values expressed in dollars. See the discussion
under the heading "Information Regarding the Consolidation and the Going Private
Transaction -- Valuation" and Appendix C to this Circular.

UPDATED VALUATION

     Promptly following the public release by International of the International
Statements, an Independent Valuator will prepare an Updated Valuation of the
Common Shares. The Corporation will publicly disclose the Updated Valuation
Range via press release immediately upon receipt of same from the Independent
Valuator.

     As part of the Common Share Consideration, each holder of Common Shares
(other than, directly or indirectly, RCL and Dissenting Shareholders) will
receive, subject to applicable laws (including solvency requirements), the
Additional Amount per Share, if any, in cash, which amount shall be rounded to
the nearest cent. In no event will the Additional Amount per Share be less than
nil. The Additional Amount per Share, if any, will be paid as soon as reasonably
practicable following the Updated Valuation Delivery Date, and in any event,
within ten Business Days thereof.

     See the discussion under the heading "Information Regarding the
Consolidation and the Going Private Transaction -- Updated Valuation".

RETRACTION STATUS OF COMMON SHARES

     In the event that the Common Share Approvals are obtained on or prior to
March 31, 2005, in which case the amendments to the Indentures will become
effective, the Board has determined at this time that the Corporation will be in
a position to honour retractions of the outstanding Common Shares immediately
following receipt of such approvals. In the event that the Common Share
Approvals are not obtained by March 31, 2005, the current terms of the
Indentures would, barring amendments thereto, preclude the Corporation from
honouring retractions of the outstanding Common Shares for the foreseeable
future.

INDEPENDENT PRIVATIZATION COMMITTEE

     Due to the relationship between the Corporation and RCL and as provided in
OSC Rule 61-501 and Policy Q-27, the Board appointed the Independent
Privatization Committee to review and consider the Consolidation and to make
recommendations to the Board. At a meeting of the Independent Privatization
Committee held on March 6, 2005, after considering the terms of the
Consolidation, the Valuation, the advice of its legal and financial advisors and
various additional matters, including such matters discussed under "Information
Regarding the Consolidation and Going Private Transaction -- Independent
Privatization Committee -- Factors Considered by Independent Privatization
Committee in Making its Recommendations", the Independent Privatization
Committee unanimously concluded that:

     (a)   although the Common Share Consideration is above the range of value
           per Common Share as determined pursuant to the Valuation, the
           Independent Privatization Committee could not, in the absence of a
           fairness opinion from GMP and given the unique and unusual
           circumstances set out in the Valuation, reach a conclusion or make a
           recommendation as to whether the Common Share Consideration is fair,
           from a financial point of view, to the Common Shareholders (other
           than RCL and certain of its affiliates entities);

     (b)   notwithstanding the conclusion outlined in (a) above, in light of the
           revised terms of the Common Share Consideration, which included the
           Additional Amount per Share, and the issuance of CCPRs, the Board
           should authorize submitting the CS Consolidation to the Common
           Shareholders for their consideration provided that the Common
           Shareholders are fully informed of the limitations, assumptions and
           qualifications of the Valuation;

                                        14
<PAGE>

     (c)   the Board should not make any recommendation with respect to how
           Common Shareholders should vote in respect of the CS Consolidation;

     (d)   although the Preferred Share Consideration is consistent with the
           rights, privileges, restrictions and conditions attaching to the
           Series II Preference Shares (and, in particular, with respect to the
           rights of retraction attaching to the Series II Preference Shares),
           given that Preferred Shareholders will be in no better position as a
           result of the completion of the PS Consolidation, the Independent
           Privatization Committee could not reach a conclusion or make a
           recommendation as to whether the Preferred Shareholders should vote
           in favour of the PS Consolidation;

     (e)   notwithstanding the conclusion outlined in (d) above, there is no
           assurance that the Corporation, given the terms of the Indentures,
           would be able to honour retractions of the Series II Preference
           Shares in the future and as a result, the Board should authorize
           submitting the PS Consolidation to the Preferred Shareholders for
           their consideration; and

     (f)   the Board should not make any recommendation with respect to how
           Preferred Shareholders should vote in respect of the PS
           Consolidation.

     See discussion under the heading "Information regarding the Consolidation
and the Going Private Transaction -- Independent Privatization Committee".

BOARD OF DIRECTORS

     On March 7, 2005, the Board met to receive and consider the recommendations
of the Independent Privatization Committee and to consider the submission of the
Consolidation to the Shareholders for their approval. The Board carefully
considered the report of the Independent Privatization Committee and resolved to
adopt such report. The Board also unanimously adopted the resolution to call the
Meeting without making a recommendation as to whether the Shareholders should
accept or reject either the CS Consolidation Resolution or the PS Consolidation
Resolution.

     See discussion under the heading "Information Regarding the Consolidation
and Going Private Transaction -- Board of Directors -- Recommendations".

MOTION TO THE COURT

     On February 25, 2005, the members of the Independent Committee filed the
Motion for, among other things, advice and direction as to whether in the
circumstances the Consolidation should be put to the Shareholders before the
Inspector delivers its final report. The Motion was heard on March 7, 2005. Mr.
Justice Campbell ruled that, in the circumstances, it was not appropriate for
the Court at this stage to make any order. Mr. Justice Campbell adjourned the
Motion seeking advice and direction pending any further steps taken by any party
based on the decisions that were to be made by the directors in connection with
the Consolidation.

PROCEDURE FOR RECEIPT OF CONSIDERATION

     If the CS Consolidation is effected, each Common Shareholder (other than,
directly or indirectly, RCL and Dissenting Shareholders) will receive: (a) the
Initial Payment as soon as practicable after the Effective Date; and (b) the
Final Payment, if any, as soon as practicable after the Updated Valuation
Delivery Date. If the PS Consolidation is effected, each Preferred Shareholder
(other than Dissenting Shareholders) will receive the Preferred Share
Consideration as soon as practicable after the Effective Date. In order for such
Shareholders to receive the Common Share Consideration and the Preferred Share
Consideration, respectively, they must first complete and sign the appropriate
enclosed Letters of Transmittal (printed on yellow paper for Common Shareholders
and pink paper for Preferred Shareholders) and return same, together with the
certificate(s) representing their Shares held, and all other requisite
documentation, to the Depositary in accordance with the procedures specified in
the appropriate enclosed Letters of Transmittal.

     In addition, immediately after the implementation of the CS Consolidation,
each Common Shareholder (other than Dissenting Shareholders and, if the SEC
Clearance is not obtained, any U.S. Holders) will receive one CCPR for each
outstanding Common Share held immediately prior to the Effective Time. See
"Information Regarding the Consolidation and the Going Private Transaction --
CCPRs".

     As soon as practicable following the Effective Date in respect of the CS
Consolidation and/or the PS Consolidation, as the case may be, and receipt of
all required documentation, the Depositary will send, or cause to be

                                        15
<PAGE>

sent, to each Shareholder who has submitted a duly signed and completed Letter
of Transmittal in accordance with the foregoing: (a) in the case of a Common
Shareholder, a cheque for the aggregate Initial Payment payable in respect of
the Common Shares held by such Common Shareholder; and (b) in the case of a
Preferred Shareholder, a share certificate representing the aggregate Preferred
Share Consideration payable in respect of the Series II Preference Shares held
by such Preferred Shareholder. If applicable, as soon as practicable following
the Updated Valuation Delivery Date and receipt of all required documentation,
the Depositary will send, or cause to be sent, to each Common Shareholder who
has submitted a duly signed and completed Letter of Transmittal in accordance
with the foregoing a cheque for the aggregate Final Payment payable in respect
of the Common Shares held by such Common Shareholder.

     In the case of a Shareholder who has lost or misplaced such Shareholder's
Share certificate(s), delivery of the appropriate consideration will be made
promptly upon receipt by the Depositary of a letter describing the loss and all
other documents required by the Corporation and the Depositary to establish
proper entitlement.

     See the discussion under the heading "Information Regarding the
Consolidation and the Going Private Transaction -- Procedure for Receipt of
Consideration".

CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

     Common Shareholders (including any Dissenting Shareholders) will generally
realize a capital gain (or capital loss) on the receipt of cash in lieu of
fractional New Common Shares on the CS Consolidation. Preferred Shareholders
(including any Dissenting Shareholders) will generally realize a capital gain
(or capital loss) on the receipt of International A Shares in lieu of fractional
New Series II Preference Shares on the PS Consolidation. The tax implications of
receiving CCPRs are also discussed under the heading "Canadian Federal Income
Tax Considerations".

     Shareholders (including any Dissenting Shareholders) who are not resident
in Canada for purposes of the Tax Act will be subject to the notification and
withholding provisions of section 116 of the Tax Act as is described in the
discussions under the heading "Canadian Federal Income Tax Considerations".

     The foregoing is qualified in its entirety by a more detailed summary that
appears under the heading "Canadian Federal Income Tax Considerations".
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR
CONSEQUENCES TO THEM WITH RESPECT TO THEIR SHARES.

EFFECT OF THE CONSOLIDATION ON MARKETS AND LISTINGS

     In the event that either or both of the CS Consolidation Resolution and the
PS Consolidation Resolution are passed, it is intended that, on or shortly after
the Effective Date, the Common Shares and the Series II Preference Shares, as
the case may be, will be delisted from the TSX. In the event that the requisite
approval of the Preferred Shareholders is not obtained in respect of the PS
Consolidation Resolution, the Series II Preference Shares may remain listed on
the TSX, subject to the applicable TSX listing requirements being met. Following
the Consolidation, it is intended that an application will be made to the OSC
and to the securities regulatory authorities in other provinces and territories
of Canada where the Corporation is a reporting issuer (or its equivalent) for an
order deeming the Corporation to no longer be a reporting issuer (or its
equivalent) for purposes of applicable Canadian securities legislation. Upon
such order being issued, the Corporation would no longer be subject to the
ongoing disclosure and other obligations currently imposed in Canada upon the
Corporation as a reporting issuer. In the event that the requisite approval of
the Preferred Shareholders is not obtained in respect of the PS Consolidation
Resolution, there can be no assurance that such order would be issued.

RIGHT OF DISSENT

     Registered holders of Common Shares have the right to dissent in respect of
the CS Consolidation Resolution and to be paid the fair value of their Common
Shares, provided they strictly comply with the provisions of applicable law.
Similarly, registered holders of Series II Preference Shares have the right to
dissent in respect of the PS Consolidation Resolution and the CS Consolidation
Resolution and to be paid the fair value of their Series II Preference Shares,
provided they strictly comply with the provisions of applicable law. FAILURE BY
A DISSENTING SHAREHOLDER TO ADHERE STRICTLY TO THE REQUIREMENTS OF SECTION 190
OF THE CBCA MAY RESULT IN THE LOSS OR UNAVAILABILITY OF RIGHTS UNDER THAT
SECTION.

     See the discussion under the heading "Right of Dissent" as well as
Appendices D and E to this Circular.

                                        16
<PAGE>

                           GENERAL PROXY INFORMATION

SOLICITATION OF PROXIES

     THIS CIRCULAR AND THE INFORMATION CONTAINED HEREIN ARE FURNISHED IN
CONNECTION WITH THE SOLICITATION OF PROXIES BEING MADE BY OR BEHALF OF
MANAGEMENT TO BE USED AT THE MEETING OF COMMON SHAREHOLDERS AND PREFERRED
SHAREHOLDERS TO BE HELD ON THURSDAY, MARCH 31, 2005 AT 10:00 A.M. (TORONTO
TIME), AND AT ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF. It is expected that
the solicitation will be primarily by mail but proxies may also be solicited
personally or by telephone by directors, officers or employees of the
Corporation. All costs of the solicitation will be borne directly by the
Corporation. Unless otherwise noted herein, all information set forth herein is
given as at March 4, 2005.

     The registered office of the Corporation is 10 Toronto Street, Toronto,
Ontario M5C 2B7.

APPOINTMENT AND REVOCATION OF PROXIES

     THE PERSONS SPECIFIED AS THE PROXYHOLDER IN THE ENCLOSED FORMS OF PROXY ARE
REPRESENTATIVES OF MANAGEMENT AND ARE DIRECTORS AND/OR OFFICERS OF THE
CORPORATION. EACH REGISTERED SHAREHOLDER HAS THE RIGHT TO APPOINT A PROXYHOLDER,
WHO NEED NOT BE A SHAREHOLDER, TO ATTEND AND ACT FOR THE SHAREHOLDER AND ON THE
SHAREHOLDER'S BEHALF AT THE MEETING OTHER THAN THE PERSONS DESIGNATED IN THE
ENCLOSED FORMS OF PROXY. THIS RIGHT MAY BE EXERCISED BY STRIKING OUT THE NAMES
OF THE DESIGNATED PERSONS AND INSERTING THE NAME OF SUCH OTHER PROXYHOLDER IN
THE BLANK SPACE PROVIDED IN THE ENCLOSED FORMS OF PROXY OR BY COMPLETING OTHER
PROXIES IN PROPER FORM. To be valid, a proxy must be executed by the
Shareholder, or his or her attorney duly authorized in writing, and deposited
with the Corporation or the Depositary at its Proxy Department at 100 University
Avenue, 11th Floor, Toronto, Ontario M5J 2Y1 at any time prior to 10:00 a.m.
(Toronto time) on Tuesday, March 29, 2005, or in the case of any adjournment(s)
or postponement(s) of the Meeting, the Close of Business on the last Business
Day preceding the day of the adjourned or postponed Meeting. If the Shareholder
is a corporation, the proxy must be executed by an officer or properly appointed
attorney thereof. A prepaid envelope addressed to the Depositary is enclosed
with this Circular for convenience.

     Any Shareholder who has given a proxy has the right to revoke it at any
time as to any matter on which a vote has not already been cast pursuant to the
authority conferred by it by duly executing (or such Shareholder's attorney
authorized in writing duly executing, or if such Shareholder is a corporation,
an officer or attorney thereof duly authorized in writing duly executing)
another form of proxy bearing a later date and depositing the same before the
specified time or by signing a written revocation of proxy and depositing that
instrument of revocation at the registered office of the Corporation at any time
up to and including the Close of Business on the last Business Day preceding the
day of the Meeting (or, in the case of any adjournment(s) or postponement(s) of
the Meeting, the Close of Business on the last Business Day preceding the day of
the adjourned or postponed Meeting at which the proxy is to be used) or with the
Chair of the Meeting on the day of the Meeting or adjourned or postponed Meeting
or in any other manner permitted by law. If such written instrument is deposited
with the Chair of the Meeting on the day of the Meeting or any adjourned or
postponed Meeting, such instrument will not be effective with respect to any
matter on which a vote has already been cast pursuant to such proxy.

     THE EXECUTION OR EXERCISE OF A PROXY DOES NOT CONSTITUTE A WRITTEN
OBJECTION FOR THE PURPOSE OF SECTION 190 OF THE CBCA. FOR INFORMATION ON
DISSENTING SHAREHOLDER RIGHTS, SEE THE DISCUSSION UNDER THE HEADING "RIGHT OF
DISSENT" ELSEWHERE IN THIS CIRCULAR AS WELL AS APPENDICES D AND E TO THIS
CIRCULAR.

ADVICE TO NON-REGISTERED HOLDERS

     THE SECTION APPLIES TO BENEFICIAL HOLDERS OF SHARES ONLY. THE INFORMATION
SET FORTH IN THIS SECTION IS OF SIGNIFICANT IMPORTANCE TO MANY HOLDERS OF
SHARES, AS A NUMBER OF SHAREHOLDERS DO NOT HOLD SHARES IN THEIR OWN NAMES. Only
Registered Shareholders, or the persons they appoint as their proxies, are
recognized and permitted to attend and vote at the Meeting. However, in many
cases, Shares beneficially owned by a holder (a "NON-REGISTERED HOLDER") are
registered either:

     (a)   in the name of an intermediary (an "INTERMEDIARY") that the
           Non-Registered Holder deals with in respect of the Shares, such as,
           among others, banks, trust companies, securities dealers or brokers
           and trustees or administrators of self-administered RRSPs, RRIFs,
           RESPs and similar plans; or

                                        17
<PAGE>

     (b)   in the name of a clearing agency (such as CDS & Co., the registration
           name for The Canadian Depository for Securities Limited) of which the
           Intermediary is a participant.

     Shares held by an Intermediary or its agent or nominee can only be voted
(for or against resolutions) upon the instructions of the Non-Registered Holder.
In Canada, without specific instructions, an Intermediary or its agent or
nominee is prohibited from voting shares for the Intermediary's clients.
Therefore, Non-Registered Holders should ensure that instructions respecting the
voting of their Shares are communicated to the appropriate person or that the
Shares are duly registered in their names. If a Non-Registered Holder so
requests, and provides an Intermediary or its agent or nominee with appropriate
documentation, the Intermediary, agent or nominee must appoint the Non-
Registered Holder or a nominee of the Non-Registered Holder as proxyholder.

     In accordance with the requirements of applicable Canadian regulatory
policies, including, without limitation, National Instrument 54-101 of the
Canadian Securities Administrators, the Corporation has distributed copies of
the Notice, this Circular and the Letters of Transmittal and forms of proxy
(collectively, the "MEETING MATERIALS") to the clearing agencies and
Intermediaries for onward distribution to Non-Registered Holders.

     Intermediaries are required to forward Meeting Materials to Non-Registered
Holders unless a Non-Registered Holder has waived the right to receive them.
Intermediaries are also required to seek voting instructions from Non-
Registered Holders in advance of a shareholders' meeting. Very often,
Intermediaries will use service companies to forward the Meeting Materials to
Non-Registered Holders. Generally, Non-Registered Holders who have not waived
the right to receive Meeting Materials will either:

     (i)   be given a proxy which has already been signed by the Intermediary
           (typically by a facsimile, stamped signature) which is restricted as
           to the number of Shares beneficially owned by the Non-Registered
           Holder but which is otherwise uncompleted. This form of proxy need
           not be signed by the Non-Registered Holder. In this case, the
           Non-Registered Holder who wishes to submit a proxy should otherwise
           properly complete the form of proxy and deposit it with the
           Depositary at its Proxy Department at 100 University Avenue, 11th
           Floor, Toronto, Ontario M5J 2Y1; or

     (ii)   more typically, be given a voting instruction form which must be
            completed and signed by the Non-Registered Holder in accordance with
            the directions on the voting instruction form (which may in some
            cases permit the completion of the voting instruction form by
            telephone or electronic means).

     The purpose of these procedures is to permit Non-Registered Holders to
direct the voting of the Shares they beneficially own. Should a Non-Registered
Holder who receives either a proxy or a voting instruction form wish to attend
and vote at the Meeting in person (or have another person attend and vote on
behalf of the Non-Registered Holder), the Non-Registered Holder should strike
out the names of the persons named in the proxy and insert the Non-Registered
Holder's (or such other person's) name in the blank space provided or, in the
case of a voting instruction form, follow the corresponding instructions on the
form. IN EITHER CASE, NON-REGISTERED HOLDERS SHOULD CAREFULLY FOLLOW THE
INSTRUCTIONS OF THEIR INTERMEDIARIES AND THEIR SERVICE COMPANIES.

     A Non-Registered Holder may revoke a voting instruction form or a waiver of
the right to receive Meeting Materials and to vote given to an Intermediary at
any time by written notice to the Intermediary, except that an Intermediary is
not required to act on a revocation of a voting instruction form or of a waiver
of the right to receive materials and to vote that is not received by the
Intermediary at least seven days prior to the Meeting.

VOTING OF PROXIES

     THE FORMS OF PROXY FORWARDED TO SHAREHOLDERS WITH THIS CIRCULAR, WHEN
PROPERLY EXECUTED, CONFER DISCRETIONARY AUTHORITY UPON THE PROXYHOLDER WITH
RESPECT TO AMENDMENT(S) OR VARIATION(S) OF THE MATTERS IDENTIFIED IN THE NOTICE
OR OTHER MATTER(S) WHICH MAY PROPERLY COME BEFORE THE MEETING. Management knows
of no amendment(s) or variation(s) or other matter(s) to come before the Meeting
other than the matters referred to in the accompanying Notice. However, if any
amendment(s) or variation(s) or other matter(s) which are not now known to
Management should properly come before the Meeting, the Shares represented by
the proxies will be voted on such amendment(s) or variation(s) or other
matter(s) in accordance with the best judgment of the respective proxyholders.

     On any ballot that may be called for, the Common Shares and the Series II
Preference Shares represented by properly executed proxies in favour of the
persons designated in the printed portion of the enclosed forms of proxy will be
voted for or against the matter identified in the Notice or any other matter(s)
which may properly come before the Meeting in accordance with the specifications
made on the forms of proxy by the Shareholders. IN THE ABSENCE OF SUCH

                                        18
<PAGE>

SPECIFICATION OR ANY DIRECTION TO THE CONTRARY, THE COMMON SHARES AND THE SERIES
II PREFERENCE SHARES REPRESENTED BY PROXIES SOLICITED BY MANAGEMENT WILL NOT BE
VOTED ON ANY BALLOT FOR OR AGAINST THE CS CONSOLIDATION RESOLUTION OR THE PS
CONSOLIDATION RESOLUTION, AS APPLICABLE, TO EFFECT THE CS CONSOLIDATION AND PS
CONSOLIDATION, RESPECTIVELY.

AUTHORIZED CAPITAL, VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

     The authorized capital of the Corporation consists of an unlimited number
of preference shares, issuable in series, an unlimited number of Common Shares,
an unlimited number of exchangeable non-voting preference shares Series I, an
unlimited number of Series II Preference Shares and an unlimited number of
Series III Preference Shares. The issued capital of the Corporation consists
solely of the Common Shares and the Series II Preference Shares.

     Each holder of Common Shares of record at the Close of Business on the
Record Date will be entitled at the Meeting, with respect to the CS
Consolidation Resolution, to one vote for each Common Share held by such holder.
Each holder of Series II Preference Shares of record at the Close of Business on
the Record Date will be entitled at the Meeting, with respect to the PS
Consolidation Resolution, to one vote for each Series II Preference Share held
by such holder.

     The Corporation will prepare, not later than ten days after the Record
Date, a list of holders of Shares who were registered on the records of the
Corporation or its transfer agent, Computershare Trust Company of Canada, as of
the Record Date. Each Shareholder named on the list is entitled, upon providing
satisfactory identification to the scrutineers, to vote the Shares shown in such
list as being held by such Shareholder (other than Shares for which a proxy has
been given and not revoked) at the Meeting. Any person who is a transferee of
Shares acquired after the Record Date and who produces properly endorsed
certificates for such Shares or otherwise establishes ownership thereof and who
demands, not later than ten days prior to the Meeting, that the Corporation
include his or her name on this list of Shareholders, is also entitled to vote
at the Meeting.

     On March 4, 2005, there were 34,945,776 Common Shares issued and
outstanding and entitled to vote on such matters coming before the holders of
Common Shares at the Meeting. To the knowledge of the directors and executive
officers of the Corporation, as at the date hereof, no person or company
beneficially owns, directly or indirectly, or exercises control or direction
over, more than 10% of the outstanding Common Shares except as follows. RCL
beneficially owns, directly or indirectly, or exercises control or direction
over, a total of 27,363,170 Common Shares or approximately 78.3% of the
outstanding Common Shares. Conrad (Lord) Black indirectly controls RCL and
therefore beneficially owns, directly or indirectly, or exercises control or
direction over, approximately 78.3% of the outstanding Common Shares. The
address of RCL is 10 Toronto Street, Toronto, Ontario M5C 2B7.

     On March 4, 2005, there were 1,701,995 Series II Preference Shares issued
and outstanding and entitled to vote on such matters coming before the holders
of Series II Preference Shares at the Meeting. To the knowledge of the directors
and executive officers of the Corporation, as at the date hereof, no person or
company beneficially owns, directly or indirectly, or exercises control or
direction over, more than 10% of the outstanding Series II Preference Shares
except as follows. Catalyst beneficially owns, directly or indirectly, or
exercises control or direction over, 1,398,000 Series II Preference Shares or
approximately 82.1% of the outstanding Series II Preference Shares. The address
of Catalyst is 79 Wellington Street West, Maritime Life Tower, Suite 3475, TD
Bank Centre, Toronto, Ontario M5K 1J3.

                                        19
<PAGE>

     INFORMATION REGARDING THE CONSOLIDATION AND GOING PRIVATE TRANSACTION

BACKGROUND AND PURPOSE OF THE MEETING

     At a meeting of the Board held on September 27, 2004, the Board approved
the entering into of engagements with U.S. and Canadian financial advisors in
connection with a proposed privatization of the Corporation as follows: (a)
Jefferies & Company, Inc. was engaged to, among other things, solicit consents
from the holders of Senior Secured Notes for amendments to the Indentures which
would facilitate a privatization of the Corporation; and (b) Westwind Partners
Inc. was engaged to assist the Corporation in, among other things, structuring a
proposed privatization of the Corporation and monetizing certain real estate
properties owned by a subsidiary of the Corporation.

     Following the meeting of the Board held on September 27, 2004, Management,
after considering various alternatives and the advice of the Corporation's
financial advisors and legal counsel, determined that the proposed privatization
of the Corporation would take the form of the Consolidation. Thereafter,
Jefferies & Company, Inc. approached certain institutional holders of the Senior
Secured Notes and negotiated, on behalf of the Corporation, the terms and
conditions of amendments to the Indentures to permit the Consolidation and
arrangements for the Debt Commitments.

     Pursuant to an undertaking of the Corporation and others in favour of
Catalyst Fund General Partner I Inc. ("CATALYST"), a holder of Series II
Preference Shares, the Corporation undertook to provide to Catalyst two business
days advance written notice prior to the entering into of any agreement or
understanding in respect of, or the implementation or completion of, any
transaction between or involving the Corporation or any related parties (as such
term was defined in the undertaking). On October 26, 2004, the Board met to
consider (but did not vote on) the Enabling Transactions and the meeting was
adjourned to be reconvened on October 28, 2004. Following the meeting of the
Board, counsel for the Corporation provided written notice to Catalyst of the
details of the Enabling Transactions, to the extent that such transactions
involved a related party transaction for the purpose of the undertaking.

     On October 27, 2004, Catalyst brought a motion in the Court seeking to
postpone the October 28, 2004 reconvened Board meeting. The Court ruled that it
was not appropriate to grant the requested relief at that time.

     On October 28, 2004, RCL, through its Chairman and Chief Executive Officer,
Conrad (Lord) Black, formally advised the Board in writing of the proposed
Consolidation. Following receipt of RCL's written intention with respect to the
proposed Consolidation, the Board established the Independent Privatization
Committee to consider, evaluate and make a recommendation to the Board
concerning the proposed Consolidation. The Independent Privatization Committee
was further empowered to, among other things, consider and advise the Board
whether, in their opinion, the proposed Consolidation is in the best interests
of the Corporation, the holders of the Common Shares and/or the holders of the
Series II Preference Shares.

     Also on October 28, 2004, the Board approved the following transactions
(the "ENABLING TRANSACTIONS") in order to permit the proposed Consolidation to
be considered by the Shareholders and to provide, if necessary, the financing to
complete the proposed Consolidation should the Shareholders elect to approve the
Consolidation at the Meeting:

     (a)   amendments to the Indentures (following the Corporation receiving
           consents from holders of a majority in aggregate principal amount of
           the outstanding Senior Secured Notes to such amendments). The
           amendments permit, among other things, the retirement of all
           outstanding Common Shares (other than those held, directly or
           indirectly, by RCL) for cash pursuant to: (i) the CS Consolidation;
           (ii) retraction requests; and/or (iii) payments in respect of the due
           exercise of dissent rights of such shares in connection with the CS
           Consolidation Resolution, and the retirement of all outstanding
           Series II Preference Shares for International A Shares owned,
           directly or indirectly, by the Corporation pursuant to the PS
           Consolidation and/or payments in respect of the due exercise of
           dissent rights of such shares in connection with the PS Consolidation
           Resolution. (Under the Indentures, the Corporation is permitted to
           retire outstanding Series II Preference Shares for International A
           Shares pursuant to retraction requests). In the absence of these
           amendments, the Corporation would be prohibited under the Indentures
           from implementing the Consolidation. The amendments to the Indentures
           also permit the Corporation to incur additional indebtedness in an
           aggregate amount outstanding not to exceed US$40.0 million through
           the issuance of additional Senior Secured Notes.

                                        20
<PAGE>

           The amendments to the Indentures will become effective if, and only
           if, all necessary corporate, shareholder and regulatory approvals
           (the "COMMON SHARE APPROVALS") in connection with the CS
           Consolidation have been obtained on or prior to March 31, 2005. In
           the event that all Common Share Approvals are not obtained by such
           date (including by reason of the meeting of Shareholders being
           adjourned or postponed to a date after March 31, 2005), absent a
           further consent of the holders of a requisite amount of the Senior
           Secured Notes, the Corporation would not be permitted under its
           financing arrangements to implement the Consolidation. There can be
           no assurances that any such consent, if sought, could be obtained;
           and

     (b)   binding commitments (the "DEBT COMMITMENTS") for the issuance and
           sale of up to US$40.0 million in aggregate principal amount of Senior
           Secured Notes, such amount to be drawn down by the Corporation if,
           and only if, the Common Share Approvals have been obtained on or
           prior to March 31, 2005. The net proceeds from the sale of such
           Senior Secured Notes may be used solely for payments in connection
           with the Consolidation and payments ancillary thereto or necessary in
           connection therewith.

     On November 16, 2004, the Independent Privatization Committee received
written notification from RCL that, in connection with the proposed
Consolidation, RCL would support such transaction on the following terms: (i)
holders of Common Shares (other than RCL and certain of its affiliated entities)
would receive $7.25 in cash for each share held by them; and (ii) holders of
Series II Preference Shares would receive 0.46 of an International A Share for
each share held by them.

     On March 6, 2005, the Board of Directors received written notification from
RCL that, in connection with the proposed Consolidation, RCL would support such
transaction on the following amended terms: (i) holders of Common Shares (other
than RCL and certain of its affiliated entities) would receive $7.60 in cash for
each share held by them plus the Additional Amount per Share, if any; and (ii)
holders of Series II Preference Shares would receive 0.46 of an International A
Share for each share held by them. In addition, immediately after the Effective
Time, each Common Shareholder (other than Dissenting Shareholders and, if the
SEC Clearance is not obtained, any U.S. Holders) would receive one CCPR for each
outstanding Common Share held by such Common Shareholder immediately prior to
the Effective Time.

TERMS AND EFFECT OF THE COMMON SHARE CONSOLIDATION

     Subject to obtaining the requisite Common Shareholder approval as discussed
below, the declaration and payment of all outstanding accrued dividends on the
Series II Preference Shares as discussed below, the filing of articles of
amendment, and the issuance of a certificate of amendment therefor, the CS
Consolidation will become effective on the Effective Date.

     The CS Consolidation, which is being carried out pursuant to Section 173 of
the CBCA, will be effected in accordance with the terms of the CS Consolidation
Resolution, substantially in the form set forth in Appendix A to this Circular.
If the CS Consolidation Resolution is passed, it is expected that the CS
Consolidation will become effective on the Effective Date, upon filing of the
articles of amendment and the issuance of a certificate of amendment giving
effect thereto.

     At the Effective Time:

     (a)   all of the Common Shares (but excluding those held by the Dissenting
           Shareholders) will be changed into New Common Shares on the basis of
           one New Common Share for every 5,766,783 Common Shares;

     (b)   holders of Common Shares will not be entitled to receive certificates
           representing fractional interests in a New Common Share, and will not
           be entitled to exercise any of the rights of Common Shareholders in
           respect of any fractional interests in a New Common Share other than
           the right to receive payment, without interest, of the sum of $7.60
           and the Additional Amount per Share, if any, in cash for each Common
           Share held by such holders immediately prior to the Effective Date;

     (c)   a registered holder of Common Shares who becomes entitled, on the CS
           Consolidation becoming effective, to receive payment of an amount
           that includes a fraction of $0.01 will be paid an amount rounded to
           the nearest $0.01, the amount $0.005 being rounded upwards;

     (d)   New Common Shares will only be issued, directly or indirectly, to RCL
           (which will become the sole direct and indirect shareholder of the
           Corporation);

                                        21
<PAGE>

     (e)   a Dissenting Shareholder will be entitled to be paid the fair value
           for such Dissenting Shareholder's Common Shares by the Corporation,
           in accordance with the provisions of the CBCA, and the Common Shares
           held by such Dissenting Shareholder will be cancelled at the
           Effective Time; and

     (f)   all Common Shares will no longer be outstanding.

     In addition, immediately after the Effective Time, each Common Shareholder
(other than Dissenting Shareholders and, if the SEC Clearance is not obtained,
any U.S. Holders) will receive one CCPR for each outstanding Common Share held
by such Common Shareholder immediately prior to the Effective Time. The CCPRs
will not be assignable or transferable except by sole operation of law or by
testamentary will. No certificate or other evidence of a CCPR will be issued
other than an appropriate notation in a register to be maintained by or on
behalf of the CCPR Trustees. Each CCPR will represent an entitlement to be paid
a pro rata share of the Net Litigation Proceeds. See "-- CCPRs".

     Dissenting Shareholders will be entitled to be paid the fair value of their
Common Shares in accordance with the provisions of the CBCA. For a full
description of such right of dissent, see the discussion under the heading
"Right of Dissent" as well as Appendices D and E to this Circular.

     The tax implications of the CS Consolidation and the CCPRs for Common
Shareholders are summarized under the heading "Canadian Federal Income Tax
Considerations".

TERMS AND EFFECT OF THE SERIES II PREFERENCE SHARE CONSOLIDATION

     Subject to obtaining the requisite Preferred Shareholder and Common
Shareholder approvals as discussed below, the filing of articles of amendment,
and the issuance of a certificate of amendment therefor, the PS Consolidation
will become effective on the Effective Date.

     The PS Consolidation, which is being carried out pursuant to Section 173 of
the CBCA, will be effected in accordance with the terms of the PS Consolidation
Resolution, substantially in the form set forth in Appendix B to this Circular.
If the PS Consolidation Resolution is passed, it is expected that the PS
Consolidation will become effective on the Effective Date, upon filing of the
articles of amendment and the issuance of a certificate of amendment giving
effect thereto.

     At the Effective Time:

     (a)   all of the Series II Preference Shares (but excluding those held by
           the Dissenting Shareholders) will be changed into New Series II
           Preference Shares on the basis of one New Series II Preference Share
           for every 1,701,995 Series II Preference Shares;

     (b)   holders of Series II Preference Shares will not be entitled to
           receive certificates representing fractional interests in a New
           Series II Preference Share, and will not be entitled to exercise any
           of the rights of Preferred Shareholders in respect of any fractional
           interests in a New Series II Preference Share other than the right to
           receive 0.46 of an International A Share for each Series II
           Preference Share held by such holders immediately prior to the
           Effective Date;

     (c)   a registered holder of Series II Preference Shares who becomes
           entitled, on the PS Consolidation becoming effective, to receive a
           fractional interest in an International A Share will receive such
           number of International A Shares rounded to the nearest whole number,
           the number 0.5 being rounded upwards;

     (d)   given the number of issued and outstanding Series II Preference
           Shares, no New Series II Preference Shares are expected to be issued;

     (e)   a Dissenting Shareholder will be entitled to be paid the fair value
           for such Dissenting Shareholder's Series II Preference Shares by the
           Corporation, in accordance with the provisions of the CBCA, and the
           Series II Preference Shares held by such Dissenting Shareholder will
           be cancelled at the Effective Time; and

     (f)   all Series II Preference Shares will no longer be outstanding.

     The closing price of the International A Shares on the New York Stock
Exchange on March 4, 2005 was US$11.50.

     In addition, prior to the Effective Time, it is anticipated that the Board
will declare and pay all outstanding accrued dividends on the Series II
Preference Shares prior to effecting the CS Consolidation. See "-- Anticipated
Dividend on the Outstanding Series II Preference Shares".

                                        22
<PAGE>

     Preferred Shareholders are advised that the International A Shares to be
delivered to them in connection with the PS Consolidation, like the
International A Shares deliverable upon retractions of Series II Preference
Shares, will not and have not been registered under the U.S. securities laws,
including the U.S. Securities Act, and may not be offered or sold in the United
States absent registration or an applicable exemption from registration
requirements. The particulars of any restrictions on resale will depend on the
specific circumstances of each Preferred Shareholder and the Preferred
Shareholders are advised to consult their own legal advisors with respect to the
applicable resale restrictions. International A Shares may not be offered or
delivered to any person to whom such offer or delivery would be unlawful. See
"-- Regulatory Matters".

     In connection with the terms of the offering of Subscription Receipts (see
"Information Regarding the Corporation -- Interests of Informed Persons in
Material Transactions"), the Corporation entered into an escrow and custodial
agreement (the "SHARE ESCROW AGREEMENT") dated April 7, 2004 with, among others,
Computershare Trust Company of Canada, as escrow agent. Pursuant to such
agreement, the Corporation caused to be deposited into escrow all of the
International A Shares owned, directly or indirectly, by the Corporation. Under
the terms of the Share Escrow Agreement, the escrow agent will release escrowed
shares from time to time in order to satisfy retraction requests from the
holders of Series II Preference Shares in accordance with the rights,
privileges, restrictions and conditions attaching to the Series II Preference
Shares in the articles of the Corporation. The Share Escrow Agreement provides
that the agreement automatically terminates when no Series II Preference Shares
remain issued and outstanding. In the event that the PS Consolidation Resolution
is approved at the Meeting and the PS Consolidation is effected, all of the
International A Shares owned, directly or indirectly, by the Corporation will be
released from escrow and the Depositary will deliver, following receipt of all
required documentation, such number of shares to the Preferred Shareholders as
is required in order to satisfy the Preferred Share Consideration.

     Dissenting Shareholders will be entitled to be paid the fair value of their
Series II Preference Shares in accordance with the provisions of the CBCA. For a
full description of such right of dissent, see the discussion under the heading
"Right of Dissent" as well as Appendices D and E to this Circular.

     The tax implications of the PS Consolidation and the PS Dividend for
Preferred Shareholders are summarized under the heading "Canadian Federal Income
Tax Considerations".

CCPRS

     The negotiation and execution of definitive written agreements and receipt
of all necessary regulatory and judicial approvals in connection with the
issuance of the CCPRs will be a condition to the completion of the CS
Consolidation.

CCPR Trust

     The Independent Committee will, pursuant to a court order, cause the CCPR
Trust to be formed. In the event that such court order is not obtained, the
Independent Committee and the Corporation will explore mutually acceptable
alternatives pursuant to which the CCPR Trust can be formed. CCPRs will be
allocated or managed by up to three trustees (the "CCPR TRUSTEES") appointed by
the current Independent Committee. It is understood that in accepting the
appointment as CCPR Trustees, the CCPR Trustees will agree to act in the best
interests of the holders of CCPRs and will thus be obligated to exercise their
authority in a manner consistent with such interests.

     The CCPR Trust will be established prior to March 31, 2005, after taking
into account accounting, tax and liability issues, securities laws and other
relevant considerations. It will be a condition of any structure that all
necessary regulatory and judicial approvals have been obtained prior to the
Effective Date (including, (i) rulings from applicable regulators to ensure that
the CCPR Trust does not become a reporting issuer or registrant as a direct or
indirect result of the CCPRs; (ii) rulings from applicable regulators for the
Corporation that permit the distribution of CCPRs without complying with the
registration or prospectus requirements of applicable Canadian securities laws;
and (iii) confirmation from staff of the SEC that the CCPRs may be issued to
U.S. persons without registration. For the avoidance of doubt, if SEC clearance
is not obtained by March 31, 2005, all Common Shareholders, except for U.S.
Common Shareholders, will be issued CCPRs as described below. To the extent SEC
clearance is obtained after March 31, 2005, CCPRs may be issued to U.S. holders
of Common Shares.

CCPRs

     The CCPR Declaration of Trust will declare that one CCPR will be created
for each Common Share outstanding immediately prior to the Effective Time
(including for the avoidance of doubt, directly and indirectly, RCL), other than

                                        23
<PAGE>

Common Shares in respect of which holders have exercised dissent rights and, if
the SEC Clearance is not obtained, any U.S. Holders. If the CS Consolidation is
not implemented, the CCPR Trust will terminate. The CCPRs will represent a
beneficial interest in the CCPR Trust. The CCPRs will not represent obligations,
or security on the assets, of the Corporation. The CCPRs will not be assignable
or transferable except solely by operation of law or by testamentary will. No
certificate or other evidence of a CCPR will be issued other than an appropriate
notation in a register to be maintained by or on behalf of the CCPR Trustees.
Each CCPR will represent an entitlement to be paid a pro rata share of the Net
Litigation Proceeds, when such Net Litigation Proceeds can be transferred to or
held in an account owned by the CCPR Trust.

CCPR Agreement

     The CCPR Trust and the Corporation will enter into a definitive agreement
(the "CCPR AGREEMENT") in form and substance satisfactory to the Independent
Committee and RCL to, among other things, establish the Litigation Panel to
pursue certain litigation on behalf of the Corporation and the shareholders of
the Corporation as well as require the Corporation to fund certain costs of such
litigation.

     An application/motion will be brought prior to March 31, 2005 for an order
of the Court (the "COURT ORDER") approving the CCPR Trust and the CCPR Agreement
pursuant to Section 240 of the CBCA and/or the Trustee Act (Ontario) (which
Court Order will be in form and substance satisfactory to the Independent
Committee and RCL). The parties will further agree that the Court Order will
include a provision providing for the resolution of disputes as to the operation
of the CCPR Agreement and guidance in respect of the interpretation thereof in a
summary manner that will not prejudice or disrupt any ongoing litigation.

Litigation Panel

     Pursuant to the Court Order, the three CCPR Trustees of the CCPR Trust will
constitute the Litigation Panel (the "LITIGATION PANEL"). The members of the
Litigation Panel will have no personal liability for any costs associated with
the Specified Litigation. The Litigation Panel will, during the CCPR Term, have
the sole power and authority to commence (including in the name of the
Corporation), direct and supervise all matters involving the Panel Controlled
Litigation including, without limitation, the ability to settle such litigation.
The Litigation Panel may in respect of Panel Controlled Litigation (to the
extent practicable and if in its reasonable judgment it is in the best interests
of the holders of the CCPRs), commence proceedings for or in the name of the
Shareholders in order to advance any causes of action regarding Specified Claims
which Shareholders could lawfully pursue (the "SHAREHOLDER LITIGATION"). Nothing
contained in the CCPR Agreement would prejudice any Shareholder from bringing
any action against the Corporation for which it may be entitled under applicable
law. In carrying out its direction and supervision of the Panel Controlled
Litigation, the Litigation Panel shall take into consideration, among other
things, the costs of any particular action against the benefit most likely
obtained therefrom.

     Pursuant to the Court Order, the Corporation will be required during the
CCPR Term to permit the members of the Litigation Panel and their
representatives to inspect the documents, books and records in the possession,
custody or control of the Corporation as the Litigation Panel determines, acting
reasonably, are relevant to the Specified Litigation. Pursuant to the Court
Order, the Corporation will also agree, during the CCPR Term, to preserve the
documents, books and records of the Corporation for the period commencing on
January 1, 1997 and ending on the Effective Time and not to destroy or otherwise
dispose of any such documents, books and records, without first obtaining the
prior written consent of the Litigation Panel. During the CCPR Term, the
Litigation Panel will have full audit rights with respect to any expenses
incurred by the Corporation in conducting the Hollinger Controlled Litigation.

     Appropriate procedures will be implemented to provide that the CCPR
Trustees, and failing them, the Court, will be entitled to appoint new CCPR
Trustees (who will, for greater certainty, at all times constitute the
Litigation Panel) in the event of the resignation, termination, death or
incapacity of one or more CCPR Trustee, provided that none of the new CCPR
Trustees shall be former or current directors or officers of, or consultants or
advisors to, the Corporation or RCL.

     The CCPR Trust and the Corporation will agree to indemnify and save
harmless the CCPR Trustees and the members of the Litigation Panel from and
against any and all liability, damages, costs (including reasonable counsel fees
and disbursements), charges and expenses arising out of or related to any act or
omission done or permitted by them to be done in connection with the execution
of the duties of their office as CCPR Trustees and members of the Litigation
Panel or by reason of their being or having been Trustees or members of the
Litigation Panel other than for

                                        24
<PAGE>

bad faith, wilful misconduct, gross negligence, breach of trust (in the case of
the CCPR Trustees only) or material breach of their obligations under the
definitive documentation. The CCPR Trust will also use its commercially
reasonable efforts during the CCPR Term to obtain standard insurance coverage
for the CCPR Trustees and members of the Litigation Panel.

     The reasonable compensation of the Litigation Panel will be approved by the
Court Order and will be paid out of the Litigation Account. For greater
certainty, the Court Order will not require the payment of such compensation.

Specified Litigation

     The proceeds that will be the subject matter of the CCPRs and the Court
Order will comprise: (i) any existing or future litigation proceedings to
advance Specified Claims initiated against RCL and RCL related entities or
persons (other than subsidiaries of the Corporation but including any current or
former directors, officers or employees of RCL and the Corporation), including
all counterclaims in respect thereof; (ii) any payments received by the
Corporation on account of Specified Claims whether or not litigation has been
commenced in respect thereof; (iii) if not pursued or settled by the
Corporation, any existing or future claims by the Corporation against certain
professional advisors or consultants to the Corporation in respect of events or
causes of action arising prior to the Effective Time, including counterclaims in
respect thereof ((i), (ii) and (iii), collectively, the "PANEL CONTROLLED
LITIGATION"); and (iv) any existing or future litigation proceedings initiated
or to be initiated by the Corporation as plaintiff, against certain other
professional advisors or consultants to the Corporation in respect of events or
causes of action arising prior to the Effective Time, including counterclaims in
respect thereof (the "HOLLINGER CONTROLLED LITIGATION"). The Panel Controlled
Litigation and the Hollinger Controlled Litigation are referred to collectively
as the "SPECIFIED LITIGATION".

     For the avoidance of doubt, the Specified Litigation will not include: (i)
actions in which the Corporation acts as the defendant (other than counterclaims
referred to above) (such actions, if in respect of an event or cause of action
arising prior to the Effective Time, being "HOLLINGER DEFENCE ACTIONS"); and
(ii) any cause of action arising after the Effective Time.

     The Corporation has agreed to use its commercially reasonable efforts to
cause all related parties subject to Panel Controlled Litigation to conduct such
litigation in a timely manner.

Panel Controlled Net Litigation Proceeds

     "PANEL CONTROLLED NET LITIGATION PROCEEDS" means the amount received during
the CCPR Term in proceeds, including awards for costs and interest, in the Panel
Controlled Litigation (the "PANEL CONTROLLED LITIGATION PROCEEDS"), including on
account of the settlement of any Panel Controlled Litigation (after deducting
taxes, if any, payable thereon by the Corporation as hereinafter provided) less
the aggregate of: (A) any judgment, settlement or other amounts paid or payable
by or on behalf of the Corporation (net of any tax benefit received in
connection therewith) in or in relation to the Panel Controlled Litigation
(including any amounts paid or payable on account of the settlement of any Panel
Controlled Litigation or as a result of counterclaims arising from or related to
the Panel Controlled Litigation, or on account of costs or interest); (B) all
costs and expenses incurred with respect to the Panel Controlled Litigation; and
(C) all costs and expenses incurred with respect to the establishment and
administration of the CCPR Trust, including all expenses of the Litigation Panel
(including indemnification costs), fees or other compensation payable to members
of the Litigation Panel, fees and costs of any person retained by the Litigation
Panel, including lawyers and accountants (the items listed in (A), (B) and (C)
above are referred to as "PANEL CONTROLLED LITIGATION PAYMENTS"). If the
Corporation contends that the costs and expenses incurred in connection with the
Panel Controlled Litigation are excessive in the circumstances, the Corporation
may seek direction from the Court, which direction shall, subject to any
applicable appeals, bind the Litigation Panel.

Funding and the Litigation Account

     Contemporaneously with the implementation of the CS Consolidation, the
Corporation will be required under the CCPR Agreement to make an initial cash
payment of $5.0 million (the "INITIAL CCPR AMOUNT") into a separate escrow bank
account of the Corporation controlled by the Litigation Panel (the "LITIGATION
ACCOUNT"). If the Litigation Panel presents to the Corporation a certificate
setting forth a bona fide purpose for which it reasonably believes that
additional funding is required by it to conduct the Panel Controlled Litigation
or pay Panel Controlled Litigation Payments, the Corporation will be required to
immediately pay up to an additional $5.0 million (the "ADDITIONAL CCPR AMOUNT")
into the Litigation Account. In the event that the Corporation disputes having
to pay the Additional CCPR Amount, the Corporation will immediately be required
to: (i) deposit fifty percent (50%) of the

                                        25
<PAGE>

requested amount (the "REQUIRED DEPOSIT") into the Litigation Account pending
resolution of the dispute; and (ii) apply to the Court for advice and direction
regarding the payment of the Required Deposit and the Additional CCPR Amount.

     The Initial CCPR Amount and the Additional CCPR Amount will only be used to
fund the Panel Controlled Litigation and Panel Controlled Litigation Payments.
At the end of the CCPR Term, any unused balance of the Initial CCPR Amount or
the Additional CCPR Amount will be returned to the Corporation.

     The Corporation will be required to deposit into the Litigation Account any
Panel Controlled Litigation Proceeds received by it during the CCPR Term. Such
deposits will be made immediately following receipt of such Panel Controlled
Litigation Proceeds.

     The Litigation Account will be transferred to and become an account of the
CCPR Trust at the earliest possible opportunity provided that it would not cause
a default or an event of default or otherwise cause or permit the acceleration
of indebtedness under the Indentures (an "INDENTURE DEFAULT"). Until such
transfer, the Litigation Account and all money therein will remain the property
of the Corporation.

     Proceeds deposited in the Litigation Account will be used to fund the Panel
Controlled Litigation and Panel Controlled Litigation Payments. The Corporation
has acknowledged that proceeds so deposited in the Litigation Account will not
be used to fund any costs or expenses relating to or in connection with the
preparation of the E&Y Report, all of which costs and expenses are for the sole
account of the Corporation.

     Notwithstanding, the foregoing, any Panel Controlled Litigation Proceeds
which are payable to or on behalf of the former Shareholders pursuant to the
Shareholder Litigation will, to the extent possible, be deposited in escrow into
a separate account of the CCPR Trust controlled by the Litigation Panel (the
"SHAREHOLDER PAYMENT LITIGATION ACCOUNT"), provided that it would not result in
an Indenture Default. The Shareholder Payment Litigation Account will be
transferred to and become an account of the CCPR Trust at the earliest possible
opportunity provided that it would not result in an Indenture Default. Until
such transfer, the Shareholder Payment Litigation Account and all money therein
will remain the property of the Corporation.

Distribution of Panel Controlled Net Litigation Proceeds

     At such time as the Litigation Account is transferred to the CCPR Trust,
the Panel Controlled Net Litigation Proceeds may be distributed by the CCPR
Trustees to the holders of the CCPRs as determined by the CCPR Trustees. If not
all of the Panel Controlled Litigation has been subject to full and final
settlement or a final and binding (without right of appeal) adjudicative
determination has not been made (a "FINAL ADJUDICATION") at the time of
distribution, the CCPR Trustees may determine a holdback (the "PANEL CONTROLLED
HOLDBACK") of such amount as they determine in their sole discretion necessary
to provide for any remaining Panel Controlled Litigation Payments. The Panel
Controlled Holdback (together with any interest earned thereon) will be utilized
to satisfy any remaining Panel Controlled Litigation Payments, with the balance,
if any, to be distributed to the holders of CCPRs (net of taxes on interest
deemed to be earned on the Panel Controlled Holdback) at such time as the CCPR
Trustees determine, acting reasonably, that such amount is not required to
satisfy any Panel Controlled Litigation Payments.

     In no event will the status of the Hollinger Controlled Litigation or the
Hollinger Defence Actions have any effect on whether the CCPR Trustees are able
to distribute Panel Controlled Net Litigation Proceeds.

Hollinger Controlled Litigation

     The Corporation will have the sole power and duty to direct and supervise
all matters involving the Hollinger Controlled Litigation including, without
limitation, the ability to settle such litigation and nothing will oblige the
Corporation to pursue any particular Hollinger Controlled Litigation or take any
action in respect thereof. In carrying out its direction and supervision of the
Hollinger Controlled Litigation, the Corporation will take into consideration,
among other things, the costs of any particular action against the benefit most
likely obtained therefrom. The Corporation will have the sole responsibility for
the funding of the Hollinger Controlled Litigation.

     "HOLLINGER CONTROLLED NET LITIGATION PROCEEDS" means the amount received
during the CCPR Term in proceeds, including awards for costs and interest, in
the Hollinger Controlled Litigation (the "HOLLINGER CONTROLLED LITIGATION
PROCEEDS"), including on account of the settlement of any Hollinger Controlled
Litigation (after deducting taxes, if any, payable thereon by the Corporation as
hereinafter provided) less the aggregate of: (A) any judgment, settlement or
other amounts paid or payable (net of any tax benefit received in connection
therewith) by the Corporation in or in relation to the Hollinger Controlled
Litigation or the Hollinger Defence Actions (other than

                                        26
<PAGE>

mutually acceptable carve-outs relating to ordinary course litigation in which
the Corporation is defendant) (including any amounts paid or payable by the
Corporation on account of the settlement of any Hollinger Controlled Litigation
or the Hollinger Defence Actions or as a result of counterclaims arising from or
related to the Hollinger Controlled Litigation or Hollinger Defence Actions), or
on account of costs and interest; and (B) all costs and expenses incurred with
respect to the Hollinger Controlled Litigation and the Hollinger Defence Actions
(the items listed in (A) and (B) above are referred to as "HOLLINGER CONTROLLED
LITIGATION PAYMENTS").

     In the event that Hollinger Controlled Net Litigation Proceeds result in a
negative balance, any amounts payable thereunder will be the sole responsibility
of the Corporation. The Panel Controlled Litigation Proceeds and Hollinger
Controlled Litigation Proceeds are referred to collectively as the "LITIGATION
PROCEEDS" and the Panel Controlled Net Litigation Proceeds and Hollinger
Controlled Net Litigation Proceeds are referred to collectively as the "NET
LITIGATION PROCEEDS".

     The Corporation will deposit into a separate escrow bank account of the
Corporation controlled by the Litigation Panel (the "HOLLINGER ESCROW ACCOUNT")
all of the Hollinger Controlled Litigation Proceeds received by it. The
Hollinger Escrow Account will be transferred to and become an account of the
CCPR Trust at the earliest possible opportunity provided that it would not
result in an Indenture Default. The Corporation will be entitled to use the
monies deposited in the Hollinger Escrow Account, regardless of ownership, to
pay for Hollinger Controlled Litigation. Until such transfer, the Hollinger
Escrow Account and all money therein, will remain the property of the
Corporation.

     At such time as the Hollinger Escrow Account is transferred to the CCPR
Trust, the Hollinger Controlled Net Litigation Proceeds will be distributed by
the CCPR Trustees to the holders of the CCPRs. If not all of the Hollinger
Controlled Litigation has been subject to Final Adjudication, the Corporation,
may at the time of any distribution, pursuant to an agreement with the
Litigation Panel (acting reasonably) determine a holdback of such amount as
determined to be necessary to pay Hollinger Controlled Litigation Payments. Such
holdback (together with any interest earned thereon) will be utilized to satisfy
any Hollinger Controlled Litigation Payments with the balance if any to be
distributed to the holders of CCPRs (net of taxes on interest deemed to be
earned on such holdback amount) at such time as the Litigation Panel and the
Corporation determine, acting reasonably, that such amount is not required to
satisfy the Hollinger Controlled Litigation Payments. The CCPR Agreement will
include a provision to the effect that upon settlement of a Specified Claim, RCL
will be required to pay only the Minority Shareholder proportion thereof,
provided that all holders of CCPRs will be responsible for their proportionate
share of expenses and any holdback.

Tax Matters

     The initial determination ("INITIAL DETERMINATION") of whether and to what
extent Panel Controlled Litigation Proceeds and/or Hollinger Controlled
Litigation Proceeds, as the case may be, are subject to tax will be made by the
Litigation Panel, acting reasonably and in consultation with its and the
Corporation's tax advisors. The Initial Determination will be submitted to the
Corporation for approval. If the Corporation, acting reasonably and in
consultation with its tax advisors, does not accept the Initial Determination,
the parties agree that they will: (a) where possible, obtain the views of the
CRA as to whether or to what extent the payment is subject to tax and the
parties will agree to be bound by such views; and (b) where the CRA is unwilling
or unable to provide such a view, the parties will refer the issue to a tax
advisor acceptable to both parties and the parties will be bound by the views of
such advisor. For purposes of determining the amount of tax payable in respect
of Net Litigation Proceeds, the rate of tax used will be the relevant combined
Canadian federal and provincial income tax rate applicable to the Corporation in
the taxation year the Litigation Proceeds are required to be recognized for
Canadian federal and provincial income tax purposes.

CCPR Term

     Each of the CCPR Trust and the CCPR Agreement will have a term ending on
June 10, 2011 (the "INITIAL CCPR TERM"). If, at the end of the Initial CCPR Term
or, if applicable, at the end of the first additional two year period, not all
of the Specified Litigation has been subject to Final Adjudication or final
payment in connection therewith (for this purpose, Specified Litigation means
that Specified Litigation in respect of which an action has been commenced prior
to the expiry of the Initial CCPR Term), the Litigation Panel may if it
reasonably believes that it is in the best interests of the holders of the
CCPRs, extend the Initial CCPR Term for up to two consecutive additional two
year periods (the "CCPR TERM"), provided that such extensions do not necessitate
registration of the CCPRs under applicable securities legislation or result in
the Corporation or the CCPR Trust becoming a reporting issuer under such
legislation. For greater certainty, payments of any Specified Claims made after
the Initial CCPR Term but prior to the expiry of the CCPR Term will be required
to be paid into the Litigation Account.
                                        27
<PAGE>

     The Litigation Panel may, in its sole discretion, reduce the term of the
CCPR Trust and the CCPR Agreement, if it determines, in its sole discretion,
that the Specified Litigation has been subject to Final Adjudication and all
final payments in connection therewith have been made or there is no longer a
reasonable prospect of the payment of any further Litigation Proceeds. In
addition, the Litigation Panel may, in its sole discretion, reduce the term of
the CCPR Trust and the CCPR Agreement, in connection with the settlement of the
Specified Litigation.

     Without the prior written consent of the Litigation Panel, the Corporation
will be prohibited during the CCPR Term from: (i) undertaking any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Corporation or any of its subsidiaries (other than
International or its subsidiaries); (ii) undertaking any direct or indirect
sale, lease or transfer of a significant part of the assets of the Corporation
or any of its subsidiaries (other than International or its subsidiaries); (iii)
undertaking a reorganization, recapitalization, dissolution or liquidation of
the Corporation or any of its subsidiaries (other than International or its
subsidiaries); or (iv) declaring or paying any dividends or any other
distribution (including the repayment of indebtedness) to its shareholders or
related parties, in each case, if any of the foregoing could reasonably be
expected to have an adverse effect on the ability of the Litigation Panel (or
CCPR Trustees, as the case may be) to pursue a claim or distribute proceeds to
the holders of CCPRs or if it would otherwise materially adversely prejudice the
Litigation Panel in any of its other activities.

     Without the prior written consent of the Litigation Panel, the Corporation
will be prohibited during the CCPR Term from incurring any indebtedness for
borrowed money (whether new or in the form of a refinancing of the Senior
Secured Notes) if, in connection therewith, it grants covenants which would be
more onerous than the Indentures with respect to the ability of the Corporation
to transfer the Net Litigation Proceeds, the Litigation Account, the Shareholder
Payment Litigation Account or the Hollinger Escrow Account to the CCPR Trust or
which would extend such restrictions past March 10, 2011.

Restrictions under the Indentures

     The Corporation will not transfer, or assume any obligation to transfer,
the Net Litigation Proceeds, the Litigation Account, the Shareholder Payment
Litigation Account or the Hollinger Escrow Account to the CCPR Trust, if any
such transfer would (either with the giving of notice or the passage of time, or
both) cause an Indenture Default and no obligation will arise until such time as
any such transfer would not cause an Indenture Default. If any such transfer or
obligation would (either with the giving of notice or the passage of time, or
both) cause an Indenture Default, the Corporation will be required to pay to the
CCPR Trust that portion of the Net Litigation Proceeds that can be paid without
causing an Indenture Default and the balance of the Net Litigation Proceeds will
be required to be paid as soon as practicable thereafter in a manner that will
not cause an Indenture Default. The Corporation will be entitled to rely on the
opinion of the Corporation's New York counsel in determining if any Indenture
Default would be caused by any such transfer or obligation.

     In no event will the Corporation, without the prior written consent of the
Litigation Panel, obtain any consent from the holders of the Senior Secured
Notes with respect to any matter (subject to mutually agreed upon carve-outs to
be contained in the CCPR Agreement relating to, among other things, amendments
relating to financial and other reporting obligations), unless and until it has
first (or contemporaneously therewith) obtained the consent of the holders of
the Senior Secured Notes permitting the Corporation to transfer the Net
Litigation Proceeds, the Litigation Account, the Shareholder Payment Litigation
Account and the Hollinger Escrow Account to the CCPR Trust. This will not
prevent the retirement, redemption or termination of the Senior Secured Notes or
the taking of any action by the Corporation required under the terms of the
Indentures as existing on the date of the establishment of the CCPR Trust or the
obtaining of waivers thereunder.

     Until such time as there are no restrictions under the Indentures or
otherwise that would apply to prevent the transfer by the Corporation of the Net
Litigation Proceeds, the Litigation Account, the Shareholder Payment Litigation
Account or the Hollinger Escrow Account to the CCPR Trust, the Corporation will
not, without the prior written consent of the Litigation Panel, be permitted to
make aggregate annual payments in excess of $10.0 million to shareholders,
directors, officers, or senior employees or other related parties, including the
respondents in Court file number 04-CL-5563 (but excluding directors, officers,
employees and shareholders who are not related to RCL or any of its affiliates
or associates) including in respect of management fees, consulting fees,
salaries, bonuses, dividends, repayment of indebtedness or distributions of any
kind.

                                        28
<PAGE>

Reports

     The CCPR Trustees will furnish a report to the holders of CCPRs and the
Court: (i) annually, which report will include annual financial statements of
the CCPR Trust, and which may provide a summary of any material developments
relating to the Specified Litigation together with an unaudited cash receipt and
disbursement statement relating to the Specified Litigation; and (ii) at any
other time deemed appropriate by the Litigation Panel. The contents of the
report will not include any matter that is subject to any solicitor client or
litigation privilege. In order to facilitate the preparation of the
aforementioned report as it relates to Hollinger Controlled Litigation, and
otherwise to keep the Litigation Panel apprised of developments in the Hollinger
Controlled Litigation, the Corporation will from time to time within seven
Business Days after a request therefor, provide to the Litigation Panel a report
in respect of the Hollinger Controlled Litigation in substance sufficient to
enable the Litigation Panel to prepare such report. The Litigation Panel will
not disclose any information in the report that is privileged or confidential
information of the Corporation or that could otherwise prejudice the position of
the Corporation in respect of any Specified Litigation.

Amendments

     Any amendments to the CCPR Agreement will require the consent of the CCPR
Trust and the Corporation.

ANTICIPATED DIVIDEND ON THE OUTSTANDING SERIES II PREFERENCE SHARES

     The holders of Series II Preference Shares are entitled to dividends if, as
and when declared by the Board in an amount equal to 0.46 of the amount of any
dividends declared in respect of the International A Shares, net of any U.S.
withholding taxes. To date, International has declared regular and special
dividends in the gross amount of US$5.70 per International A Share for which
corresponding dividends on the Series II Preference Shares have not yet been
declared and which presently are accruing.

     As a result of certain provisions in the articles of the Corporation
relating to the Series II Preference Shares, in order to proceed with the CS
Consolidation, the Board must declare and pay all outstanding accrued dividends
on the Series II Preference Shares (as at March 4, 2005, an aggregate of
approximately US$4.24 million or approximately US$2.49 per Series II Preference
Share) prior to effecting the CS Consolidation. Subject to obtaining the
requisite Common Shareholder approval in connection with the CS Consolidation,
the Corporation anticipates that the Board will be in a position to declare and
pay all accrued dividends on the Series II Preference Shares outstanding by the
Effective Date (the "PS DIVIDEND").

RETRACTION STATUS OF COMMON SHARES

     Retractions of Common Shares submitted after May 31, 2004 are suspended at
this time. As of March 4, 2005, an aggregate of 395,665 Common Shares
(approximately 1.1% of the Common Shares) had been submitted for retraction (and
not processed), all with a retraction price of $9.00 per share. The current
retraction price per Common Shares is fixed at $4.65.

     In the event that the Common Share Approvals are obtained on or prior to
March 31, 2005, in which case the amendments to the Indentures will become
effective, the Board has determined at this time that the Corporation will be in
a position to honour retractions of the outstanding Common Shares immediately
following receipt of such approvals. In the event that the Common Share
Approvals are not obtained by March 31, 2005, the current terms of the
Indentures would, barring amendments thereto, preclude the Corporation from
honouring retractions of the outstanding Common Shares for the foreseeable
future.

     As the Effective Date will not take place until after March 31, 2005,
Shareholders who previously submitted their Common Shares for retraction who
wish to obtain the Common Share Consideration and CCPRs should make arrangements
to withdraw their retraction request prior to the Meeting. In order to exercise
withdrawal rights, Shareholders should contact the Computershare Call Centre --
Shareholder Services at 1 (800) 564-6253.

SHAREHOLDER APPROVALS

     In order to become effective, the CS Consolidation Resolution must be
approved by: (i) at least two-thirds of the votes cast by holders of Common
Shares present or represented by proxy at the Meeting and entitled to vote on
the CS Consolidation Resolution; and (ii) in order to comply with the
requirements of OSC Rule 61-501 and Policy Q-27, as described below, a majority
of the votes cast by Minority Shareholders.

                                        29
<PAGE>

     OSC Rule 61-501 and Policy Q-27 require that, in addition to any other
required shareholder approval, in order to complete a business combination or
going private transaction, the approval of a majority of the votes cast by
Minority Shareholders of affected equity securities be obtained. In relation to
the CS Consolidation, the "MINORITY SHAREHOLDERS" will be all holders of Common
Shares, other than the following: (i) RCL; (ii) any "related parties" of RCL (as
defined, for the purposes of OSC Rule 61-501 and Policy Q-27) who would not be
equally treated; and (iii) any person or company acting jointly or in concert
with the foregoing. To the best of the Corporation's knowledge, the votes
attaching to approximately 27,366,016 Common Shares will be excluded from this
vote.

     In order to become effective, the PS Consolidation Resolution must be
approved by at least two-thirds of the votes cast by holders of Series II
Preference Shares present or represented by proxy at the Meeting and entitled to
vote on the PS Consolidation Resolution. In addition, in order for the PS
Consolidation to be effected, the CS Consolidation Resolution must be approved
by at least two-thirds of the votes cast by holders of Common Shares present or
represented by proxy at the Meeting and entitled to vote on the CS Consolidation
Resolution.

     ANY FAILURE TO OBTAIN THE APPROVAL OF THE HOLDERS OF THE SERIES II
PREFERENCE SHARES FOR THE PS CONSOLIDATION RESOLUTION AT THE MEETING WOULD NOT
PREVENT THE CS CONSOLIDATION FROM PROCEEDING, IF THE CS CONSOLIDATION RESOLUTION
IS APPROVED BY THE COMMON SHAREHOLDERS AS SET OUT ABOVE.

     The forms of proxy delivered with this Circular provide a means for a
Shareholder to vote for or against the CS Consolidation Resolution and the PS
Consolidation Resolution, as applicable. THE FORMS OF PROXY FURTHER PROVIDE THAT
IF A SHAREHOLDER USING THE PROXY DOES NOT SPECIFY WHETHER SUCH SHARES ARE TO BE
VOTED FOR OR AGAINST THE CS CONSOLIDATION RESOLUTION OR THE PS CONSOLIDATION
RESOLUTION, AS APPLICABLE, THE PROXYHOLDER WILL NOT VOTE FOR OR AGAINST SUCH
RESOLUTION.

     RCL has informed the Corporation it intends to vote the Shares owned by it,
directly or indirectly, in favour of the CS Consolidation Resolution and the PS
Consolidation Resolution.

REGULATORY MATTERS

     The issuance by the CCPR Trust of the CCPRs to the Common Shareholders
(other than Dissenting Shareholders and, if the SEC Clearance is not obtained,
any U.S. Holders) will require an exemption to be provided by applicable
Canadian securities regulatory authorities (including the OSC) from the
registration and prospectus requirements of applicable Canadian securities
legislation. The issuance of the CCPRs is subject to the CCPR Trust obtaining
such an exemption. While there can be no assurance that the exemption will be
obtained prior to the Effective Time, or at all, the Corporation is seeking to
obtain the exemption by the time of the holding of the Meeting.

     In order to complete the PS Consolidation, the Corporation must provide
notice to the OSC and the other applicable securities regulatory authorities in
Canada pursuant to subsections 35(1)(14)(ii) and 72(1)(h)(ii) of the OSA and
equivalent provisions under the securities legislation of the other provinces
and territories of Canada in respect of the trade of the International A Shares
held by it which will be transferred to holders of Series II Preference Shares
as a result of the PS Consolidation. Following the giving of such notice, each
of the OSC and such other applicable Canadian securities regulatory authorities
may inform the Corporation within ten days of the notice that it objects to the
proposed trade and thereby remove the Corporation's ability to rely on the
stipulated exemptions. In such event, the Corporation would be unable to proceed
with the PS Consolidation irrespective of whether or not the holders the Series
II Preference Shares duly pass the PS Consolidation Resolution as set out above.

     International A Shares that are otherwise deliverable in connection with
the PS Consolidation will only be delivered in any jurisdiction to persons to
whom applicable laws and regulations permit such delivery, including pursuant to
any available exemption or regulatory relief from such laws and regulations, and
who provide the covenants, representations and warranties required by the Letter
of Transmittal applicable to the Series II Preference Shares.

     The International A Shares owned, directly or indirectly, by the
Corporation are currently subject to the International MICTO. As a result of the
International MICTO, in order to effect the PS Consolidation and the delivery of
the International A Shares owned, directly or indirectly, by the Corporation to
holders of Series II Preference Shares in connection therewith, the Corporation
must obtain from the OSC an order to vary the International MICTO to permit the
trades of International A Shares, and acts in further thereof, contemplated by
the PS Consolidation. The completion of the PS Consolidation is subject to the
International MICTO having been varied as at the Effective Time. Work is in
progress in order to obtain the required variation to the International MICTO.

                                        30
<PAGE>

     Certain holders of the Shares are currently subject to the Hollinger MICTO.
In order to effect the CS Consolidation and/or the PS Consolidation, the
Corporation may be required to obtain from the OSC an order to vary the
Hollinger MICTO. In the event that such variation is required, the Corporation
intends to seek and obtain the appropriate orders by the time of the holding of
the Meeting.

     U.S. securities laws generally restrict the offer or sale of securities to
U.S. persons without registration with the SEC, and such restrictions could be
deemed to apply to any proposed distribution of the CCPRs to any Common
Shareholders who are U.S. persons. Accordingly, unless the Corporation obtains
confirmation from the staff of the SEC that they do not object to the
distribution of CCPRs to U.S. persons without registration ("SEC CLEARANCE"),
following implementation of the CS Consolidation, Common Shareholders who are
U.S. holders within the meaning of the U.S. Securities Act ("U.S. HOLDERS")
would not receive or be entitled to any of the benefits of the CCPRs in respect
of Common Shares held by them. The Corporation is seeking the SEC Clearance from
the SEC staff.

     As noted above under "Important Considerations for Shareholders", the
Corporation's ability to implement the proposed Consolidation is dependent on
the effectiveness of certain amendments to the Indentures, which in turn, is
dependent on, among other things, the Corporation obtaining all necessary
regulatory approvals for the Consolidation. The Corporation intends to take all
necessary action to obtain all such regulatory approvals.

INDEPENDENT PRIVATIZATION COMMITTEE

Formation and Organization of the Independent Privatization Committee

     On October 28, 2004, at a meeting of the Board, RCL through its Chairman
and Chief Executive Officer, Conrad (Lord) Black, formally advised the Board in
writing of a proposed consolidation of all of the issued and outstanding Common
Shares and all of the issued and outstanding Series II Preference Shares which
would result in RCL or its subsidiaries being the only shareholders of the
Corporation. Following receipt of RCL's written intention with respect to the
proposed Consolidation, the Board concluded that it would be appropriate to
appoint a committee comprised of directors independent from management of the
Corporation, RCL and their respective affiliates.

     At the October 28, 2004 meeting, the Board appointed Robert J. Metcalfe
(Chairman), Allan Wakefield and Gordon W. Walker, Q.C. as members of the
Independent Privatization Committee. Gordon W. Walker, Q.C. resigned from the
Independent Privatization Committee on November 24, 2004 in order to assume the
position of Chairman of the Corporation. After November 24, 2004, Messrs.
Metcalfe and Wakefield comprised the Independent Privatization Committee. The
members of the Independent Privatization Committee do not hold any securities of
the Corporation, RCL or any affiliates thereof.

     On November 16, 2004, the Independent Privatization Committee received
written notification from RCL that, in connection with the proposed
Consolidation, RCL would support such transaction on the following terms: (i)
the Common Shareholders (other than RCL and certain of its affiliated entities)
would receive $7.25 in cash for each Common Share pursuant to the CS
Consolidation; and (ii) the Preferred Shareholders would receive 0.46 of an
International A Share for each Series II Preference Share pursuant to the PS
Consolidation.

     Each of the two members of the Independent Privatization Committee has
extensive business experience and is independent from the "interested parties"
as defined under OSC Rule 61-501. Neither of the members of the Independent
Privatization Committee: (i) is an employee of, or an insider, associate or
affiliate of RCL or any affiliate thereof, or has held such position during the
previous five years; or (ii) may benefit from the Consolidation in a manner that
is different from the Minority Shareholders in the event that the Consolidation
becomes effective. No non-independent persons participated in the Independent
Privatization Committee's decision making deliberations.

     The mandate of the Independent Privatization Committee was to, among other
things, conduct a thorough review of the proposed Consolidation and make
recommendations to the Board in respect thereof in order to permit the Board to
make a recommendation to Shareholders with respect to the proposed
Consolidation. The Independent Privatization Committee was empowered to
establish rules and procedures relating to the conduct of its business. The
Independent Privatization Committee was also empowered to retain legal counsel
or other professional advisors, at the expense of the Corporation, as it deemed
appropriate to assist it in performing its mandate on such terms and conditions
as the Independent Privatization Committee deemed appropriate and to engage an
independent financial advisor to provide a formal valuation in accordance with
the requirements of OSC Rule 61-501 and Policy Q-27 and to otherwise assist the
Independent Privatization Committee in its deliberations.

                                        31
<PAGE>

Summary of Proceedings of the Independent Privatization Committee

     The Independent Privatization Committee retained Wildeboer Dellelce LLP to
act as its independent legal counsel.

     OSC Rule 61-501 and Policy Q-27 provide that, unless exempted, an issuer
proposing to carry out a "business combination" transaction is required to
engage an independent valuator to prepare a valuation of the "affected
securities" and to provide to the holders of the affected securities a summary
of such valuation. In this instance, the affected securities are the Common
Shares. From November 5, 2004 to November 22, 2004, the Independent
Privatization Committee met with potential financial advisors in connection with
the preparation of an independent valuation. The Independent Privatization
Committee interviewed and reviewed the credentials, experience, financial
expertise and proposed terms of engagement of several candidates.

     On November 23, 2004, the Independent Privatization Committee retained GMP
as its financial advisor to: (i) prepare the Valuation; (ii) provide an opinion
as to the fairness, from a financial point of view, of the Common Share
Consideration and the Preferred Share Consideration; and (iii) provide a
solvency valuation for inclusion in the Circular. The Independent Privatization
Committee placed no limitations or restrictions on the analysis to be undertaken
by GMP.

     The terms and conditions of GMP's engagement were set out in an engagement
letter dated November 23, 2004 (the "GMP ENGAGEMENT LETTER"). GMP's engagement
was subsequently amended to reflect certain changes in fee structure and to
provide that GMP was no longer required to deliver a fairness opinion or
solvency valuation. Pursuant to the GMP Engagement Letter, GMP confirmed that it
had no prior or existing relationships with the Corporation, RCL, Conrad (Lord)
Black, Peter G. White or F. David Radler or any of their respective associates
or affiliates. The Independent Privatization Committee was satisfied that GMP
met the applicable standards for independence under OSC Rule 61-501 and Policy
Q-27. The fee payable to GMP by the Corporation under the terms of its
engagement is not contingent in whole or in part on the conclusions of GMP or
the completion of the Consolidation and was determined by negotiation between
the Independent Privatization Committee and GMP.

     The Independent Privatization Committee met numerous times during the
period from October 28, 2004 to March 6, 2005, the date of its formal report to
the Board, both with and without its legal and financial advisors, to conduct
various discussions and meetings related to the fulfillment of its mandate,
including: to consider its responsibilities; to discuss the legal and regulatory
requirements applicable to the Consolidation; to discuss the relevant issues
arising from the structure of the Consolidation, including the fact that the
Consolidation was a "going private transaction"/"business combination" under
applicable securities laws; to consider issues regarding the lack of current
financial disclosure of the Corporation and International; to consider the
impact of proceedings and investigations by applicable securities regulatory
authorities against the Corporation and International; to consider issues
regarding the impact on the Valuation of outstanding litigation both for and
against the Corporation and International; to review and evaluate the
consideration being offered to Shareholders pursuant to the Consolidation; to
review and discuss the draft Valuation and the limitation of scope, as well as
the assumptions and qualifications contained in such draft Valuation; to receive
and review the Valuation; and to consider and make its recommendations to the
Board. In addition, the Independent Privatization Committee and its advisors met
with and/or had telephone discussions with various parties, including Conrad
(Lord) Black, as well as certain other current and former members of management
of the Corporation and their legal and financial advisors. Other material
proceedings of the Independent Privatization Committee are described below.

     On November 30, 2004, the Independent Privatization Committee and its legal
and financial advisors met with litigation counsel to the independent directors
of the Corporation. The Independent Privatization Committee and its advisors
were orally apprised of the status of certain Canadian litigation matters
involving or affecting the Corporation, including the Inspection. From November
30, 2004 to the date of its formal report to the Board, the Independent
Privatization Committee and its advisors were periodically provided updates as
to the status of Canadian litigation matters involving the Corporation. The
Independent Privatization Committee also met regularly with the Inspector to
assist the Inspector in obtaining information necessary for the Inspection and
to obtain an understanding of the status of the Inspection.

     On January 14, 2005, the Independent Privatization Committee and its legal
and financial advisors met, via teleconference, with special U.S. litigation
counsel to the Corporation. The Independent Privatization Committee and its
advisors were orally apprised of the status of certain U.S. litigation matters
involving or affecting the Corporation.

                                        32
<PAGE>

From January 14, 2005 to the date of its formal report to the Board, the
Independent Privatization Committee and its advisors were periodically provided
updates as to the status of U.S. litigation matters involving the Corporation.

     In mid-January 2005, the Independent Privatization Committee also met with
GMP to review its plans in connection with the preparation of the Valuation and
fairness opinion. At that meeting, GMP advised the Independent Privatization
Committee that, given the unique and unusual circumstances of the Corporation,
including the nature and extent of litigation surrounding the Corporation, the
lack of current financial statements for the Corporation or International and
the ongoing Inspection, GMP would be unable to provide a fairness opinion in
respect of the Consolidation, nor would it be able to give comfort as to the
solvency of the Corporation following the Consolidation.

     On February 14, 2005, legal advisors to the Independent Privatization
Committee, counsel to GMP and counsel to the Corporation had discussions with
the OSC regarding the scope of the Valuation and the limitations of such
Valuation (including, certain material assumptions and qualifications it would
likely contain) given the unique and unusual circumstances of the Corporation.
The Independent Privatization Committee was kept apprised of the discussions
between the OSC and GMP and its counsel with respect to the scope of the
Valuation.

     The Corporation is subject to the Inspection and as of the date of the
Independent Privatization Committee's report to the Board, the Inspector was
still in the process of completing the Inspection. Given that it appeared
unlikely that a final report of the Inspector would be filed prior to March 31,
2005, during the period from mid-February 2005 to March 6, 2005, the Independent
Privatization Committee, together with the Board, negotiated the terms of the
CCPR Trust with RCL.

     As of the date of the Independent Privatization Committee's report to the
Board, International was not current in its continuous disclosure obligations
under applicable Canadian and United States securities laws. Given that it
appeared unlikely that International would be up to date with its continuous
disclosure obligations as at March 31, 2005, during the period from mid-February
2005 to March 6, 2005, the Independent Privatization Committee, together with
the Board, negotiated the terms of a contingent payment to Common Shareholders
based on the results of the Updated Valuation, which is to be completed
following the publication of the International Statements. See "-- Updated
Valuation".

     The Independent Privatization Committee considered requesting an extension
from RCL of its support for the Consolidation beyond March 31, 2005 for an
additional period of 60 to 90 days, in order to (i) provide the Inspector
additional time to complete or substantially complete the Inspection, and (ii)
provide International additional time to become up to date in its continuous
disclosure obligations. However, it was far from certain that such an additional
time period would be sufficient to complete the Inspection or permit the release
of the International Statements. The Independent Privatization Committee was
further cognizant of the fact that the consent of the holders of Senior Secured
Notes, which is necessary in order to complete the Consolidation, expires on
March 31, 2005. As a result, in February 2005, the Independent Privatization
Committee contacted Jefferies & Company, Inc., the agent of the Corporation with
respect to the Senior Secured Notes, to explore the likelihood of obtaining an
extension to the consent of the holders of the Senior Secured Notes. Jefferies &
Company, Inc. advised the Independent Privatization Committee that, due to a
number of factors, such consent would be very difficult to obtain, if at all,
and would likely result in significant additional expense to the Corporation.

     On March 1, 2005, the Independent Privatization Committee received an oral
presentation from GMP, together with a draft Valuation, setting out the expected
valuation range per Common Share, the methodology it employed and relevant
analysis, as well as the assumptions, limitations and qualifications that it
intended to apply in reaching its conclusions in the Valuation. The Independent
Privatization Committee questioned GMP concerning its methodology and
qualifications, closely reviewed the analysis undertaken by GMP and discussed
the requirement for a valuation of the Series II Preference Shares.

     Between March 1, 2005 and March 6, 2005, the Independent Privatization
Committee had further discussions with respect to the Valuation.

     On March 4, 2005, the Independent Privatization Committee met with Conrad
(Lord) Black, Peter G. White and J.A. Boultbee, directors and officers of RCL,
and advised them that it had some concerns with respect to certain issues
relating to the Consolidation, including: (i) that the proposed consideration of
$7.25 per Common Share was likely to be at the low end of the range per Common
Share in the Valuation; (ii) the uncertainty of value in respect of potential
litigation; and (iii) the impact, if any, on the valuation range of the Common
Shares following the release of the International Statements.

                                        33
<PAGE>

     On March 6, 2005, the Board received written notification from RCL that, in
connection with the proposed CS Consolidation, RCL would support such
transaction on the following amended terms. Each Common Shareholder (other than
RCL and certain of its affiliated entities) would receive $7.60 for each Common
Share held at the time that articles of amendment are filed effecting the CS
Consolidation, subject to a potential upward adjustment pursuant to the payment
of the Additional Amount per Share following the publication of the
International Statements. In addition, each Common Shareholder (other than
Dissenting Shareholders and, if the SEC Clearance is not obtained, any U.S.
Holders) would receive a CCPR; provided however, that if the SEC Clearance is
not obtained, no Common Shareholder who has not completed a Letter of
Transmittal and certified therein that it is not a U.S. Holder shall receive a
CCPR until such time as the Depositary receives such certification.

     On March 6, 2005, the Independent Privatization Committee also received
from GMP its final Valuation, in which GMP estimated that, as at March 1, 2005,
the fair market value of the Common Shares was in the range of $7.21 to $7.57
per Common Share and the value of the Series II Preference Shares was equivalent
to 0.46 of an International Share per Series II Preference Share.

     In considering the Valuation and fulfilling its mandate, the Independent
Privatization Committee reviewed the methodology utilized by GMP, the
assumptions underlying the methodology and the conclusions to be drawn from
GMP's analysis. In particular, the Independent Privatization Committee noted
that the Valuation is limited in scope given certain "unique and unusual
circumstances". See "-- Valuation -- Key Assumptions and Limitations".

Recommendations of Independent Privatization Committee

     At a meeting of the Independent Privatization Committee held on March 6,
2005, after considering the terms of the Consolidation, the Valuation, the
advice of its legal and financial advisors and various additional matters,
including the matters discussed below under the heading "-- Factors Considered
by Independent Privatization Committee in Making its Recommendations", the
Independent Privatization Committee unanimously concluded that:

     (a)   although the Common Share Consideration is above the range of value
           per Common Share as determined pursuant to the Valuation, the
           Independent Privatization Committee could not, in the absence of a
           fairness opinion from GMP and given the Unique and Unusual
           Circumstances set out in the Valuation, reach a conclusion or make a
           recommendation as to whether the Common Share Consideration is fair,
           from a financial point of view, to the Minority Shareholders;

     (b)   notwithstanding the conclusion outlined in (a) above, in light of the
           revised terms of the Common Share Consideration of March 6, 2005,
           which included the Additional Amount per Share, and the issuance of
           the CCPRs, the Board should authorize submitting the CS Consolidation
           to the Common Shareholders for their consideration provided that the
           Common Shareholders are fully informed of the limitations,
           assumptions and qualifications of the Valuation;

     (c)   the Board should not make any recommendation with respect to how
           Common Shareholders should vote in respect of the CS Consolidation;

     (d)   although the Preference Share Consideration is consistent with the
           rights, privileges, restrictions and conditions attaching to the
           Series II Preference Shares (and, in particular, with respect to the
           rights of retraction attaching to the Series II Preference Shares),
           given that Preferred Shareholders will be in no better position as a
           result of completion of the PS Consolidation, the Independent
           Privatization Committee could not reach a conclusion or make a
           recommendation as to whether the Preferred Shareholders should vote
           in favour of the PS Consolidation;

     (e)   notwithstanding the conclusion outlined in (d) above, there is no
           assurance that the Corporation, given the terms of the Indentures,
           would be able to honour retractions of the Series II Preference
           Shares in the future and as a result, the Board should authorize
           submitting the PS Consolidation to the Preferred Shareholders for
           their consideration; and

     (f)   the Board should not make any recommendation with respect to how
           Preferred Shareholders should vote in respect of the PS
           Consolidation.

     At the conclusion of its deliberations, the Independent Privatization
Committee was satisfied that there had been an adequate process of investigation
and deliberation to ensure that any decision made was made in good faith on an
informed basis in the best interests of the Corporation and so as to properly
protect the interests of the Minority Shareholders and the Preferred
Shareholders.
                                        34
<PAGE>

Factors Considered by Independent Privatization Committee in Making its
Recommendations

     Despite the fact the Independent Privatization Committee recommends that
the Board make no recommendation to the Minority Shareholders or the Preferred
Shareholders as to how they should vote in respect of the Consolidation, there
are a number of factors that led the Independent Privatization Committee to the
conclusion that the Minority Shareholders and the Preferred Shareholders should
be provided with an opportunity to consider the merits of the Consolidation. The
Independent Privatization Committee took notice that:

     1.    in order for the CS Consolidation to be effective, it must be
           approved by a majority of votes cast by Minority Shareholders present
           in person or represented by proxy at the Meeting and entitled to vote
           on the CS Consolidation;

     2.    in light of: (i) the controlling share ownership position of RCL of
           approximately 78.3% of the outstanding Common Shares; (ii) the fact
           that since the public announcement of the proposed Consolidation, the
           Corporation has not received any proposals for an alternative
           transaction; (iii) the fact that there has been no indication from
           RCL of a desire to divest its interest in the Corporation; (iv) the
           continued lack of liquidity and limited trading volume of the Common
           Shares; and (v) the well publicized difficulties that the Corporation
           has encountered recently, the ability of the Minority Shareholders to
           sell their Common Shares and to realize on their investment is
           limited. Through the CS Consolidation, the Minority Shareholders will
           have the ability to dispose of all of their Common Shares for cash
           consideration that, in the absence of the CS Consolidation, might not
           otherwise be available;

     3.    RCL requested that the Board call a meeting of Shareholders to
           consider the Consolidation and could requisition a meeting if the
           Board failed to do so;

     4.    any net amount received in connection with the CCPR Trust and any
           amount received pursuant to the Updated Valuation would have the
           effect of increasing the aggregate consideration paid to Minority
           Shareholders for their Common Shares;

     5.    subject to the limitations, assumptions, qualifications and scope
           limitations set forth in Valuation, the Common Share Consideration is
           above the range of value per Common Share determined by GMP pursuant
           to the Valuation;

     6.    the Common Share Consideration represents a premium of approximately
           76% to the closing market price of the outstanding Common Shares on
           the TSX of $4.31 on October 28, 2004 (the day that the proposed
           Consolidation was publicly announced), prior to taking into account
           any further consideration that may be received by Minority
           Shareholders pursuant to the Updated Valuation or as a result of the
           CCPR;

     7.    the difficulty of providing liquidity to Shareholders in the near
           term given the damage done to the Corporation's reputation;

     8.    GMP would be unable to provide a fairness opinion in light of the
           factors described under the heading "Unique and Unusual
           Circumstances" in the Valuation;

     9.    Minority Shareholders will be provided with an appraisal remedy in
           accordance with the provisions of the CBCA, should they choose to
           dissent from the CS Consolidation and, accordingly, they will have an
           opportunity to claim additional consideration for their Common
           Shares;

     10.   notwithstanding that pursuant to the articles of the Corporation, a
           Preferred Shareholder is entitled to make an irrevocable election to
           require the Corporation to redeem all or any of its Series II
           Preference Shares in consideration for, at the Corporation's option:
           (i) the transfer to such holder of (x) 0.46 of an International A
           Share for each Series II Preference Share to be redeemed, and (y)
           such number or fraction of an International A Share as is equal to
           the amount of any dividends or distributions declared and unpaid on
           the Series II Preference Shares plus any dividends or distributions
           declared on the International A Shares in respect of which a dividend
           has not been declared on the Series II Preference Shares on the date
           of transfer of the International A Shares; or (ii) cash (in Canadian
           dollars) of an equivalent value therefor, there is no assurance that
           the Corporation will be in a position to honour retractions of Series
           II Preference Shares in the future;

     11.   Preferred Shareholders will be provided with an appraisal remedy in
           accordance with the provisions of the CBCA, should they choose to
           dissent from the PS Consolidation or the CS Consolidation and,
           accordingly, they will have an opportunity to claim additional
           consideration for the Series II Preference Shares;
                                        35
<PAGE>

     12.   the difficulty the Corporation is facing with respect to certain
           regulatory matters could lead to the Common Shares and the Series II
           Preference Shares no longer being eligible to trade on the TSX and
           this could, in turn, result in a lack of an established market for
           the Common Shares and the Series II Preference Shares; and

     13.   the Independent Privatization Committee also examined whether it
           should consider other alternatives to enhance value to Shareholders.
           The Independent Privatization Committee sought and received advice in
           this regard from a legal and practical perspective. The Independent
           Privatization Committee was of the view that RCL's ownership position
           in the Corporation and the current litigious relationship between the
           Corporation and International made the possibility of an alternative
           transaction in the circumstances very limited.

     The foregoing list of factors considered by the Independent Privatization
Committee is not intended to be exhaustive. In view of the wide variety of
factors considered in connection with its evaluation of the Consolidation, the
Independent Privatization Committee did not find it practicable to, and did not,
quantify or otherwise attempt to assign relative weight to specific factors in
reaching its respective determinations. In addition, individual members of the
Independent Privatization Committee may have given different weight to different
factors. The Independent Privatization Committee recognized that, while the
consummation of the CS Consolidation gives the Common Shareholders the
opportunity to realize a premium over the prices at which the Common Shares were
traded prior to the public announcement of the CS Consolidation, accepting the
CS Consolidation will eliminate a Common Shareholder's ability to participate in
the possible future growth and profits of the Corporation.

     In order to arrive at its recommendations, the Independent Privatization
Committee: obtained the advice of both its legal counsel and GMP; completed an
examination of the terms and conditions of the Consolidation and completed a
detailed examination of the Valuation; in considering the Valuation, had
discussions with senior management of the Corporation with respect to, among
other things, the business, financial condition and prospects of the
Corporation; and examined all other documents and information that the
Independent Privatization Committee, after consulting with its legal counsel,
considered relevant to review in order to make recommendations with respect to
the Consolidation. Although GMP and the Independent Privatization Committee's
legal counsel provided advice to the Independent Privatization Committee, the
conclusions and recommendations of the Independent Privatization Committee are
solely those of the Independent Privatization Committee.

Other Considerations

     As a result of the inability of the Independent Privatization Committee or
GMP to gain access to the management of International or its financial advisors,
the Independent Privatization Committee relied upon public information regarding
International for purposes of the Valuation, and the recommendations of the
Independent Privatization Committee are subject to the fact that such
recommendations do not reflect various future events which may occur in respect
of the business, affairs and operations of International and its subsidiaries,
including, among other things: (a) any recent and planned developments in
International and its subsidiaries' business, affairs and operations or any
other material facts or material changes in respect thereof that are not yet
publicly announced; (b) the prospects for growth and profitability of
International and its subsidiaries; (c) the effect, if any, of any potential
restatement of the financial statements of International; and (d) the effect of
any potential divestiture of assets by International.

     For the purposes of their deliberations, the Independent Privatization
Committee assumed the completeness and accuracy of all information publicly
filed with securities regulators in respect of International and its
subsidiaries. The Independent Privatization Committee also advises that
Shareholders should: (a) monitor the trading prices of the Common Shares between
the date hereof and March 31, 2005; (b) monitor the trading prices of the
International A Shares between the date hereof and March 31, 2005; (c) monitor
the financial press and SEDAR for any announcements with respect to the
Inspection and other announcements which may affect the Unique and Unusual
Circumstances outlined in the Valuation; and (d) carefully review the
information contained in the Circular, including the detailed terms and
conditions of the Consolidation and the Valuation, including the assumptions and
qualifications and risks outlined therein as well as the tax consequences to
Shareholders of the Consolidation.

     The Independent Privatization Committee is of the view that Shareholders
should come to their own decision as to whether to vote in favour of or against
the Consolidation. Shareholders are urged to consult with their investment
dealer, stockbroker, financial advisor, lawyer or other professional advisor in
determining whether to vote in favour of or against the Consolidation.
Shareholders are advised that the Consolidation may have tax consequences and
Shareholders should consult their professional tax advisors.

                                        36
<PAGE>

BOARD OF DIRECTORS -- RECOMMENDATIONS

     The Board, acting through its Independent Committee, with Peter G. White
not participating, has met numerous times since October 28, 2004 and has taken
an active role in reviewing the proposed Consolidation. In this regard, the
Board has had numerous meetings with the Independent Privatization Committee and
GMP.

     The members of the Independent Committee obtained their own independent
legal counsel to advise on a variety of issues arising from the proposed
Consolidation, including to consider whether the cash payment payable by the
Corporation to the Common Shareholders holding fewer than 5,766,783 Common
Shares will be in compliance with applicable solvency tests.

     On March 7, 2005, the Board met to receive and consider the recommendations
of the Independent Privatization Committee and to consider the submission of the
Consolidation to the Shareholders for their approval. The Board carefully
considered the report of the Independent Privatization Committee and resolved to
adopt such report.

     The Board also unanimously adopted the resolution to call the Meeting
without making a recommendation as to whether the Shareholders should accept or
reject either the CS Consolidation Resolution or the PS Consolidation
Resolution.

     Peter G. White, a director, officer and indirect shareholder of RCL,
declared his interest in the Consolidation and abstained from voting with
respect to the above resolutions of the Board. See "Interest of Certain Persons
in the Consolidation".

MOTION TO THE COURT

     On February 25, 2005, the members of the Independent Committee filed the
Motion for, among other things, advice and direction as to whether in the
circumstances the Consolidation should be put to the Shareholders before the
Inspector delivers its final report.

     The Motion also sought an order approving an increase of $10.0 million to
the Hollinger Independent Directors' Trust, confirmation of the deposit of an
additional $1.5 million to such fund (see "Information Regarding the Corporation
-- Interests of Informed Persons in Material Transactions") and the
establishment of a similar fund in favour of two financial executives of the
Corporation with a deposit of $500,000. The Motion further sought an order
approving payments to the directors of the Corporation (other than Peter G.
White) in the event of the termination of their tenure as directors and a
retention bonus in the event that the Corporation continues as a public company
after March 31, 2005, in each case, in an amount equal to a multiple of fees
paid to such directors since November 18, 2004.

     Certain holders of Common Shares intervened on the Motion. The Motion was
heard on March 7, 2005. At the hearing on the Motion, arguments were presented
by counsel for various interested parties to Mr. Justice Colin L. Campbell,
including counsel for the OSC who advised of the ongoing involvement of the OSC
in connection with the Meeting and the proposed Consolidation. Mr. Justice
Campbell ruled that, in the circumstances, it was not appropriate for the Court
at this stage to make any order. Mr. Justice Campbell adjourned the Motion
seeking advice and direction pending any further steps taken by any party based
on the decisions that were to be made by the directors in connection with the
Consolidation.

     With respect to the matters before the Court in respect of indemnification
of directors and officers of the Corporation, Mr. Justice Campbell ruled that,
at least in the first instance, such matters were to be dealt with by the Board.
The Court also held that, following any such decision by the Board, if it were
necessary that the matter be returned before the Court, any interested party was
at liberty to do so. No order was issued by the Court in respect of matters
related to directors' remuneration.

VALUATION

Engagement of GMP by the Independent Privatization Committee

     OSC Rule 61-501 and Policy Q-27 provide that, unless exempted, an issuer
proposing to carry out a "business combination"/"going private transaction" is
required to engage an independent valuator to prepare a valuation of the
affected securities and to provide to the holders of the affected securities a
summary of such valuation.

     Once constituted, the Independent Privatization Committee retained GMP as
financial advisor and valuator to the Independent Privatization Committee. GMP
was asked to prepare and deliver to the Independent Privatization Committee an
independent valuation of the outstanding Common Shares, on a per share basis, in
accordance with OSC

                                        37
<PAGE>

Rule 61-501 and Policy Q-27, and to prepare and deliver a valuation of the
outstanding Series II Preference Shares, on a per share basis. A formal
engagement letter was executed on December 14, 2004, and an amendment to the
engagement letter was executed on February 25, 2005 (collectively, the
"ENGAGEMENT LETTER").

Independence of GMP

     GMP is not an insider, associate or affiliate of the Corporation, certain
specified parties (including Conrad (Lord) Black, RCL, Peter G. White and F.
David Radler) (collectively, the "INTERESTED PARTIES") or any of their
respective affiliates or associates. GMP has neither provided financial advisory
services nor participated in any financings involving the Corporation, the
Interested Parties or any of their respective affiliates or associates. The fees
payable to GMP under the Engagement Letter on the delivery of the Valuation are
not contingent upon the conclusions reached by GMP in the Valuation or upon the
success of the Consolidation. There are no understandings, agreements or
commitments between GMP, the Interested Parties or any of their respective
affiliates or associates with respect to any future business dealings. However,
GMP may in the future, in the ordinary course of business, seek to perform
financial advisory or investment banking services for any one or more of them
from time to time.

     GMP acts as a trader and dealer, both as principal and agent, in all major
Canadian financial markets and, as such, may have had or may in the future have
positions in securities of the Corporation and, from time to time, may have
executed or may execute transactions on behalf of the Corporation or on behalf
of other clients for which it receives compensation. As an investment dealer,
GMP conducts research on securities and may, in the ordinary course of business,
provide research reports and investment advice to its clients on investment
matters, including matters involving an investment in the Corporation.

Credentials of GMP

     GMP is a Canadian-based investment bank with offices in Toronto, Calgary
and Montreal, Canada and Geneva, Switzerland, which provides research and
corporate finance advice and services, and engages in securities trading and
investment banking. GMP carries on investment banking activities, institutional
and retail securities trading activities. In Canada, GMP is an investment
banking firm with operations in all facets of corporate finance, mergers and
acquisitions, equity sales and trading and investment research. GMP has
participated in a significant number of transactions involving private and
public companies and has experience in preparing valuations. GMP is not in the
business of providing auditing services and is not controlled by a financial
institution.

Key Assumptions and Limitations

     In the Valuation, GMP noted various unique and unusual circumstances (the
"UNIQUE AND UNUSUAL CIRCUMSTANCES") surrounding the Consolidation including:

     1.    Neither the Corporation nor International is in compliance with
           certain aspects of the applicable continuous disclosure requirements
           of Canadian and U.S. securities laws, the non-compliance of which
           includes the failure to file certain materials, as disclosed in the
           Circular;

     2.    The Corporation is currently the subject of an Inspection pursuant to
           an order of the Court;

     3.    The Corporation and International are each currently engaged in
           litigation that may materially affect the value of the securities of
           the Corporation;

     4.    The Corporation and/or International may be the subject of future
           enforcement proceedings by regulatory authorities in Canada and/or
           the U.S.;

     5.    A Special Committee of the board of directors of International has
           investigated certain related party transactions involving certain
           former executive officers and certain and former directors of
           International and the Corporation; and

     6.    GMP has had no access to the operational and executive management of
           International.

     IN ADDITION TO THE FOREGOING, GMP MADE CERTAIN MATERIAL ASSUMPTIONS IN
PREPARING THE VALUATION. THE VALUATION PROVIDES THAT CERTAIN ASSUMPTIONS USED BY
GMP IN THE PREPARATION THEREOF ARE, IN THE PROFESSIONAL JUDGMENT OF GMP, BASED
UPON THE BEST INFORMATION REASONABLY AVAILABLE TO GMP AT THE TIME OF THE
PREPARATION OF THE VALUATION, THAT SUCH ASSUMPTIONS MAY PROVE TO BE INACCURATE
AND ACTUAL RESULTS ACHIEVED WITH RESPECT TO MATTERS BASED UPON SUCH ASSUMPTIONS
WILL VARY FROM THOSE USED BY GMP AND SUCH VARIATIONS MAY BE MATERIAL.

                                        38
<PAGE>

Valuation Conclusion

     Subject to the limitations, assumptions, qualifications and scope
limitations stated in the Valuation:

     (a)   GMP estimates, as of March 1, 2005, the fair market value of the
           Common Shares is in the range of $7.21 to $7.57 per share; and

     (b)   GMP is of the view that the value of a Series II Preference Share is
           equivalent to 0.46 of an International A Share. In this regard, GMP
           has determined that the appropriate approach with respect to the
           valuation of the Series II Preference Shares is to value same in
           relation to the retraction right to receive International A Shares,
           rather than a range of values expressed in dollars.

     THE FOREGOING DISCUSSION IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE
READ IN CONJUNCTION WITH, THE VALUATION ATTACHED AS APPENDIX C TO THIS CIRCULAR.
SHAREHOLDERS ARE URGED TO READ THE VALUATION IN ITS ENTIRETY.

PRIOR VALUATIONS

     To the knowledge of the directors and senior officers of the Corporation,
there has not been any prior valuation made in respect of the Corporation, its
securities or material assets for which disclosure is required to be made in
this Circular in the 24 months before the date hereof.

     The offers made by Press Holdings International Limited on January 27, 2004
to purchase all of the issued and outstanding Common Shares on the basis of
$8.44 per share and Series II Preference Shares on the basis of $9.53 per share
are the only bona fide prior offers for the Shares in the past 24 months. The
offers were terminated on March 2, 2004. For detailed information concerning the
offers and the background to the offers, reference is made to the directors'
circular dated February 9, 2004 relating thereto on the public file with the
securities commissions and other similar regulatory authorities in Canada which
can be accessed via the Internet at www.sedar.com.

UPDATED VALUATION

     Promptly following the public release by International of the International
Statements, an Independent Valuator will prepare an Updated Valuation of the
Common Shares. The Independent Valuator and the Updated Valuation will be under
the supervision and direction of the Independent Privatization Committee. The CS
Consolidation will not be implemented until an engagement letter has been
entered into with an Independent Valuator in connection with the Updated
Valuation. The Corporation will publicly disclose the Updated Valuation Range
via press release immediately upon receipt of same from the Independent
Valuator.

     As part of the Common Share Consideration, each holder of Common Shares
(other than, directly or indirectly, RCL and Dissenting Shareholders) will
receive, subject to applicable laws (including solvency requirements), the
Additional Amount per Share, if any, in cash, which amount shall be rounded to
the nearest cent. In no event will the Additional Amount per Share be less than
nil. The Additional Amount per Share, if any, will be paid as soon as reasonably
practicable following the Updated Valuation Delivery Date, and in any event,
within ten Business Days thereof. See "-- Procedure for Receipt of
Consideration".

     RCL will guarantee the payment obligations of the Corporation in respect of
the Additional Amount per Share. In addition, RCL and certain of its related
parties will provide a release in favour of the Independent Valuator for claims
arising out of the Updated Valuation and will indemnify the Independent Valuator
against claims as a result of the performance of the services rendered by the
Independent Valuator in connection with the Updated Valuation.

PROCEDURE FOR RECEIPT OF CONSIDERATION

     If the CS Consolidation is effected, each Common Shareholder (other than,
directly or indirectly, RCL and Dissenting Shareholders) will be entitled to
receive: (a) the Initial Payment as soon as practicable after the Effective
Date; and (b) the Final Payment, if any, as soon as practicable after the
Updated Valuation Delivery Date. If the PS Consolidation is effected, each
Preferred Shareholder (other than Dissenting Shareholders) will be entitled to
receive the Preferred Share Consideration as soon as practicable after the
Effective Date. In order for such Shareholders to receive the Common Share
Consideration and the Preferred Share Consideration, respectively, they must
first complete and sign the appropriate enclosed Letters of Transmittal (printed
on yellow paper for Common Shareholders and pink paper for Preferred
Shareholders) and return same, together with the certificate(s) representing
their Shares held, and all other requisite documentation, to the Depositary in
accordance with the procedures specified in the appropriate enclosed Letters of
Transmittal.

                                        39
<PAGE>

     As soon as practicable following the Effective Date of the CS Consolidation
and/or the PS Consolidation, as the case may be, and receipt of all required
documentation, the Depositary will send, or cause to be sent, to each
Shareholder who has submitted a duly signed and completed Letter of Transmittal
in accordance with the foregoing: (a) in the case of a Common Shareholder, a
cheque for the aggregate Initial Payment payable in respect of the Common Shares
held by such Common Shareholder; and (b) in the case of a Preferred Shareholder,
a share certificate representing the aggregate Preferred Share Consideration
payable in respect of the Series II Preference Shares held by such Preferred
Shareholder. If applicable, as soon as practicable following the Updated
Valuation Delivery Date and receipt of all required documentation, the
Depositary will send, or cause to be sent, to each Common Shareholder who has
submitted a duly signed and completed Letter of Transmittal in accordance with
the foregoing a cheque for the aggregate Final Payment payable in respect of the
Common Shares held by such Common Shareholder.

     Certificates representing fractional interests in a New Common Share or New
Series II Preference Share will not be issued. After the Effective Time, the
existing share certificates representing: (i) Common Shares (held by
Shareholders other than, directly or indirectly, RCL and Dissenting
Shareholders) will represent only the right to receive a cheque or cheques
representing the aggregate Common Share Consideration, without interest, payable
in respect thereof; and (ii) Series II Preference Shares (held by Shareholders
other than Dissenting Shareholders) will represent only the right to receive a
share certificate representing the aggregate Preferred Share Consideration
deliverable in respect thereof.

Consideration

     The Corporation shall deposit, or cause to be deposited, with the
Depositary at any time at or prior to the Effective Time, sufficient: (a) funds
(by cheque, bank or wire transfer or other means) to pay the aggregate amount
required to fund the aggregate Initial Payment from the cash resources of the
Corporation; and (b) International A Shares owned, directly or indirectly, by
the Corporation, to deliver the aggregate amount required to satisfy the
Preferred Share Consideration. If applicable, the Corporation shall deposit, or
cause to be deposited, with the Depositary promptly following the Updated
Valuation Delivery Date, sufficient funds (by cheque, bank or wire transfer or
other means) to pay the aggregate amount required to fund the aggregate Final
Payment from the cash resources of the Corporation. The deposit of foregoing
funds and shares with the Depositary is to be paid by the Depositary to or to
the order of or delivered to or to the order of the respective holders of
Shares, in the case of cash, without interest, on presentation and surrender at
the offices of the Depositary in the City of Toronto, of the applicable Letter
of Transmittal and the share certificate(s) identified in the applicable Letter
of Transmittal, with all other requisite documentation. At the Effective Time,
the Shares in respect of which such deposit is made shall be deemed to be
cancelled. Subject to the next paragraph below, the Corporation shall be fully
and completely discharged from its obligation to pay or deliver the Common Share
Consideration and the Preferred Share Consideration to such holders of Shares
and thereafter the rights of such holders shall be limited to receiving, in the
case of cash, without interest, subject to withholding, from the Depositary
their proportionate part of the money or shares so deposited for their Shares,
on presentation and surrender of the said share certificates held by them
respectively (and all other requisite documentation) as specified above. Any
interest on any funds so deposited shall belong to the Corporation.

     In addition, immediately after the implementation of the CS Consolidation,
each Common Shareholder (other than Dissenting Shareholders and, if the SEC
Clearance is not obtained, any U.S. Holders) will receive one CCPR for each
outstanding Common Share held immediately prior to the Effective Time; provided
however, that if the SEC Clearance is not obtained, no Common Shareholder who
has not completed a Letter of Transmittal and certified therein that it is not a
U.S. Holder shall receive a CCPR until such time as the Depositary receives such
certification. CCPRs do not form part of the Common Share Consideration. See "--
CCPRs".

     Subject to applicable law, after the expiration of six months following the
applicable Effective Date, any remaining monies or International A Shares on
deposit with the Depositary will be returned to the Corporation or its
successors. Where a duly completed and executed Letter of Transmittal and the
share certificate(s) identified in that Letter of Transmittal are delivered to
the Depositary thereafter with all other requisite documentation, the
obligations of the Corporation or its successors to make payment in respect of
the Common Shares Consideration or to deliver the Preferred Share Consideration
will, subject to any applicable law, be satisfied from the general corporate
funds or holdings of International A Shares of the Corporation or its
successors.

     Under no circumstances will interest accrue or be paid by the Corporation,
its successors or the Depositary on the Common Share Consideration, including
without limitation, for any delay in making payment.

                                        40
<PAGE>

Letters of Transmittal and Surrender of Share Certificates

     A Letter of Transmittal (printed on yellow paper) for use by Common
Shareholders and a Letter of Transmittal (printed on pink paper) for use by
Preferred Shareholders are enclosed with this Circular for the surrender of
share certificates. The details for the surrender of such share certificates to
the Depositary at the addresses in Toronto of the Depositary are set out in the
Letters of Transmittal. In order to receive the Common Share Consideration
and/or the Preferred Share Consideration, as applicable, a Shareholder must
first deliver and surrender to the Depositary all share certificates
representing such Shareholder's Shares, together with the applicable Letter(s)
of Transmittal duly completed and executed in accordance with the instructions
set out therein, on such form or in otherwise acceptable form and such other
documents as the Corporation and the Depositary may reasonably require.

     Only Registered Shareholders or the persons they appoint as their proxies
are required to complete, sign and submit the Letters of Transmittal.
Shareholders who own Shares beneficially: (a) through an intermediary
(including, among others, banks, trust companies, securities dealers or brokers
and trustees or administrators of self-administered registered retirement
savings plans, registered retirement income funds, registered education savings
plans and similar plans); or (b) in the name of a clearing agency (such as The
Canadian Depository for Securities Limited and the Depository Trust Company),
are not required to submit a Letter of Transmittal. The intermediary or the
clearing agency, as the case may be, should take the appropriate steps to ensure
the Depositary receives the necessary documentation. SHAREHOLDERS WHOSE SHARES
ARE REGISTERED IN THE NAME OF A BROKER, INVESTMENT DEALER, BANK, TRUST COMPANY
OR OTHER NOMINEE MUST CONTACT THEIR NOMINEE HOLDER TO ARRANGE FOR THE SURRENDER
OF THEIR SHARES.

Residency Status and Withholding

     Each Shareholder will be required in the applicable Letter of Transmittal
to represent and warrant that such Shareholder is, or is not, a non-resident of
Canada for the purposes of the Tax Act. Each Shareholder who is a non-resident
of Canada for the purposes of the Tax Act should deliver, together with the
applicable Letter of Transmittal and such other required documents and
certificates, as applicable, a clearance certificate issued by the CRA under
Section 116 of the Tax Act (and provincial clearance certificates issued by any
relevant provincial tax authority under analogous provisions of applicable
provincial income tax legislation) satisfactory to the Corporation in respect of
the disposition of the holder's fractional interest in a New Common Share or New
Series II Preference Shares, as applicable, pursuant to the Consolidation. SUCH
CLEARANCE CERTIFICATE SHOULD BE DELIVERED EVEN IF THE NON-RESIDENT SHAREHOLDER
IS NOT TAXABLE ON THE DISPOSITION OF THE SHARES.

     Each Shareholder who is a nominee or agent (such as a stock broker) holding
legal title to Shares on behalf of one or more beneficial owners is required to
indicate in a letter attached to the applicable Letter of Transmittal how many
of such shares are held on behalf of beneficial owners who are non-residents of
Canada for the purposes of the Tax Act, the name of such beneficial owners and
the number of the Shares so held on behalf of each such beneficial owner. In
respect of each such non-resident beneficial owner, the nominee or agent should
deliver a clearance certificate issued by the CRA under Section 116 of the Tax
Act (and provincial clearance certificates issued by any relevant provincial tax
authority under analogous provisions of applicable provincial income tax
legislation) satisfactory to the Corporation in respect of the disposition of
the holder's fractional interest in a New Common Share or New Series II
Preference Shares, as applicable, pursuant to the Consolidation, as more fully
described above. In the event that the nominee or agent fails to deliver the
requisite clearance certificate described above with a Letter of Transmittal,
the Corporation intends to deduct and withhold from the Common Share
Consideration or Preferred Share Consideration otherwise payable to any such
holder such amounts as the Corporation may become liable for under Canadian
income tax law.

     Unless the Depositary receives from a non-resident Shareholder or from a
nominee or agent of a non-resident Shareholder, as the case may be, a clearance
certificate relating to the payment of the Common Share Consideration or
Preferred Share Consideration on the Consolidation (which certificate must be
satisfactory to the Corporation in its sole discretion and must set out a
"certificate limit" that is not less than the aggregate Common Share
Consideration and/or Preferred Share Consideration, as applicable, to be
received by such Shareholder), the Depositary intends to withhold, on behalf of
the Corporation, from the Common Share Consideration and/or Preferred Share
Consideration, as applicable, to be received by such Shareholder as tax for the
account of the non-resident Shareholder, the amount for which the Corporation
may become liable under Section 116 of the Tax Act (and any analogous provision
of provincial income tax legislation). If a satisfactory clearance certificate
has not been received by the Corporation before the third Business Day before
the 30th day of the month following the month in which the Consolidation occurs,
the Corporation

                                        41
<PAGE>

will remit to the CRA and the appropriate provincial tax authorities, the amount
required to be remitted. Similar withholdings and remittances will apply to:

     (a)   a Shareholder who fails to represent and warrant whether such
           Shareholder is, or is not, a non-resident of Canada for the purposes
           of the Tax Act; and

     (b)   the beneficial owner of Shares held by nominees or agents who fail to
           deliver with the applicable Letter of Transmittal a letter indicating
           how many of such Shares are held on behalf of beneficial owners who
           are non-residents of Canada for the purposes of the Tax Act, the name
           of such beneficial owners and the number of the Shares so held on
           behalf of each such beneficial owner.

     NON-RESIDENT SHAREHOLDERS ARE URGED TO CONTACT THEIR OWN TAX ADVISORS AS
SOON AS POSSIBLE IN ORDER TO OBTAIN ADVICE AND ASSISTANCE IN CONNECTION WITH THE
APPLICATION FOR A CLEARANCE CERTIFICATE UNDER SECTION 116 OF THE TAX ACT (AND
ANY ANALOGOUS CLEARANCE CERTIFICATE FROM THE CORRESPONDING PROVINCIAL TAX
AUTHORITIES), AS THE PROCESS OF OBTAINING SUCH A CERTIFICATE MAY TAKE SEVERAL
WEEKS.

Lost Certificates

     A Shareholder who has lost or misplaced such Shareholder's Share
certificate(s) should complete the applicable Letter of Transmittal as fully as
possible and forward it, together with a letter describing the loss, to the
Depositary. The Depositary will assist in making the necessary arrangements to
establish proper entitlement (which may include an affidavit and a bonding
requirement) for payment of the Common Share Consideration or delivery of the
Preferred Share Consideration in accordance with the terms of the Consolidation.

Method of Delivery

     The method of delivery of share certificates or the Letters of Transmittal,
and all other required documents is at the option and risk of the person
delivering them. The Corporation recommends that such documents be delivered by
hand to the Depositary, at the offices noted in the Letters of Transmittal, and
a receipt obtained therefore, or if mailed, that registered mail, with return
receipt requested, be used.

     Shareholders holding Shares that are registered in the name of a broker,
investment dealer, bank, trust company or other nominee must contact their
nominee holder to arrange for the surrender of their Shares.

Payment and Delivery of the Consideration

     Assuming due delivery of the required documentation, as soon as
practicable: (A) after the Effective Date, the Depositary will forward, or cause
to be forwarded: (i) cheques for the Initial Payment, without interest, to which
a Shareholder is entitled; and (ii) share certificates for the Preferred Share
Consideration to which a Shareholder is entitled; and (B) if applicable, after
the Updated Valuation Delivery Date, the Depositary will forward, or cause to be
forwarded cheques for the Final Payment, without interest, to which a
Shareholder is entitled, in each case, by first class mail to the address of the
Shareholder as specified in the applicable Letter of Transmittal, unless the
Shareholder indicates to the Depositary that he or she wishes to pick up the
cheque(s) and/or share certificate(s) representing the Common Share
Consideration and the Preferred Share Consideration, as applicable, in which
case the cheques and/or share certificate(s) will be available at the Toronto
offices of the Depositary for pick-up by such holder. Under no circumstances
will interest be payable on the Common Share Consideration by reason of any
delay in paying the Common Share Consideration (or any part thereof) or
otherwise.

Prescription Period

     Any certificate which prior to the Effective Date represented issued and
outstanding Shares which has not been surrendered with all other instruments
required by the Letters of Transmittal on or prior to the sixth anniversary of
the Effective Date will cease to represent any claim or interest of any kind or
nature against the Corporation, the Depositary or their respective successors.

Determination of Validity

     All questions as to the delivery and surrender of certificates, the
delivery and form of documents and the validity, eligibility (including time of
receipt) and acceptance for payment of any delivery and surrender of
certificates will be determined by the Corporation, in its sole discretion,
which determination shall be final and binding on all parties.

                                        42
<PAGE>

     The Corporation reserves the absolute right to reject any or all deliveries
and surrenders of share certificates, Letters of Transmittal and any other
requisite documentation determined by it not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of the
Corporation's counsel, be unlawful. The Corporation also reserves the absolute
right to waive any of the conditions of the delivery and surrender of share
certificates or any defect or irregularity in any delivery or surrender of share
certificates. No delivery and surrender of share certificates will be deemed to
be properly made until all defects and irregularities have been cured or waived.
None of the Corporation, the Depositary or any other person will be under any
duty or obligation to give notification of any defect or irregularity in
deliveries and surrenders or incur any liability for failure to give any such
notice. The Corporation's interpretation of the terms and conditions of the
Consolidation (including, without limitation, the delivery and surrender of
share certificates and Letters of Transmittal) will be final and binding on all
parties.

JUDICIAL DEVELOPMENTS

     Prior to the pronouncement of OSC Rule 61-501 and Policy Q-27, Canadian
courts had, in a few instances, granted preliminary injunctions to enjoin
transactions which constituted "business combination" or "going private"
transactions within the meaning of OSC Rule 61-501 and Policy Q-27,
respectively. The current trend in both legislation and in Canadian
jurisprudence is towards permitting "business combination" or "going private"
transactions to proceed subject to compliance with requirements intended to
ensure procedural and substantive fairness to the minority shareholders.

     Shareholders should consult their legal advisors for a determination of
their legal rights with respect to any transaction which may constitute a
"business combination" or "going private" transaction.

                   CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

     The following is, in the opinion of Fogler, Rubinoff LLP, Canadian counsel
to the Corporation, a summary of the principal Canadian federal income tax
considerations under the Tax Act, as of the date hereof, generally applicable to
a Shareholder in respect of the Consolidation and in respect of the PS Dividend.

     This summary is generally applicable to Shareholders who, for purposes of
the Tax Act, hold their Shares (including International A Shares to be
distributed to Preferred Shareholders on the PS Consolidation) and CCPRs as
capital property, and who deal at arm's length and are not affiliated with the
Corporation. The Shares, the International A Shares and the CCPRs will generally
constitute capital property to a holder thereof unless the holder holds such
securities in the course of carrying on a business, or the holder has acquired
such securities in a transaction or transactions considered to be an adventure
in the nature of trade. Certain holders whose Shares might not otherwise qualify
as capital property may be entitled to obtain such qualification in certain
circumstances by making the election permitted by subsection 39(4) of the Tax
Act. This summary does not apply to a Shareholder who is a non-resident insurer
or a "specified financial institution" as defined in the Tax Act, is otherwise a
"financial institution" subject to the mark-to-market rules contained in the Tax
Act, a Shareholder in respect of which International is or will be a "foreign
affiliate" within the meaning of the Tax Act or a Shareholder who acquired
Shares on the exercise of employee or director stock options. Such Shareholders
should consult their own tax advisors regarding their particular circumstances.

     This summary is based on the current provisions of the Tax Act and
counsel's understanding of the current publicly available statements of the
administrative practices of the CRA. The summary takes into account all proposed
amendments (the "TAX PROPOSALS") to amend the Tax Act and the regulations
thereto publicly announced by the Minister of Finance (Canada) prior to the date
hereof but there is no certainty that the Tax Proposals will be enacted in the
form proposed, if at all. The summary does not otherwise take into account or
anticipate any changes in law or in the CRA's practices, whether by judicial,
governmental or legislative decisions or action, nor does it take into account
tax legislation or considerations of any province, territory or foreign
jurisdiction. The provisions of provincial income tax legislation vary from
province to province in Canada and in some cases differ from federal income tax
legislation.

     THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, NOR
SHOULD IT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PARTICULAR SHAREHOLDER,
AND NO REPRESENTATIONS WITH RESPECT TO THE INCOME TAX CONSEQUENCES TO ANY
PARTICULAR SHAREHOLDER ARE MADE. ACCORDINGLY, SHAREHOLDERS SHOULD CONSULT THEIR
OWN TAX ADVISORS FOR ADVICE WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
CONSOLIDATION AND THE PS DIVIDEND IN THEIR PARTICULAR CIRCUMSTANCES, INCLUDING
THE APPLICATION AND EFFECT OF THE INCOME AND OTHER TAX LAWS OF ANY COUNTRY,
PROVINCE, STATE OR LOCAL TAX AUTHORITY.

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<PAGE>

RESIDENTS OF CANADA

     The following summary is only applicable to Shareholders who are resident
or are deemed to be resident in Canada for purposes of the Tax Act.

PS Dividend

     In the case of a Preferred Shareholder who is an individual, the amount of
the PS Dividend received by such Preferred Shareholder will be included in
computing such Preferred Shareholder's income and will be subject to the
gross-up and dividend tax credit rules normally applicable to taxable dividends
received from taxable Canadian corporations under the Tax Act. The receipt of
the PS Dividend may give rise to liability for alternative minimum tax.

     In the case of a Preferred Shareholder that is a corporation, the amount of
the PS Dividend received will be included (subject to the potential application
of subsection 55(2) of the Tax Act as discussed below) in computing such
Preferred Shareholder's income and generally will be deductible in computing
taxable income. Under subsection 55(2) of the Tax Act, a Preferred Shareholder
that is a corporation may be required to recognize all or a portion of the PS
Dividend received as a capital gain from the disposition of a capital property.
Preferred Shareholders that are corporations should consult with their tax
advisors.

     A Preferred Shareholder which is a "private corporation" as defined in the
Tax Act (or any other corporation resident in Canada and controlled by or for
the benefit of an individual or a related group of individuals) may be liable to
pay a refundable tax under Part IV of the Tax Act in respect of the PS Dividend.

CS Consolidation and CCPRs

     On the payment of the Common Share Consideration in lieu of a fractional
New Common Share arising on the CS Consolidation, a Common Shareholder will not
be considered to have received a dividend (by virtue of the Corporation's status
as a "mutual fund corporation" under the Tax Act), but will be considered to
have disposed of the Common Shareholder's Common Shares for proceeds of
disposition equal to the fair market value of the consideration so received.
Each Common Shareholder will realize a capital gain (or capital loss) equal to
the amount by which the proceeds of disposition of the Common Shares, net of any
reasonable costs of disposition, to the Common Shareholder exceeds (or are less
than) the adjusted cost base of the Common Shares.

     The proceeds of disposition of the Common Shares will be equal to the
aggregate of the amount of cash and the fair market value at the time of receipt
of CCPRs received by a Common Shareholder for his or her Common Shares. The cost
of a CCPR to a Common Shareholder will be equal to such fair market value. As
the amount to be received as a result of the CCPRs, if any, is uncertain, the
fair market value thereof is unclear. Common Shareholders will be required to
value the CCPRs based on all available facts and circumstances at the Effective
Time. Although not free from doubt, a Common Shareholder who disposes of a CCPR
may realize a capital gain (or capital loss) to the extent that the proceeds
received therefor, net of any costs of disposition, exceed (or are less than)
the adjusted cost base of the CCPR to the Common Shareholder. A Common
Shareholder who receives an interim payment under a CCPR may realize a capital
gain to the extent that the amount of the payment exceeds the portion of the
adjusted cost base of the CCPR to the Common Shareholder that is reasonably
attributable to that payment. It is possible, however, that all amounts received
by a Common Shareholder in respect of a CCPR would be treated as ordinary
income.

     A Common Shareholder may be required to include in income for a particular
taxation year the portion of the net income of the CCPR Trust for a taxation
year, including ordinary income or the taxable part of net realized capital
gains, regardless of whether or not a Common Shareholder receives a cash payment
from the CCPR Trust in such taxation year in respect of a CCPR.

PS Consolidation

     By virtue of the PS Consolidation, the Preferred Shareholders will receive
a certain number of International A Shares. A Preferred Shareholder will not be
considered to have received a dividend (by virtue of the Corporation's status as
a "mutual fund corporation" under the Tax Act), but will be considered to have
disposed of the Preferred Shareholder's Series II Preference Shares for proceeds
of disposition equal to the fair market value of the International A Shares so
received immediately prior to the Effective Time. Each Preferred Shareholder
will realize a capital gain (or capital loss) equal to the amount by which the
proceeds of disposition of the Series II Preference Shares, net of any
reasonable costs of disposition, to the Preferred Shareholder exceeds (or are
less than) the adjusted cost base of the Series II Preference Shares.

                                        44
<PAGE>

     The cost of an International A Share so acquired by a Preferred Shareholder
will be equal to the fair market value of the International A Share immediately
prior to the Effective Time. The adjusted cost base of an International A Share
will be averaged with the cost of all other International A Shares held by the
Preferred Shareholder at that time as capital property.

Tax Treatment of Capital Gains and Capital Losses

     A Shareholder will be required to include in income one-half of the amount
of any capital gain (a "TAXABLE CAPITAL GAIN") resulting from the disposition
and will be required to deduct one-half of the amount of any capital loss (an
"ALLOWABLE CAPITAL LOSS") against taxable capital gains realized by the
Shareholder in the year of disposition. Allowable capital losses in excess of
taxable capital gains may be carried back and deducted in any of the three
preceding years or carried forward and deducted in any following year against
taxable capital gains realized in such years to the extent and under the
circumstances described in the Tax Act.

     Taxable capital gains realized by a Canadian-controlled private corporation
may be subject to an additional 6 2/3% refundable tax. Capital gains realized by
an individual, including a trust other than certain specified trusts, may give
rise to alternative minimum tax under the Tax Act.

     In the case of a Shareholder that is a corporation, the amount of any
capital loss otherwise determined resulting from the disposition of the
Shareholder's fractional interest in a Share may be reduced by the amount of
dividends previously received or deemed to have been received thereon in
accordance with the detailed provisions of the Tax Act in that regard. Analogous
rules may apply where a corporation is a member of a partnership or a
beneficiary of a trust which owns a fractional interest in a Share. These rules
also apply where a trust or partnership (of which a corporation is a beneficiary
or a member) is a member of a partnership or beneficiary of a trust that owns a
fractional interest in a Share.

Deferred Plans and Foreign Property

     A CCPR will not constitute a "qualified investment" for a trust governed by
a registered retirement savings plan ("RRSP"), a registered retirement income
fund ("RRIF"), a deferred profit sharing plan ("DPSP") (collectively, the
"DEFERRED PLANS") or a registered education savings plan ("RESP"). As a result,
if a trust governed by an RRSP or RRIF acquires a CCPR, the fair market value
thereof at the time it was acquired by the trust must be included in the income
of the annuitant under the RRSP or RRIF, as the case may be. If such a trust
subsequently disposes of the CCPR, the annuitant is entitled to a deduction
equal to the lesser of the amount previously included in the income of the
annuitant and the proceeds of disposition of the CCPR. A trust governed by an
RRSP or RRIF will be subject to tax on the income, including capital gains,
earned from the CCPR. If a trust governed by a DPSP acquires a CCPR, the trust
must pay a special tax equal to the fair market value of the CCPR at the time of
acquisition. Upon a subsequent disposition of the CCPR, the trust would be
entitled to a refund equal to the lesser of the amount of the special tax
previously imposed and the proceeds of disposition of the CCPR. If a trust
governed by an RESP acquires a CCPR, the trust must pay a special tax equal to
1% of the fair market value of the CCPR at the end of each month in which such
trust holds the CCPR. COMMON SHAREHOLDERS THAT ARE TRUSTS GOVERNED BY AN RRSP,
RRIF, DPSP OR RESP SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM (AND TO THE ANNUITANTS, BENEFICIARIES OR SUBSCRIBERS
THEREUNDER) OF HOLDING CCPRS, INCLUDING THE POTENTIAL ADVANTAGES TO THEM OF
SELLING THEIR COMMON SHARES PRIOR TO THE EFFECTIVE DATE.

     As at the date hereof, the International A Shares would constitute a
"qualified investment" for Deferred Plans and RESPs by virtue of such shares
being listed on the New York Stock Exchange.

     The International A Shares will constitute "foreign property" for purposes
of the Tax Act. Deferred Plans and certain other investors generally exempt from
tax will be subject to the tax under Part XI of the Tax Act if, at the end of
any month, the cost amount (as defined in the Tax Act) of foreign property held
by such investor exceeds, generally, 30% of the total cost amount of all
property held by it. RESPs are not subject to the foreign property rules. The
CCPRs would constitute "foreign property" for purposes of the Tax Act. Tax
Proposals released on February 23, 2005 will, if enacted, eliminate the foreign
property rule limits for 2005 and subsequent calendar years.

Dividends on International A Shares

     The Canadian dollar equivalent of any dividends received (before deduction
of any withholding tax as may be applicable) by a holder on International A
Shares will be included in computing income. Such dividends received by a

                                        45
<PAGE>

holder who is an individual will not be eligible for the dividend tax credit.
Such dividends received by a holder that is a corporation will not be eligible
for the intercorporate dividend deduction in the Tax Act.

     Subject to certain limitations, withholding tax as may be imposed by the
United States on dividends paid by International will be treated as foreign
income tax which may be eligible for credit against the holder's Canadian
federal income tax or as a deduction in computing the holder's income.

     A holder that is a "Canadian controlled private corporation" (as defined in
the Tax Act) may be liable to pay an additional refundable tax of 6 2/3% with
respect to dividends received on the International A Shares.

Disposition of International A Shares

     The tax consequences to a holder on the disposition of International A
Shares will generally be the same as that described under the heading "-- Tax
Treatment of Capital Gains and Capital Losses" above.

Foreign Investment Entity Tax Proposals

     The Preferred Shareholders will receive International A Shares pursuant to
the PS Consolidation.

     On October 30, 2003, revised Tax Proposals were released regarding the
taxation of certain interests held by Canadian residents in certain non-resident
entities (e.g. International) which will be applicable for taxation years
commencing after 2002 (the "FIE PROPOSALS"). If the FIE Proposals are enacted as
proposed, where a Canadian resident holds shares, other than shares that are an
"exempt interest", in a corporation that constitutes a "foreign investment
entity" at the corporation's taxation year-end, the Canadian resident generally
will be required to either (i) include in income for the Canadian resident's
taxation year that includes such year-end an amount determined as a prescribed
percentage of the Canadian resident's designated cost of such shares at the end
of each month ending in the Canadian resident's taxation year at which time the
shares were held by the Canadian resident, or (ii) in certain circumstances,
include in (or deduct from) income on an annual basis any increase (or decrease)
in the value of that interest. International will not be a foreign investment
entity at the end of its taxation year if, at that time, the carrying value of
all of its investment property is not greater than one-half of the "carrying
value" of all of its property, or if its principal undertaking is not an
"investment business", within the meaning of those terms in the FIE Proposals.
It is unclear whether International currently is a "foreign investment entity"
within the meaning of the FIE Proposals and no assurances can be given as to its
status in the future.

     In any event, the FIE Proposals will not apply in a taxation year of a
holder, if at the end of the taxation year of International that ends in such
year, the International A Shares are "exempt interests". The International A
Shares will constitute exempt interests at a particular time if:

     (a)   it is reasonable to conclude that the holder has, at that time, no
           "tax avoidance motive" (within the meaning of the FIE Proposals) in
           respect of the such shares;

     (b)   throughout the period, in International's taxation year that includes
           that time, during which the holder held the shares in International,
           it is resident for purposes of the Tax Act in a country in which
           there is a prescribed exchange (which includes the United States) and
           such shares are listed on a prescribed stock exchange (which includes
           the New York Stock Exchange); and

     (c)   throughout such period, the shares are an "arm's length interest" of
           the holder within the meaning of the FIE Proposals.

     The determination of whether a holder will have a tax avoidance motive in
respect of the International A Shares within the meaning of the FIE Proposals
will depend upon the particular circumstances of the holder. Based upon a
certificate of an officer of the Corporation, Fogler, Rubinoff LLP, Canadian
counsel for the Corporation, is of the view, that the International A Shares
would, as at the date hereof, qualify as an arm's length interest in respect of
a Preferred Shareholder for purposes of the FIE Proposals, so long as the
aggregate fair market value of all International A Shares that are held by the
holder, or an entity or individual with whom the holder does not deal at arm's
length, does not exceed 10% of the fair market value of all of the issued and
outstanding International A Shares. However, no assurances can be given that the
International A Shares will qualify as an arm's length interest at any time in
the future.

Foreign Property Information Reporting

     A holder that is a "specified Canadian entity" for a taxation year or a
fiscal period and whose total cost amount of "specified foreign property",
including International A Shares, at any time in the year or fiscal period
exceeds

                                        46
<PAGE>

$100,000 (as such terms are defined in the Tax Act) will be required to file an
information return for the year or period disclosing prescribed information.
Subject to certain exceptions, a Preferred Shareholder in the year will be a
specified Canadian entity. The Preferred Shareholders should consult their own
tax advisors about whether they must comply with these rules.

Dissenting Shareholders

     Dissenting Shareholders will be considered to have disposed of their Shares
(as opposed to their fractional interests in a Share) for proceeds of
disposition equal to the amount paid by the Corporation to the Dissenting
Shareholder, less the amount of any interest awarded by the court. Provided the
Corporation is a "mutual fund corporation" under the Tax Act at the time payment
is made to a Dissenting Shareholder, the tax consequences to a Dissenting
Shareholder will generally be the same as those described under the headings "--
CS Consolidation" and "-- PS Consolidation" above, as the case may be, except
that any amount received or receivable on account of interest will be fully
included in the Dissenting Shareholder's income. Although it is anticipated that
the Corporation will continue to maintain its status as a "mutual fund
corporation" under the Tax Act, if the Corporation is not a "mutual fund
corporation" under the Tax Act at the time payment is made to a Dissenting
Shareholder, the tax consequences may be materially different than those
described under the headings "-- CS Consolidation" and "-- PS Consolidation"
above.

NON-RESIDENTS OF CANADA

     The following summary is only applicable to Shareholders who are neither
resident nor deemed to be resident in Canada for purposes of the Tax Act, who do
not use or hold, and are not deemed to use or hold, their Shares in connection
with carrying on a business in Canada, and whose Shares do not constitute
"taxable Canadian property" for the purposes of the Tax Act (each such
Shareholder being a "NON-RESIDENT HOLDER"). The Shares of a Non-Resident Holder
will not constitute "taxable Canadian property" unless: (a) at any time during
the period of five years immediately preceding the date such Shares are
consolidated, 25% or more of the issued Shares of any class or series of the
capital stock of the Corporation were owned by the Non-Resident Holder, by
persons with whom the Non-Resident Holder did not deal at arm's length or by any
combination thereof; (b) the Non-Resident Holder had an interest in or option in
respect of property described in (a); or (c) the Non-Resident Holder's Shares
are deemed to be "taxable Canadian property" under the Tax Act.

     A Non-Resident Holder will not be subject to any Canadian capital gains tax
with respect to the cancellation of Shares on the Consolidation. However, a
Non-Resident Holder may realize a capital gain or loss with respect to the
disposition of the Shareholder's fractional interest in a Share. Since
fractional interests in a share may not be interests in shares listed on any
stock exchange, a right to receive proceeds in lieu of the issuance of a
fractional interest in a New Common Share or New Series II Preference Share held
by a Non-Resident Holder may be "taxable Canadian property" for purposes of the
Tax Act, notwithstanding that the Non-Resident Holder's Shares do not constitute
"taxable Canadian property". In addition, a right to receive proceeds in lieu of
the issuance of a fractional interest in a New Common Share or New Series II
Preference Share may not constitute "excluded property" within the meaning of
subsection 116(6) of the Tax Act. As a result, any capital gain realized by a
Non-Resident Holder on such disposition may be subject to tax under the Tax Act
unless such gain is exempted from Canadian tax by the application of an
applicable income tax treaty. Accordingly, unless the Non-Resident Holder
provides the Corporation with a satisfactory certificate under section 116 of
the Tax Act prior to the date cash payment is made by the Corporation, the
Corporation intends to withhold and remit as tax for the account of the
Non-Resident Holder 25% of the amount that the Non-Resident Holder is entitled
to receive (determined before withholding taxes). NON-RESIDENT HOLDERS SHOULD
CONSULT THEIR OWN TAX ADVISORS CONCERNING SECTION 116 OF THE TAX ACT AND THEIR
ULTIMATE CANADIAN TAX LIABILITY, INCLUDING THE POTENTIAL ADVANTAGES TO THEM OF
SELLING THEIR SHARES PRIOR TO THE EFFECTIVE DATE OF THE CONSOLIDATION.

     A Non-Resident Holder who is entitled to the PS Dividend will be subject to
non-resident withholding tax under the Tax Act at the rate of 25% of the amount
of the dividend, subject to reduction under the provisions of an applicable
income tax treaty. For example, under the Canada-United States Income Tax
Convention, the rate of withholding tax is generally reduced to 15% in respect
of dividends paid to a person who is a beneficial owner thereof and who is a
resident of the United States for the purposes of the Convention.

                                        47
<PAGE>

  CERTAIN U.S. TAX CONSEQUENCES FOR SHAREHOLDERS THAT ARE NOT U.S. PERSONS OF
       OWNING INTERNATIONAL A SHARES AS A RESULT OF THE PS CONSOLIDATION

Dividends

     Except as described below, if a Preferred Shareholder becomes a holder of
International A Shares pursuant to the PS Consolidation and such Preferred
Shareholder is not a U.S. person for U.S. federal income tax purposes, dividends
paid to the Preferred Shareholder are subject to withholding of U.S. federal
income tax at a 30% rate or at a lower rate if the Preferred Shareholder is
eligible for the benefits of an income tax treaty that provides for a lower
rate. Even if eligible for a lower treaty rate, the payor of the dividend will
generally be required to withhold at a 30% rate (rather than the lower treaty
rate) on dividend payments, unless the payor is furnished with:

     (i)    a valid Internal Revenue Service Form W-8BEN or an acceptable
            substitute form upon which a holder certifies, under penalties of
            perjury, his or her status as (or, in the case of a United States
            alien holder that is a partnership or an estate or trust, such forms
            certifying the status of each partner in the partnership or
            beneficiary of the estate or trust as) a non-United States person
            and his or her entitlement to the lower treaty rate with respect to
            such payments; or

     (ii)   in the case of payments made outside the United States to an
            offshore account (generally, an account maintained by the holder at
            an office or branch of a bank or other financial institution at any
            location outside the United States), other documentary evidence
            establishing entitlement to the lower treaty rate in accordance with
            U.S. Treasury regulations.

     If a holder is eligible for a reduced rate of United States withholding tax
under a tax treaty, such holder may obtain a refund of any amounts withheld in
excess of that rate by filing a refund claim with the United States Internal
Revenue Service.

     If dividends paid to a holder are "effectively connected" with such
holder's conduct of a trade or business within the United States, and, if
required by a tax treaty, the dividends are attributable to a permanent
establishment that the holder maintains in the United States, the "effectively
connected" dividends are taxed at rates generally applicable to United States
citizens, resident aliens and domestic United States corporations. In general,
no tax is required to be withheld from such "effectively connected" dividends,
provided that the holder furnishes a valid Form W-8ECI to the payor of
dividends.

     If a holder is a corporate holder of International A Shares that is not a
U.S. person for U.S. federal income tax purposes, "effectively connected"
dividends that the holder receives may, under certain circumstances, be subject
to an additional "branch profits tax" at a 30% rate or at a lower rate if the
holder is eligible for the benefits of an income tax treaty that provides for a
lower rate.

Disposition of International A Shares

     If a Preferred Shareholder becomes a holder of International A Shares
pursuant to the PS Consolidation and such Preferred Shareholder is not a U.S.
person for U.S. federal income tax purposes, such Preferred Shareholder
generally will not be subject to U.S. federal income tax on gain that he or she
recognizes on a disposition of International A Shares unless:

     (i)    the gain is "effectively connected" with such Preferred
            Shareholder's conduct of a trade or business in the United States,
            and the gain is attributable to a permanent establishment that the
            Preferred Shareholder maintains in the United States, if that is
            required by an applicable income tax treaty as a condition for
            subjecting the Preferred Shareholder to United States taxation on a
            net income basis;

     (ii)   the Preferred Shareholder is an individual, he or she holds
            International A Shares as a capital asset, he or she is present in
            the United States for 183 or more days in the taxable year of the
            sale and certain other conditions exist; or

     (iii)  International is or has been a United States real property holding
            corporation for federal income tax purposes and the Preferred
            Shareholder held, directly or indirectly, at any time during the
            five-year period ending on the date of disposition, more than 5% of
            the International A Shares and such Preferred Shareholder is not
            eligible for any treaty exemption.

     If such Preferred Shareholder is a corporate holder of International A
Shares that is not a U.S. person for U.S. federal income tax purposes,
"effectively connected" gains that it recognizes may also, under certain
                                        48
<PAGE>

circumstances, be subject to an additional "branch profits tax" at a 30% rate or
at a lower rate if the Preferred Shareholder is eligible for the benefits of an
income tax treaty that provides for a lower rate.

Backup Withholding and Information Reporting

     In general, backup withholding and information reporting requirements may
apply unless, if a Preferred Shareholder becomes a holder of International A
Shares pursuant to the PS Consolidation and such Preferred Shareholder is not a
U.S. person for U.S. federal income tax purposes, such Preferred Shareholder
satisfies certain documentary requirements establishing his or her non-U.S.
status or he or she otherwise establishes an exemption.

     A holder generally may obtain a refund of any amounts withheld under the
backup withholding rules that exceed his or her income tax liability by filing a
refund claim with the United States Internal Revenue Service.

Federal Estate Taxes

     International A Shares held by a holder that is not a U.S. person for U.S.
federal tax purposes at the time of death will be included in the holder's gross
estate for U.S. federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.

                                RIGHT OF DISSENT

     Under Section 190 of the CBCA: (a) a registered holder of Common Shares may
dissent in respect of the CS Consolidation Resolution to approve the CS
Consolidation; and (b) a registered holder of Series II Preference Shares may
dissent in respect of the CS Consolidation Resolution and the PS Consolidation
Resolution to approve the CS Consolidation and the PS Consolidation,
respectively. If the CS Consolidation and the PS Consolidation (or either one of
them) are completed, Dissenting Shareholders who strictly comply with procedures
set forth in the CBCA will be entitled to be paid the fair value of their
Shares. This right of dissent is summarized in Appendix D to this Circular and
Section 190 of the CBCA is set forth in Appendix E to this Circular. IT IS
RECOMMENDED THAT A SHAREHOLDER WISHING TO EXERCISE A RIGHT OF DISSENT SEEK LEGAL
ADVICE, AS FAILURE TO COMPLY STRICTLY WITH THE REQUIREMENTS SET FORTH IN SECTION
190 OF THE CBCA MAY RESULT IN THE LOSS OR UNAVAILABILITY OF ANY RIGHT TO
DISSENT.

               EXPENSES OF THE CONSOLIDATION AND SOURCE OF FUNDS

     Subject to the agreement of RCL to reimburse the Corporation for all
reasonable fees and expenses incurred by the Corporation in connection with the
Enabling Transactions and the Consolidation noted below, the Corporation will
pay all costs and expenses relating to the Enabling Transactions and the
Consolidation, including legal, accounting, filing and printing costs, the costs
associated with obtaining the Valuation and the Updated Valuation and the costs
incurred in connection with the preparation of the Circular. The amount of such
costs is expected to be approximately $5.5 million, which includes $1 million in
payment to GMP in respect of providing the Valuation. Assuming that no further
Common Shares are submitted for retraction other than the 395,665 Common Shares
submitted for retraction as of March 4, 2005 and such Common Shares are
processed following receipt of the Common Share Approvals for an aggregate price
of approximately $3.56 million, the Common Share Consideration paid following
the completion of the CS Consolidation, the aggregate Initial Payment of which
is expected to total approximately $54.6 million, will be funded by internal
cash flows of the Corporation and/or from funds obtained pursuant to the
issuance of additional Senior Secured Notes in connection with the Debt
Commitments.

     RCL has entered into arrangements with the Corporation that provide that if
the requisite approvals of the Common Shareholders are not obtained for any
reason by March 31, 2005, RCL will reimburse the Corporation for all of the
reasonable fees and expenses incurred by the Corporation in connection with the
Enabling Transactions and the proposed Consolidation, including the fees and
expenses of GMP in respect of providing the Valuation, the Independent Valuator
in respect of the Updated Valuation, legal counsel for GMP and legal counsel for
the Independent Privatization Committee. In connection with the foregoing, RCL
provided the Corporation with security in the form of a general security
agreement.

                INTEREST OF CERTAIN PERSONS IN THE CONSOLIDATION

     RCL holds, directly or indirectly, 27,363,170 Common Shares, representing
approximately 78.3% of all issued and outstanding Common Shares and 66,963
Series II Preference Shares, representing approximately 3.9% of all issued and
outstanding Series II Preference Shares. Pursuant to the Consolidation, the
Corporation will become a wholly-

                                        49
<PAGE>

owned, direct and indirect, subsidiary of RCL. None of the current members of
the Board holds or exercises control or direction over, directly or indirectly,
any Common Shares or Series II Preference Shares other than Peter G. White, who
is an indirect shareholder of RCL and a director and officer of RCL. In view of
the foregoing, Peter G. White declared his indirect interest in connection with
the approval by the Board of Directors of the Consolidation and related matters.

               EFFECT OF THE CONSOLIDATION ON MARKETS AND LISTING

     In the event that either or both of the CS Consolidation Resolution and the
PS Consolidation Resolution are passed, it is intended that, on or shortly after
the Effective Date, the Common Shares and the Series II Preference Shares, as
the case may be, will be delisted from the TSX. In the event that the requisite
approval of the Preferred Shareholders is not obtained in respect of the PS
Consolidation Resolution, the Series II Preference Shares may remain listed on
the TSX, subject to the applicable TSX listing requirements being met. Following
the Consolidation, it is intended that an application will be made to the OSC
and to the securities regulatory authorities in other provinces and territories
of Canada where the Corporation is a reporting issuer (or its equivalent) for an
order deeming the Corporation to no longer be a reporting issuer (or its
equivalent) for purposes of applicable Canadian securities legislation. Upon
such order being issued, the Corporation would no longer be subject to the
ongoing disclosure and other obligations currently imposed in Canada upon the
Corporation as a reporting issuer. In the event that the requisite approval of
the Preferred Shareholders is not obtained in respect of the PS Consolidation
Resolution, there can be no assurance that such order would be issued.

                     INFORMATION REGARDING THE CORPORATION

GENERAL

     The Corporation is the continuing company, under the CBCA, resulting from
the 1985 amalgamation of Argcen Holdings Inc., Hollinger Argus Limited
(incorporated June 28, 1910) and Labmin Resources Limited. The registered office
of the Corporation is 10 Toronto Street, Toronto, Ontario M5C 2B7. The
Corporation is a "mutual fund corporation" under the Tax Act.

     The Corporation's principal asset is its interest in International, which
is a newspaper publisher, the assets of which include the Chicago Sun-Times, a
large number of community newspapers in the Chicago area and a portfolio of news
media investments, and a portfolio of revenue-producing and other commercial
real estate in Canada, including its head office building located at 10 Toronto
Street, Toronto, Ontario. As of March 4, 2005, the Corporation owned, directly
or indirectly, 782,923 International A Shares and 14,990,000 International B
Shares, being approximately 17.4% of the equity and 66.8% of the voting interest
in International.

CAPITAL STRUCTURE

     The authorized capital of the Corporation consists of an unlimited number
of preference shares, issuable in series, an unlimited number of Common Shares,
an unlimited number of exchangeable non-voting preference shares Series I, an
unlimited number of Series II Preference Shares and an unlimited number of
Series III Preference Shares. As of March 4, 2005, 34,945,776 Common Shares and
1,701,995 Series II Preference Shares were issued and outstanding. Each of the
Shares is retractable at the option of the holder. See "Information Regarding
the Consolidation and Going Private Transaction -- Retractions Status of Common
Shares". The outstanding Common Shares and Series II Preference Shares are
listed on the TSX under the symbols "HLG.C" and "HLG.PR.B", respectively.

SENIOR SECURED NOTES

     The Corporation has outstanding US$93.0 million aggregate principal amount
of Senior Secured Notes. The Senior Secured Notes are guaranteed by RMI, a
wholly-owned subsidiary of RCL, and by an indirect wholly-owned subsidiary of
the Corporation. The Senior Secured Notes are secured by, among other things, a
first priority lien on 14,990,000 International B Shares owned, directly or
indirectly, by the Corporation. Under the terms of the Senior Secured Notes, the
Corporation is subject to certain financial covenants and other restrictions.

     As part of the terms of the Senior Secured Notes, the Corporation was
required to cause an exchange offer registration statement to be declared
effective with the SEC under the U.S. Securities Act by November 4, 2003.
Registration of the securities is not being sought at this time. As a result of
this registration default, the annual interest rate on the Senior Secured Notes
increased by 0.5% per year from November 4, 2003. The annual interest rate
increased by an additional 0.5% per year on February 2, 2004, resulting in a
maximum additional interest rate of 1.0%

                                        50
<PAGE>

per year over the 11 7/8% interest rate on the Senior Secured Notes until all
registration defaults are cured. If and when the Corporation cures this
registration default, the interest rate on the Senior Secured Notes will revert
immediately to the original level.

OWNERSHIP OF SECURITIES OF THE CORPORATION

     None of the directors and executive officers of the Corporation, or, to the
knowledge of the Corporation or such directors and executive officers, after
reasonable enquiry, (i) their respective associates, (ii) any person or company
holding more than 10% of any class of equity securities of the Corporation, or
(iii) any person or company acting jointly or in concert with the Corporation or
RCL, beneficially owns, directly or indirectly, or controls or exercises
direction over, any securities of the Corporation, except for RCL, which
beneficially owns, directly or indirectly, or exercises control or direction
over, a total of 27,363,170 Common Shares or approximately 78.3% of the
outstanding Common Shares. Conrad (Lord) Black, a former director and executive
officer of the Corporation, indirectly controls RCL and therefore beneficially
owns, directly or indirectly, or exercises control or direction over,
approximately 78.3% of the outstanding Common Shares. The address of RCL is 10
Toronto Street, Toronto, Ontario M5C 2B7. Peter G. White, a director and
executive officer of the Corporation, is an indirect shareholder, officer and
director of RCL.

MANAGEMENT AND INSIDER CEASE TRADE ORDERS

     On May 18, 2004, as a result of the failure by each of the Corporation and
International in filing financial statements pursuant to the OSA, the OSC issued
temporary cease trade orders that prohibited certain current and former
directors, officers and insiders of each of the Corporation and International
from trading in securities of the Corporation and International, as applicable,
subject to certain exceptions. On June 1, 2004, the OSC issued final cease trade
orders prohibiting certain current and former directors, officers and insiders
of the Corporation (the "HOLLINGER MICTO") and International (the "INTERNATIONAL
MICTO") from trading in securities of the Corporation and International, as
applicable (subject to certain exceptions), until two full business days after
the Corporation's or International's, as applicable, required filings with the
OSC are brought up to date in compliance with Ontario securities law.

     As a result of the terms of the International MICTO, in order to effect the
PS Consolidation and the delivery of the International A Shares owned, directly
or indirectly, by the Corporation to holders of Series II Preference Shares in
connection therewith, the Corporation must obtain from the OSC an order to vary
the International MICTO to permit the trades of International A Shares
contemplated by the PS Consolidation. The completion of the PS Consolidation is
subject to the International MICTO having been varied as at the Effective Time.
Work is in progress in order to obtain the required variation to the
International MICTO.

     Certain holders of the Shares are currently subject to the Hollinger MICTO.
In order to effect the CS Consolidation and/or the PS Consolidation, the
Corporation may be required to obtain from the OSC an order to vary the
Hollinger MICTO. In the event that such variation is required, the Corporation
intends to seek and obtain the appropriate orders by the time of the holding of
the Meeting.

INSPECTION

     Pursuant to the order of Mr. Justice Colin L. Campbell of the Court, Ernst
& Young Inc. (the "INSPECTOR") was appointed as inspector pursuant to subsection
229(1) of the CBCA to conduct an investigation of certain of the affairs of the
Corporation, as requested by Catalyst (the "INSPECTION"). The Inspector is
principally to investigate and report to the Court upon the facts in relation to
any "related party transaction" (as defined in the Court order granting the
Inspection) between the Corporation (including any of its subsidiaries, other
than International or its subsidiaries), and a "related party" for the period
January 1, 1997 to the date of the order. The Inspector is continuing the
Inspection. As of March 4, 2005, the Inspector has provided six interim reports
to the Court with respect to the Inspection. Irrespective of whether the
Consolidation is completed or not, the Inspection will continue until it is
completed in accordance with the order of the Court and a final report of the
Inspector is submitted to the Court.

COMMITMENTS TO ACQUIRE SECURITIES OF THE CORPORATION

     Other than pursuant to the Consolidation and retractions of the Shares
pursuant to the articles of the Corporation, there are no commitments to acquire
equity securities of the Corporation by the Corporation or, to the knowledge of
the Corporation and its directors and executive officers, after reasonable
enquiry, by: (i) any of the directors or executive officers of the Corporation;
(ii) any of the respective associates of the directors and executive officers of
the Corporation; (iii) by any person or company who beneficially owns (directly
or indirectly) more than 10% of any class

                                        51
<PAGE>

of the Corporation's equity securities (including RCL); or (iv) by any person or
company acting jointly or in concert with the Corporation or RCL.

BENEFITS FROM THE CONSOLIDATION

     The Corporation will become a wholly-owned, direct and indirect, subsidiary
of RCL as a result of the Consolidation. See "-- Interest of Certain Persons in
the Consolidation". To the knowledge of the Corporation, after reasonable
enquiry, there are no direct or indirect benefits resulting from the
Consolidation that will accrue to any director or executive officer of the
Corporation, to any of their respective associates, or to any person or company
acting jointly or in concert with the Corporation or RCL.

PRICE RANGE AND TRADING VOLUMES OF THE SHARES

     The outstanding Common Shares and Series II Preference Shares are listed on
the TSX under the symbols "HLG.C" and "HLG.PR.B", respectively. The following
table sets forth the high and low sales prices and aggregate volume of sales of
the Shares traded on the TSX for the periods indicated:

<Table>
<Caption>
                                                            TSX                         TSX
                                                       COMMON SHARES        SERIES II PREFERENCE SHARES
                                                  -----------------------   ----------------------------
                                                  HIGH   LOW     VOLUME      HIGH     LOW       VOLUME
                                                  ----   ----   ---------   ------   ------   ----------
                                                  ($)    ($)                 ($)      ($)
<S>                                               <C>    <C>    <C>         <C>      <C>      <C>
2004
  March.........................................  8.00   6.80   1,620,190   11.25     9.00    3,597,166
  April.........................................  7.40   6.90     192,827   11.55    10.50    1,363,865
  May...........................................  8.00   6.32      93,512   11.77    10.50      214,570
  June..........................................  6.40   5.00      88,191   10.87     9.00       27,968
  July..........................................  6.09   4.25     358,533    9.80     9.00        1,819
  August........................................  5.35   4.80     406,090    9.05     9.00        1,091
  September.....................................  4.95   3.55   1,013,867    9.11     8.75        1,865
  October.......................................  5.95   3.10     299,313    9.00     8.50       12,046
  November......................................  7.00   5.75     326,365    9.01     9.00        1,235
  December......................................  7.18   6.45     191,156   10.00     9.01        3,993
2005
  January.......................................  6.60   5.75     404,201    9.03     9.03        2,997
  February......................................  6.30   5.96     268,599    8.00     8.00          300
  March (to March 4, 2005)......................  6.35   6.01     134,025    8.00     8.00           --
</Table>

     The closing prices of the Common Shares and Series II Preference Shares on
the TSX on October 27, 2004, the last full trading day prior to the date of the
announcement of the Consolidation, were $4.20 and $8.99, respectively.

DIVIDEND POLICY

     Under applicable corporate law, the Corporation is not required to pay any
dividends or redeem any of its Shares in certain circumstances, including if the
Corporation's liquidity would be unduly impaired as a consequence. In addition,
there are restrictions under the Indentures on the Corporation's ability to pay
dividends on its outstanding Shares.

     The following is a summary of the Corporation's dividend record in respect
of the Common Shares for the two years preceding the date of this Circular. On
March 10, 2003, the Corporation paid: (i) a cash dividend of $0.05 per Common
Share; and (ii) a stock dividend of 0.018182 of a Common Share for each Common
Share held as at February 24, 2003. On June 10, 2003, the Corporation paid a
stock dividend of 0.02961 of a Common Share for each Common Share held as at May
27, 2003. On September 10, 2003, the Corporation paid a stock dividend of
0.031915 of a Common Share for each Common Share held as at August 27, 2003.

     The following is a summary of the Corporation's dividend record in respect
of the Series II Preference Shares for the two years preceding the date of this
Circular. Each Series II Preference Share entitles the holder to a dividend
equal to the amount of any dividend on 0.46 of an International A Share (less
any U.S. withholding tax thereon payable by the Corporation or its
subsidiaries). In the first quarter of 2003, the Corporation paid dividends of
$0.033544 per Series II Preference Share; in the second quarter of 2003, the
Corporation paid dividends of $0.031715 per Series II

                                        52
<PAGE>

Preference Share; in the third quarter of 2003, the Corporation paid dividends
of $0.030435 per Series II Preference Share; and in the fourth quarter of 2003,
the Corporation paid dividends of $0.028934 per Series II Preference Share.

     As a result of certain provisions in the articles of the Corporation
relating to the Series II Preference Shares, in order to proceed with the CS
Consolidation, the Board must declare and pay all outstanding accrued dividends
on the Series II Preference Shares (as at March 4, 2005, an aggregate of
approximately US$4.24 million or approximately US$2.49 per Series II Preference
Share) prior to effecting the CS Consolidation. Subject to obtaining the Common
Share Approvals in connection with the CS Consolidation, the Corporation
anticipates that the Board will be in a position to declare and pay all accrued
dividends on the Series II Preference Shares outstanding by the Effective Date.
See "Information Regarding the Consolidation and the Going Private Transaction
-- Anticipated Dividend on the Outstanding Series II Preference Shares".

PREVIOUS PURCHASES, SALES AND DISTRIBUTIONS

     Excluding securities of the Corporation purchased or sold pursuant to the
exercise of employee stock options, warrants and other conversion rights and
entitlements: (A) no securities of the Corporation were purchased or sold by the
Corporation since March 1, 2004 other than: (i) the purchase of an aggregate of
26,703 Common Shares and 22,170,914 Series II Preference Shares in respect of
retractions of such Shares; and (ii) the private placement on April 7, 2004 of
20,096,919 Subscription Receipts at an issue price of $10.50 per Subscription
Receipt (which Subscription Receipts were subsequently exchanged pursuant to
their terms, for no additional consideration, into 20,096,919 Series II
Preference Shares on June 11, 2004); (iii) the mandatory redemption of 9,271,175
Series III Preference Shares on June 11, 2004 at a price of $10.00 for each
Series III Preference Share redeemed, plus accrued and unpaid dividends thereon;
(iv) the redemption of US$42.0 million aggregate principal amount of Senior
Secured Notes on June 11, 2004 at a price (expressed as a percentage of
principal amount) of 111.875%, plus accrued and unpaid interest thereon; and (v)
the private placement on September 30, 2004 of US$15.0 million aggregate
principal amount of Senior Secured Notes; and (B) except as noted in (A)(ii)
above, the only Shares distributed by the Corporation during the five years
preceding the date of this Circular is the issuance of an aggregate of 2,642,932
Common Shares in respect of stock dividends.

     The Corporation may fund a portion of the payment of the Common Share
Consideration following the completion of the CS Consolidation pursuant to the
issuance of up to US$40.0 million of additional Senior Secured Notes pursuant to
the Debt Commitments. See "Expenses of the Consolidation and Source of Funds".

INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

     Except as otherwise disclosed herein, no person who has been an "informed
person" of the Corporation for the purposes of National Instrument 51-102 --
Continuous Disclosure Obligations of the Canadian Securities Administrators at
any time since the beginning of the Corporation's last completed financial year
and, to the knowledge of the directors and executive officers of the
Corporation, after reasonable enquiry, none of their respective associates or
affiliates, has any material interest, direct or indirect, in the Consolidation
or in any other proposed transaction which has materially affected or would
materially affect the Corporation or any of its subsidiaries.

     On March 10, 2003, the Corporation issued US$120.0 million aggregate
principal amount of Senior Secured Notes (currently, there is US$93.0 million
aggregate principal amount of Senior Secured Notes outstanding). On the date of
issue by the Corporation of the Senior Secured Notes, RMI entered into a support
agreement (the "SUPPORT AGREEMENT") with the Corporation under which RMI agreed
to make annual support payments in cash to the Corporation on a periodic basis
by way of contributions to the capital of the Corporation (without receiving any
shares of the Corporation) or subordinated debt. The Corporation, RMI and RCL
also entered into a contribution agreement in this regard. RCL has
unconditionally guaranteed RMI's obligations under the contribution agreement,
with such guarantee supported by a pledge of RCL's shares of RMI. The amount of
the annual support payments is equal to the greater of: (a) the non-consolidated
negative net cash flow of the Corporation (which does not extend to outlays for
retractions and redemptions in respect of the share capital of the Corporation),
and (b) US$14.0 million per year (less any future payments of Services
Agreements fees directly to the Corporation or to any of the Corporation's
wholly-owned restricted subsidiaries, as they are defined in the Indentures, and
any excess in the net dividend amount received on the International A Shares and
International B Shares owned, directly or indirectly, by the Corporation that is
over US$4.65 million per year), in either case, as reduced by any permanent
repayment of debt owing by RCL to the Corporation. The Support Agreement
terminates upon the repayment of the Senior Secured Notes. Amounts the
Corporation calculates to be due to the Corporation pursuant to the Support
Agreement in respect of the period
                                        53
<PAGE>

March 10, 2003 to December 31, 2003 amounted to US$39.6 million, of which
US$14.7 million has been received by the Corporation. As of the date of this
Circular, RMI has acknowledged only that an additional US$4.1 million is payable
for such period (for a total amount payable in 2003 of US$18.8 million). Amounts
the Corporation calculates to be due to the Corporation pursuant to the Support
Agreement in respect of the period January 1, 2004 to December 31, 2004 amounted
to approximately US$43.4 million, of which US$11.3 million has been received by
the Corporation. As of the date of this Circular, RMI has acknowledged only that
an additional US$2.7 million is payable for such period (for a total amount
payable in 2004 of US$14.0 million). The amount received in 2004 was contributed
by RMI to the capital of the Corporation (without receiving any shares of the
Corporation).

     On March 23, 2004, in order to assist the Corporation in complying with the
terms of the Indentures and avoiding the potential acceleration of the Senior
Secured Notes upon the occurrence of an Event of Default under the Indentures,
Domgroup Ltd., a wholly-owned subsidiary of the Corporation, lent to RCL the
principal amount of approximately $4.7 million, evidenced by a demand promissory
note bearing interest at prime plus 4% per annum. As security therefor, RCL
entered into a general security agreement in favour of Domgroup Ltd. All of the
proceeds of the loan were immediately contributed by RCL to RMI as a capital
contribution, without deduction, and RMI immediately paid such proceeds to the
Corporation as a contribution to the capital of the Corporation pursuant to the
terms of the Support Agreement. On June 29, 2004 and August 27, 2004, similar
loans were made by Domgroup Ltd. to RCL in the principal amount of approximately
$4.8 million and $5.2 million, respectively, for the same reason and used by RCL
and RMI in the manner set forth above.

     On April 7, 2004, the Corporation offered and sold 20,096,919 subscription
receipts (the "SUBSCRIPTION RECEIPTS") of the Corporation at a price of $10.50
per Subscription Receipt for gross proceeds of $211.0 million. Each Subscription
Receipt represented the right to receive, without payment of any additional
consideration, one Series II Preference Share upon satisfaction of a number of
escrow release conditions. Pursuant to the offering, all outstanding
Subscription Receipts were to be automatically exercised and the Series II
Preference Shares were to be issued immediately following satisfaction by the
Corporation of each of such escrow release conditions. Pursuant to the Offering
and satisfaction of the escrow release conditions, the Corporation redeemed
US$42.0 million aggregate principal amount of the Senior Secured Notes on June
11, 2004 and redeemed all of the Corporation's previously-outstanding Series III
Preference Shares. As a result of the offering of Subscription Receipts, the
Corporation's interest obligations on the Senior Secured Notes was reduced, the
Corporation's dividend obligations on the previously-outstanding Series III
Preference Shares ceased and there was a decrease in the dividends receivable by
the Corporation on the International A Shares held by it, directly or
indirectly. The net effect of the foregoing was a reduction of the Corporation's
annual non-consolidated negative net cash flow resulting in a reduction of the
amounts payable by RMI pursuant to the Support Agreement (subject to the US$14.0
million minimum annual support payments).

     Pursuant to an Order and Final Judgment of the Delaware Court of Chancery
dated June 28, 2004 (the "DELAWARE ORDER"), the Corporation and Conrad (Lord)
Black, the former Chairman and Chief Executive Officer of the Corporation, were
ordered to jointly pay to International an aggregate of US$16.55 million on
account of non-compete payments received by the Corporation in prior years, plus
interest. On July 16, 2004, the Corporation repaid to International US$5.96
million and the balance of the amount set forth in the Delaware Order of US$15.3
million was paid by Conrad (Lord) Black. The terms of the Corporation's
obligation to make restitution to Conrad (Lord) Black, if any, have not been
resolved. The Corporation has appealed the Delaware Order to the Delaware
Supreme Court.

     Pursuant to the Delaware Order, on July 6, 2004, Conrad (Lord) Black also
repaid to International US$8.75 million on account of non-compete payments
received by him in prior years (inclusive of accrued interest). In 2004, F.
David Radler, former Deputy Chairman, President, Co-Chief Operating Officer and
a director of the Corporation, repaid to International approximately US$9.3
million on account of non-compete payments received by him in prior years
(inclusive of accrued interest). In 2004, Peter Y. Atkinson, former Executive
Vice President of the Corporation, repaid to International approximately US$2.8
million on account of non-compete payments received by him in prior years and
payments under the incentive compensation plan of Hollinger Digital LLC
(inclusive of accrued interest).

     A loan in the principal amount of $1.1 million was made to RCL by Domgroup
Ltd. on June 30, 2004. The loan, together with interest at the prime rate plus
8% per annum, was repaid in full by RCL on September 29, 2004.

     On September 30, 2004, the Corporation received consents from holders of a
majority in aggregate principal amount of the outstanding Senior Secured Notes
approving a number of amendments to the indenture governing the Senior Secured
Notes and the related security agreement. The amendments included a provision
permitting the
                                        54
<PAGE>

Corporation to incur indebtedness in an aggregate amount outstanding not to
exceed US$15.0 million (and to grant a second priority security interest in the
collateral supporting the Senior Secured Notes in connection therewith) through
the issuance of notes substantially similar to the Senior Secured Notes pursuant
to an indenture substantially similar to the existing indenture. The amendments
further permitted the Corporation to direct the trustee of the Senior Secured
Notes to apply up to approximately US$10.5 million, currently being held as cash
collateral under the indenture, to satisfy future interest payment obligations
on the outstanding Senior Secured Notes. On September 30, 2004, the Corporation
also obtained a waiver from holders of a majority in aggregate principal amount
of the outstanding Senior Secured Notes in respect of any and all defaults or
events of default under, and non-compliance with certain covenants of, such
indenture. On such date, the Corporation completed the closing of a private
placement of US$15.0 million in aggregate principal amount of Senior Secured
Notes at 100% of the face amount. The net proceeds from the sale of such Senior
Secured Notes totalled approximately US$13.9 million, after deducting the
expenses of the offering. The new Senior Secured Notes are guaranteed by RMI.

     As a result of the expiry of the Corporation's directors' and officers'
liability insurance on June 30, 2004, the Corporation placed $500,000 in trust
with the law firm of Aird & Berlis LLP, as trustee, in support of the
Corporation's indemnification obligations to director Gordon W. Walker, Q.C. and
former director Richard Rohmer pursuant to a Trust and Contribution Agreement
dated as of June 30, 2004 (the "HOLLINGER INDEPENDENT DIRECTORS' TRUST").
Pursuant to such agreement, the Corporation agreed to deposit additional moneys
to the Hollinger Independent Directors' Trust up to a maximum of $1.5 million as
and when the Corporation reasonably determined that it had such moneys
available. In January, 2005, the Board of Directors determined that the
Corporation was able to deposit an additional $1.5 million to the Hollinger
Independent Directors' Trust. Such amount was delivered to the trustee of the
Hollinger Independent Directors' Trust to be held in trust until such time as a
Court determines that it may be transferred to the Hollinger Independent
Directors' Trust (whereupon it shall be so transferred) or the Board unanimously
agrees that it shall be transferred back to the Corporation (whereupon it shall
be so transferred). On March 7, 2005, at a Board meeting held after the meeting
of the Board at which the directors adopted the report of the Independent
Privatization Committee and agreed to adopt the resolution to call the Meeting
without making a recommendation to Shareholders in respect of the Consolidation,
the directors unanimously agreed that the $1.5 million be transferred to the
Hollinger Independent Directors' Trust. Once transferred to the Hollinger
Independent Directors' Trust, such funds, together with the original $500,000,
will support the Corporation's indemnification obligations to directors Gordon
W. Walker, Q.C., Paul A. Carroll, Q.C., Donald M.J. Vale, Robert J. Metcalfe and
Allan Wakefield and former director Richard Rohmer. At the same meeting, the
Board resolved that the Corporation deposit an additional $6.0 million to the
Hollinger Independent Directors' Trust for the benefit of the same individuals
and that the Corporation establish a similar fund in favour of two financial
executives of the Corporation with a deposit of $500,000.

     As disclosed above, RCL has entered into arrangements with the Corporation
that provide that if the requisite approvals of the Common Shareholders are not
obtained for any reason such that the CS Consolidation does not proceed, RCL
will reimburse the Corporation for all of the reasonable fees and expenses
incurred by the Corporation in connection with the Enabling Transactions and the
proposed Consolidation, including the fees and expenses of GMP in respect of
providing the Valuation, the Independent Valuator in respect of the Updated
Valuation, legal counsel for GMP and legal counsel for the Independent
Privatization Committee. In connection with the foregoing, RCL provided the
Corporation with security in the form of a general security agreement. In
addition, as disclosed above, RCL has agreed to guarantee the payment
obligations of the Corporation in respect of the Adjusted Amount per Share.

     In fiscal 2004, RMI provided management services to International and its
subsidiaries pursuant to the Services Agreements in consideration for fees and
RMI provided management services to the Corporation and its wholly-owned
subsidiaries. See "-- Management Contracts".

     RMI is a wholly-owned subsidiary of RCL and RCL beneficially owns, directly
or indirectly, or exercises control or direction over, approximately 78.3% of
the outstanding Common Shares. Conrad (Lord) Black, a former director and
executive officer of the Corporation, indirectly controls RCL and therefore
beneficially owns, directly or indirectly, or exercises control or direction
over, approximately 78.3% of the outstanding Common Shares. Conrad (Lord) Black,
Peter Y. Atkinson, J.A. Boultbee and F. David Radler, former directors and
executive officers of the Corporation, and Peter G. White, a director and
executive officer of the Corporation, are direct or indirect shareholders in
RCL. Conrad (Lord) Black is a director of International and until January 17,
2004 served as the non-executive Chairman of International and until March 5,
2004 served as Executive Chairman of Telegraph Group Limited. Until April 27,
2004,

                                        55
<PAGE>

Peter Y. Atkinson served as Executive Vice President of International. Each of
Conrad (Lord) Black, J.A. Boultbee and F. David Radler is a director or
executive officer of RCL, RMI and Argus. Barbara Amiel Black, a former director
and executive officer of the Corporation, is a director of Argus and
International and until March 18, 2004 served as Vice President, Editorial of
International. Peter G. White, a director and executive officer of the
Corporation, is also a director and executive officer of RCL, RMI and Argus.
Each of Frederick A. Creasey and Tatiana Samila, officers of the Corporation,
are officers of RCL, RMI and Argus. In addition, from May 26, 2004 to November
25, 2004, Donald M.J. Vale served as a director of Argus. Paul A. Carroll, Q.C.
served as a director of Argus from April 20, 2004 to May 14, 2004 and from May
25, 2004 to November 25, 2004.

EXECUTIVE COMPENSATION

Description of Officers' Remuneration

     For the fiscal years ended December 31, 2002 and 2003, except as provided
in the following sentence, the services of the Corporation's executive officers
were provided by RCL and the Corporation did not provide cash remuneration to
its executive officers as such. As of December 23, 2003, the services of Peter
G. White have been provided to the Corporation and its wholly-owned subsidiaries
pursuant to the White Consulting Agreement. See "-- Management Contracts".

     In fiscal 2004, the services of the following persons who served as
executive officers of the Corporation in 2004 were provided by RCL and the
Corporation did not provide cash remuneration to such persons in such
capacities: Conrad (Lord) Black, former Chairman and Chief Executive Officer;
Barbara Amiel Black, former Vice President, Editorial; J.A. Boultbee, former
Executive Vice President; Frederick A. Creasey, Chief Financial Officer (except
as set forth in the Summary Compensation Table below); F. David Radler, former
Deputy Chairman, President and Co-Chief Operating Officer; and Peter Y.
Atkinson, former Executive Vice President.

Description of Directors' Remuneration

     Each director of the Corporation is entitled to receive an annual
director's fee of $25,000 (other than the directors that the Corporation
determines are "independent", who are entitled to receive an annual directors'
fee of $100,000), payable quarterly, in advance, and a fee of $1,500 for each
board or committee meeting attended. Directors are reimbursed for expenses
incurred in attending the meetings. Members of the Board's committees receive
annual fees of $3,000. The Chairman of any committee of the Board receives an
annual fee of $2,500. Commencing in November, 2004, as a result of substantial
changes in the composition of the Board and management of the Corporation,
having regard to the unusually long hours the directors were devoting to the
Corporation's business and affairs, in lieu of the $1,500 meeting fee, the
directors (other than Peter G. White) receive $500 per hour for each hour
worked, whether or not a formal meeting of the Board or a committee thereof is
held.

     On March 7, 2005, at a Board meeting held after the meeting of the Board at
which the Board adopted the report of the Independent Privatization Committee
and agreed to adopt the resolution to call the Meeting without making a
recommendation to Shareholders in respect of the Consolidation, the directors
approved payments in the amount of $600,000 to each member of the Independent
Committee upon any such person ceasing to be a director of the Corporation for
any reason. Such termination payments are payable to such persons whether or not
the Consolidation is implemented. In addition, Conrad (Lord) Black and companies
he controls, including the Corporation, RCL and RMI and their respective
subsidiaries, have agreed to release the members of the Independent Committee
from any and all claims they may have against such persons in their capacities
as directors of the Corporation.

     Effective February 24, 1999, directors are permitted to elect that up to
100% of the total fees to which they are entitled be paid in the form of
deferred share units under the Hollinger Inc. Directors' Share Unit Plan, as
amended (the "DIRECTORS' SHARE UNIT PLAN"). For a director that elects to
participate, a number of deferred share units equal to the number of Common
Shares that could be purchased on the open market for a dollar amount equal to
the applicable percentage of that director's fee is credited to an account
maintained by the Corporation for that director under the Directors' Share Unit
Plan. Dividend equivalents will be credited to the director's account as if
dividends were paid on each deferred share unit held by the director on the
dividend record date and reinvested in additional deferred share units at the
market price of the Common Shares on the dividend payment date. Deferred share
units are to be paid to the director no later than December 31 of the year
following the calendar year in which the director ceased to serve. Payments are
to be made, at the election of the director, in either cash or Common Shares
purchased on the market, net of withholding tax, based on the market value of
the Common Shares on the date of the payment.
                                        56
<PAGE>

     In January, 2004, an independent committee of the Board of Directors was
constituted to conduct a review of the offers made by Press Holdings
International Limited to purchase all of the issued and outstanding Common
Shares, Series II Preference Shares and Series III Preference Shares and to make
recommendations to the Board of Directors in respect thereof. The members of the
independent committee, Messrs. Rohmer and Walker, received the usual fee of
$1,500 for each meeting of the independent committee attended.

     In October, 2004, the Independent Privatization Committee was constituted
to conduct a review of the proposed Consolidation transaction and to make
recommendations to the Board of Directors in respect thereof. The members of the
Independent Privatization Committee, Messrs. Metcalfe and Wakefield, are
entitled to receive the directors' remuneration referred to above.

SUMMARY COMPENSATION TABLE

     The following table sets forth compensation information for the three
fiscal years ended December 31, 2004, December 31, 2003 and December 31, 2002 in
respect of each of the named executives.

<Table>
<Caption>

---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
                                                            ANNUAL COMPENSATION                    LONG-TERM
                                                                                                  COMPENSATION
                                                 -------------------------------------------     -----------------
                                                                                  OTHER
                                                                                 ANNUAL       SECURITIES UNDER      ALL OTHER
 NAME AND PRINCIPAL POSITION            YEAR      SALARY           BONUS      COMPENSATION    OPTIONS GRANTED (1)  COMPENSATION
                                                    ($)             ($)            ($)             (#)                 ($)
---------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>       <C>              <C>          <C>             <C>                  <C>
 Donald M.J. Vale (2)................   2004        134,216(3)            0               0               0                   0
 President                              2003              0               0               0               0                   0
                                        2002              0               0               0               0                   0
---------------------------------------------------------------------------------------------------------------------------------
 Conrad (Lord) Black (4).............   2004        253,637(5)(6)          0         14,819(8)             0                  0
 Former Chairman of the Board and       2003        860,116(5)(6)          0        229,130(7)       360,000                  0
 Former Chief Executive Officer         2002        900,361(5)(6)          0        237,440(7)       375,000                  0
---------------------------------------------------------------------------------------------------------------------------------
 Frederick A. Creasey................   2004              0          70,000               0               0                   0
 Chief Financial Officer                2003              0               0               0               0                   0
                                        2002              0               0               0               0                   0
---------------------------------------------------------------------------------------------------------------------------------
 Peter G. White......................   2004        990,827(9)            0               0               0                   0
 Vice President,                        2003         19,355(9)            0               0               0                   0
 Operations and Secretary               2002              0               0               0               0                   0
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
</Table>

Notes:

(1)  These amounts relate solely to options to acquire International A Shares
     granted pursuant to International's Stock Option Plans. No options to
     acquire Common Shares pursuant to the Corporation's Executive Share Option
     Plan or options to acquire limited partnership units of Hollinger L.P. were
     granted in 2004, 2003 or 2002.

(2)  Donald M.J. Vale was appointed President of the Corporation in November,
     2004.

(3)  Donald M.J. Vale did not receive any cash remuneration in his capacity as
     an executive officer of the Corporation. From November 18, 2004 to December
     31, 2004, he received an aggregate of $134,216 in directors' remuneration.

(4)  Conrad (Lord) Black resigned as Chairman, Chief Executive Officer and a
     director of the Corporation in November, 2004.

(5)  With the exception of salaries paid by Telegraph Group Limited (which
     salaries were paid in pounds sterling and have been converted into Canadian
     dollars at the average rate per applicable period for the purposes of this
     disclosure) and certain performance incentive bonuses, Conrad (Lord) Black
     received no salary or bonus directly from the Corporation. See "--
     Management Contracts" and "Executive Compensation -- Description of
     Officers' Remuneration". RCL and RMI are associates of Conrad (Lord) Black.

(6)  Including salary from Telegraph Group Limited and directors' fees paid by
     the Corporation, International, Telegraph Group Limited and The Spectator
     (1828) Limited.

(7)  This amount includes a portion of the cost of maintaining his New York
     condominium and an allocation for a portion of the cost of a New York and a
     London automobile and driver, but excludes 128,193 pounds sterling (or
     $293,280) paid or reimbursed by International or a subsidiary thereof in
     respect of business expenses relating to security and other business
     activities at his London residence.

(8)  Conrad (Lord) Black resigned as Chairman and a director of Telegraph Group
     Limited on March 6, 2004 and as a director of The Spectator (1828) Limited
     on March 26, 2004. This amount includes costs associated with a company
     car, private medical and dental insurance and other benefits paid by
     Telegraph Group Limited for the period January 1, 2004 to March 6, 2004.

(9)  Includes amounts paid to Peter G. White Management Ltd., a company
     controlled by Peter G. White, pursuant to the White Consulting Agreement
     and directors' fees paid by the Corporation to Peter G. White.

                                        57
<PAGE>

OPTIONS/STOCK APPRECIATION RIGHTS

     In 1994, the Board of Directors approved an Executive Share Option Plan
(the "OPTION PLAN"). Under the Option Plan, the Corporation issues
non-transferable options ("OPTIONS") to purchase Common Shares to certain
executives of the Corporation and its subsidiaries (including the named
executives). The Option Plan is designed: (i) to provide incentive to executives
of the Corporation and its subsidiaries who are in positions which enable them
to make significant contributions to the longer term objectives of the
Corporation; (ii) to give suitable recognition to the ability and industry of
such executives; and (iii) to attract and retain in the employment of the
Corporation and its subsidiaries persons of ability and industry.

     The Options are to purchase up to a specified maximum number of Common
Shares at a price equal to the exercise price which is the average trading price
on the TSX of the Common Shares for the 10 trading days ending on the third
trading day preceding the date of grant. The Options are exercisable to the
extent of 25% thereof at the end of each of the first through fourth years
following issuance, on a cumulative basis, with the exercise period terminating
six years after the date of grant of the Options. Unexercised Options expire at
the earlier of one month following the date of termination of the employee's
employment or six years after grant.

     No options were granted in 2004 to the named executives pursuant to the
Option Plan, International's Stock Option Plans or Hollinger L.P.'s Unit Option
Plan.

     The following table sets forth details concerning the 2004 financial year
end value of: (a) outstanding Options issued pursuant to the Option Plan; (b)
outstanding options to purchase International A Shares issued pursuant to
International's Stock Option Plans; and (c) outstanding options to purchase
limited partnership units of Hollinger L.P. pursuant to Hollinger L.P.'s Unit
Option Plan.

       AGGREGATED OPTION/SAR EXERCISES DURING THE MOST RECENTLY COMPLETED
            FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION/SAR VALUES

<Table>
<Caption>

---------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
                                                                                                         VALUE OF
                                                                                                        UNEXERCISED
                                                                              UNEXERCISED              IN-THE-MONEY
                                                                              OPTIONS AT                OPTIONS AT
                                SECURITIES            AGGREGATE                 FY-END                    FY-END
                                ACQUIRED                VALUE                   (#) (1)                   ($) (2)
                                ON EXERCISE           REALIZED               EXERCISABLE/              EXERCISABLE/
  NAME AND PRINCIPAL POSITION        (#)                  ($)                UNEXERCISABLE             UNEXERCISABLE
-----------------------------------------------------------------------------------------------------------------------
<S>                             <C>                   <C>                <C>                   <C>                           <C>
  Donald M.J. Vale............         0                    0                     0/0                       0/0
  President                                                                (Hollinger Inc.)
                                       0                    0                     0/0                       0/0
                                                                           (Hollinger L.P.)
                                       0                    0                     0/0                       0/0
                                                                            (International)
---------------------------------------------------------------------------------------------------------------------------------
  Conrad (Lord) Black.........         0                    0                     0/0                       0/0
  Former Chairman of the Board                                             (Hollinger Inc.)
  and Chief Executive Officer          0                    0                  205,000/0                 79,200/0
                                                                           (Hollinger L.P.)
                                       0(3)                 0(3)           1,507,000/557,500     US$6,091,975/US$2,666,225
                                                                            (International)
---------------------------------------------------------------------------------------------------------------------------------
  Frederick A. Creasey........         0                    0                     0/0                       0/0
  Chief Financial Officer                                                  (Hollinger Inc.)
                                       0                    0                     0/0                       0/0
                                                                           (Hollinger L.P.)
                                       0                    0                78,375/36,375         US$292,301/US$174,866
                                                                            (International)
---------------------------------------------------------------------------------------------------------------------------------
  Peter G. White..............         0                    0                     0/0                       0/0
  Vice President, Operations                                               (Hollinger Inc.)
  and Secretary                        0                    0                     0/0                       0/0
                                                                           (Hollinger L.P.)
                                       0                    0                     0/0                       0/0
                                                                            (International)
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
</Table>

                                        58
<PAGE>

Notes:

(1)  These numbers relate to the Options granted pursuant to the Option Plan,
     the options granted pursuant to the International Stock Option Plans and
     the options granted pursuant to Hollinger L.P.'s Unit Option Plan.

(2)  Calculated using the closing price per Common Share on the TSX of $6.61,
     per International A Share on the New York Stock Exchange of US$15.68 and
     per limited partnership unit of Hollinger L.P. on the TSX of $1.07, on
     December 31, 2004, less the exercise price of the applicable options.

(3)  On February 13, 2004 and April 2, 2004, Conrad (Lord) Black attempted to
     exercise options to purchase 1,363,750 International A Shares, consisting
     of 40,000 options expiring 5/2/2004 at US$13.00 per share, 40,000 options
     expiring 10/9/2005 at US$12.40 per share, 65,000 options expiring 8/1/2006
     at US$9.71 per share, 95,000 options expiring 5/1/2007 at US$10.06 per
     share, 150,000 options expiring 2/26/2009 at US$12.25 per share, 245,000
     options expiring 2/12/2009 at US$11.63 per share, 251,250 options expiring
     3/7/2010 at US$10.53 per share, 200,000 options expiring 4/2/2011 at
     US$14.37 per share, 187,500 options expiring 2/5/2012 at US$11.13 per share
     and 90,000 options expiring 2/6/2013 at US$9.45 per share. International
     refused to accept Conrad (Lord) Black's payment for such options and
     refused to deliver the stock certificates therefor, and the transaction is
     now the subject of litigation.

MANAGEMENT CONTRACTS

     In 1998, the management services arrangements between RCL, the Corporation
and the other companies in the Hollinger group were restructured to reflect the
transformation of the Corporation into an open-end investment corporation and
the provision by RCL of management services directly to the Corporation and the
other companies in the Hollinger group.

     The business of the Corporation consists solely of the investment of its
assets in corporations. The majority of the net asset value of the Corporation
is represented by its investment in International, a U.S. public company, the
outstanding shares of which are listed on the New York Stock Exchange.
International and its consolidated group have commanded the substantial portion
of executive services provided by RCL or its wholly-owned subsidiary, RMI, to
the Hollinger group of companies. The independent directors of International
assumed a direct role in the negotiation of fees paid to RCL for management
services provided to International and its wholly-owned subsidiaries under
separate agreements (the "SERVICES AGREEMENTS") entered into between RCL and
International and its subsidiaries. The Services Agreements were transferred, in
July, 2002, from RCL to RMI.

     A new arrangement between the Corporation and RCL (the "HOLLINGER
MANAGEMENT AGREEMENT") became effective as of January 1, 1998 and was generally
consistent in its scope and terms with the management agreement it superseded
except that it governed only the provision of management services to the
Corporation. The Hollinger Management Agreement was terminated as of January 1,
2001. Subsequent to its termination and until December 31, 2003, RCL and RMI
continued to provide to the Corporation similar services to those provided under
the Hollinger Management Agreement under an arrangement in which RCL and RMI
received no compensation for those services. No management fee was paid by the
Corporation and its wholly-owned subsidiaries in 2004 pursuant to the Hollinger
Management Agreement or otherwise.

     10 Toronto Street Inc., an indirect wholly-owned subsidiary of the
Corporation, entered into a consulting agreement (the "WHITE CONSULTING
AGREEMENT") with Peter G. White Management Ltd., a company controlled by Peter
G. White, effective December 23, 2003 which provides that Peter G. White will
render various services to the Corporation and its wholly-owned subsidiaries,
including assisting the Board of Directors in conserving the value of the
Corporation's assets, addressing liquidity issues facing the Corporation and its
wholly-owned subsidiaries, assisting the Board in meeting applicable regulatory
requirements and otherwise performing duties similar to those of a restructuring
officer. The White Consulting Agreement terminates on July 22, 2005, unless
extended by agreement of the parties, and may be terminated earlier, for cause,
upon 30 days prior written notice or, without cause, upon 6 weeks prior written
notice (or payment in lieu) or payment of all fees to the end of the term. For
its services under the White Consulting Agreement, Peter G. White Management
Ltd. receives $75,000 per month.

MANAGEMENT SERVICES

     Pursuant to the Services Agreements and separate services agreements with
Moffat Management Inc. and Black-Amiel Management Inc., RMI and such companies
provided advisory, consultative, procurement and administrative services to
International and its respective subsidiaries including, among other things,
strategic advice, planning and financial services (including advice and
assistance with respect to acquisitions, divestitures or joint venture
arrangements); consulting services regarding risk management and insurance
coverage; and assistance in operational matters. In November 2003, International
notified RMI that the Services Agreements would terminate effective June 1, 2004
in accordance with their terms. At that time, International notified RMI of a
proposed reduction

                                        59
<PAGE>

in the management fees payable pursuant to the Services Agreements during the
period January 1, 2004 to June 1, 2004. The proposed reduction is currently in
dispute by RMI. It is RMI's position that, in fiscal 2004, approximately US$10.8
million was payable in fees to RMI pursuant to the Services Agreements. As a
result of the on-going disputes between Conrad (Lord) Black, RCL, RMI and the
Corporation, on the one hand, and International on the other, International has
not paid approximately US$2.1 million plus approximately $5.7 million in respect
of management fees owing under the Services Agreements to RMI in respect of the
period prior to January 1, 2004. No fees were payable to Moffat Management Inc.
or Black-Amiel Management Inc. pursuant to separate service agreements in 2004.

     RMI is a wholly-owned subsidiary of RCL and RCL beneficially owns, directly
or indirectly, or exercises control or direction over, approximately 78.3% of
the outstanding Common Shares. The relationships of Conrad (Lord) Black, Peter
Y. Atkinson, J.A. Boultbee, Frederick A. Creasey, F. David Radler, Tatiana
Samila and Peter G. White with RCL and RMI are described under "-- Interests of
Informed Persons in Material Transactions". In fiscal 2004, none of such
individuals received salaries directly from the Corporation or International in
their capacities as officers of the Corporation or International, except for
amounts paid to Conrad (Lord) Black by Telegraph Group Limited in the amount of
approximately $118,167 in respect of executive services provided.

     Moffat Management Inc. is controlled by certain direct and indirect
shareholders of RCL. J.A. Boultbee is a director and/or officer of Moffat
Management Inc. Black-Amiel Management Inc. is controlled by Conrad (Lord)
Black. Each of Conrad (Lord) Black, Barbara Amiel Black and J.A. Boultbee is a
director and/or officer of Black-Amiel Management Inc.

     The municipality of residence of such persons is as follows: Conrad (Lord)
Black, London, England; Peter Y. Atkinson, Oakville, Ontario; Barbara Amiel
Black, London, England; J.A. Boultbee, Toronto, Ontario; Frederick A. Creasey,
Oakville, Ontario; F. David Radler, Vancouver, British Columbia; Tatiana Samila,
Toronto, Ontario; and Peter G. White, Banff, Alberta.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

     The following table sets forth information as at December 31, 2004 with
respect to compensation plans of the Corporation under which equity securities
of the Corporation are authorized for issuance:

<Table>
<Caption>

-------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
                        NUMBER OF SECURITIES TO BE                                          NUMBER OF SECURITIES REMAINING
                         ISSUED UPON EXERCISE OF         WEIGHTED-AVERAGE EXERCISE        AVAILABLE FOR FUTURE ISSUANCE UNDER
                           OUTSTANDING OPTIONS,        PRICE OF OUTSTANDING OPTIONS,     EQUITY COMPENSATION PLANS (EXCLUDING
  PLAN CATEGORY (1)        WARRANTS AND RIGHTS            WARRANTS AND RIGHTS ($)         SECURITIES REFLECTED IN THE SECOND
                                                                                                        COLUMN)
-----------------------------------------------------------------------------------------------------------------------
<S>                    <C>                            <C>                               <C>
  Option Plan                      Nil                              N/A                                5,560,000
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
</Table>

Note:

(1)  The only equity compensation plan of the Corporation is the Option Plan
     which has been approved by the shareholders of the Corporation. The Option
     Plan provides that Options in respect of up to 5,560,000 Common Shares,
     less the number of Common Shares which the Board may in the future issue or
     reserve for issuance pursuant to any other share compensation arrangement
     of the Corporation, are available for award under the Option Plan. See "--
     Options/Stock Appreciation Rights".

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

     As of the date of this Circular, none of the executive officers, directors,
employees and former executive officers, directors, employees of the Corporation
or any of its subsidiaries is indebted to the Corporation or any of its
subsidiaries, whether in connection with a purchase of securities or otherwise.
RCL, whose direct and indirect shareholders include current and former executive
officers and/or directors of the Corporation, being Peter Y. Atkinson, Conrad
(Lord) Black, Barbara Amiel Black, J.A. Boultbee, F. David Radler and Peter G.
White, is, as at the date of this Circular, indebted to one of the Corporation's
wholly-owned subsidiaries, Domgroup Ltd., in the aggregate amount of $14.7
million. In addition, RMI, a wholly-owned subsidiary of RCL, is, as at the date
of this Circular, indebted to the Corporation in the aggregate amount of US$56.9
million. See "-- Interests of Informed Persons in Material Transactions".

                                        60
<PAGE>

     In the past, the Corporation made loans to certain directors, executive
officers and executive officers of the Corporation in connection with the
subscription for convertible preference shares pursuant to its now-expired
executive share purchase plan (the "PURCHASE PLAN"). These loans were assumed by
one of the Corporation's wholly-owned subsidiaries, Domgroup Ltd. In 1999, the
Corporation also made loans to companies controlled by certain directors and
executive officers of the Corporation in connection with the initial public
offering of units by Hollinger L.P. The following table sets out certain
information relating to such loans for each individual who is, or at any time
during the fiscal year ended December 31, 2004 was, a director or executive
officer of the Corporation and each associate of any such director or executive
officer:

<Table>
<Caption>

---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
                                                                                     FINANCIALLY
                                                        LARGEST          AMOUNT        ASSISTED                         AMOUNT
                                                         AMOUNT       OUTSTANDING     SECURITIES                       FORGIVEN
                                    INVOLVEMENT       OUTSTANDING        AS AT        PURCHASES                         DURING
                                 OF CORPORATION OR    DURING 2004    MARCH 4, 2005   DURING 2004     SECURITY FOR        2004
  NAME AND PRINCIPAL POSITION    SUBSIDIARY (1)(2)        (C$)            (C$)           (#)       INDEBTEDNESS (3)       ($)
---------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                  <C>             <C>             <C>           <C>                <C>
  Conrad (Lord) Black.........     Domgroup Ltd.       3,453,526           0              0        735,280 Series II       0
  Former Chairman of the Board       as lender                                                     Preference Shares
  and Chief Executive Officer
  of the Corporation
                                    Corporation       194,334 (4)          0              0          50,000 units          0
                                     as lender
---------------------------------------------------------------------------------------------------------------------------------
  F. David Radler.............     Domgroup Ltd.       2,502,309           0              0        577,720 Series II       0
  Former Deputy Chairman,            as lender                                                     Preference Shares
  President and Co-Chief
  Operating
  Officer of the Corporation
                                    Corporation       201,581 (5)          0              0          50,000 units          0
                                     as lender
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
</Table>

Notes:

(1)  The loans made by the Corporation and assigned to Domgroup Ltd. were on a
     non-interest basis prior to the conversion of the preference shares
     subscribed for with the proceeds of the loans. All preference shares
     subscribed for under the Purchase Plan have been converted and, as a
     consequence of tenderings to issuer bids by the Corporation in 1997 and
     1998, Series II Preference Shares resulting from the preference shares
     issued under the Purchase Plan were held in trust by RCL for the benefit of
     the subscribers. From October 1, 1998, the loans made by the Corporation
     and assigned to Domgroup Ltd. bore interest at the prime rate plus  1/2%
     per annum and were secured by a pledge of the Series II Preference Shares
     resulting from the preference shares issued under the Purchase Plan.

(2)  From April 13, 1999, the loans secured by a pledge of the Hollinger L.P.
     units bore interest at the prime rate plus  1/2% per annum.

(3)  The number of Series II Preference Shares and limited partnership units of
     Hollinger L.P. that were pledged as security for the indebtedness.

(4)  The limited partnership units of Hollinger L.P. were beneficially owned by
     Conrad Black Capital Corporation, a company controlled by Conrad (Lord)
     Black.

(5)  The limited partnership units of Hollinger L.P. were beneficially owned by
     F.D. Radler Ltd., a company controlled by F. David Radler.

     On March 4, 2004, the 735,280 and 577,720 Series II Preference Shares
beneficially owned by Conrad (Lord) Black and F. David Radler, respectively, and
pledged as set out in the table above, were sold and a portion of the proceeds
from such sales were applied to repay in full the loans owing to Domgroup Ltd.
and the Corporation. As a result, the limited partnership units of Hollinger
L.P. pledged as security for the indebtedness have been released.

ARRANGEMENTS BETWEEN THE CORPORATION AND SECURITYHOLDERS

     There are no contracts, arrangements or understandings, formal or informal,
made or proposed to be made between the Corporation and: (i) any securityholder
of the Corporation with respect to the Consolidation; or (ii) any person or
company with respect to any securities of the Corporation in relation to the
Consolidation.

ARRANGEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS

     There are no arrangements or agreements made or proposed to be made between
the Corporation and any of the directors or executive officers of the
Corporation pursuant to which a payment or other benefit is to be paid or given
by way of compensation for loss of office or as to their remaining in or
retiring from office, except as described under the heading "-- Executive
Compensation -- Description of Directors' Remuneration".

     Pursuant to the provisions of the by-laws of the Corporation and the CBCA,
and indemnity agreements with the Corporation, the current and former directors
and officers of the Corporation are indemnified by the Corporation, to the

                                        61
<PAGE>

extent permitted by the CBCA, in respect of all costs and liabilities which each
of them may incur as a result of his or her having acted as a director and/or
officer of the Corporation or any company in which the Corporation owns
securities. As a result of the expiry of the Corporation's directors' and
officers' liability insurance, the Corporation has placed funds, and intends to
place additional funds, in trust with the law firm of Aird & Berlis LLP, as
trustee, in support of the Corporation's indemnification obligations to certain
current and former directors. See "-- Interests of Informed Persons in Material
Transactions".

     Peter G. White, a director and executive officer of the Corporation, also
provides various services to the Corporation and its wholly-owned subsidiaries
through Peter G. White Management Ltd., a company controlled by Peter G. White,
pursuant to the White Consulting Agreement. The White Consulting Agreement
provides that the agreement terminates on July 22, 2005, unless extended by
agreement of the parties, and may be terminated earlier, for cause, upon 30 days
prior written notice or, without cause, upon 6 weeks prior written notice (or
payment in lieu) or payment of all fees to the end of the term. See "--
Management Contracts".

COMPOSITION OF THE COMPENSATION COMMITTEE

     Prior to January 27, 2005, the duties of the Compensation Committee were
carried out by the Compensation and Corporate Governance Committee. There were
no directors appointed to the Corporate Governance and Compensation Committee
for the period of November 21, 2003 to April 28, 2004, at which time Richard
Rohmer, Gordon W. Walker, Q.C. and Peter G. White were appointed by the Board of
Directors. A majority of such individuals were not officers, employees or former
officers or employees of the Corporation, any of its subsidiaries or RCL or had
any interest in RCL. On November 24, 2004, the committee was reconstituted and
the current members of the committee were appointed by the Board.

REPORT ON EXECUTIVE COMPENSATION

     The duties and responsibilities of the Compensation Committee include the
review and approval of corporate goals and objectives relevant to Chief
Executive Officer compensation, the Chief Executive Officer's compensation
level, including any long-term incentive component of such compensation,
together with making recommendations to the Board with respect to compensation
with respect to all employees reporting directly to the Chief Executive Officer,
incentive compensation plans and equity-based plans.

     The compensation levels for the executives and other employees of RCL are
the responsibility of RCL and are not determined by the Compensation Committee
or by the Board of Directors, except to the extent that the Corporation
compensates the executives and employees in the form of Options. As described
herein, Conrad (Lord) Black did not receive any compensation from the
Corporation in 2004 in his capacity as Chief Executive Officer. As President,
Donald M.J. Vale receives the same compensation he receives in his capacity as a
director of the Corporation.

     The Compensation Committee approves the granting of Options under the
Option Plan. No Options have been granted under the Option Plan since 1998.

     The foregoing report has been furnished by the current members of the
Compensation Committee: Allan Wakefield, Paul A. Carroll, Q.C. and Gordon W.
Walker, Q.C.

                                        62
<PAGE>

SHAREHOLDER RETURN PERFORMANCE GRAPH

     The chart below compares the yearly percentage change in the cumulative
total shareholder return for $100 invested in Common Shares (assuming all
dividends were reinvested at the market price on the date of payment) against
the cumulative total shareholder return of $100 invested in the S&P/TSX
Composite Index for the five years commencing December 31, 1999 and ending
December 31, 2004.

            COMPARISON OF 5-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
              ON THE COMMON SHARES AND THE S&P/TSX COMPOSITE INDEX

                              (PERFORMANCE CHART)

     On December 30, 2004, the closing price of the outstanding Common Shares on
the TSX was $6.61. On March 4, 2005, the closing price of the outstanding Common
Shares on the TSX was $6.35.

<Table>
<Caption>
--------------------------------------------------------------------------------
DECEMBER 31             1999      2000      2001      2002      2003      2004
--------------------------------------------------------------------------------
<S>                    <C>       <C>       <C>       <C>       <C>       <C>
 Hollinger Inc.        100.00    120.00     92.64     46.74     30.74     61.57
--------------------------------------------------------------------------------
 S&P/TSX Composite
  Index                100.00    107.41     93.91     82.23    104.20    119.29
--------------------------------------------------------------------------------
</Table>

Note:

The cumulative return of the Common Shares is based on the closing prices of the
Common Shares on the TSX on December 31, 1999, 2000, 2001, 2002, 2003 and 2004
or if there was no trading on such date, the closing price on the last trading
day prior to such date.

MATERIAL CHANGES IN THE AFFAIRS OF THE CORPORATION AND OTHER MATERIAL FACTS
CONCERNING THE CORPORATION

     For detailed information concerning the Corporation and its business and
financial affairs, reference is made to the Corporation's annual information
form dated May 16, 2003, its management proxy circular dated May 16, 2003 in
respect of the annual and special meeting of shareholders held on June 25, 2003,
its management proxy circular dated April 28, 2004 in respect of the special
meeting of shareholders held on May 27, 2004, the material change reports dated
May 23, 2003, May 28, 2003, June 12, 2003, November 27, 2003, January 19, 2004,
January 23, 2004, February 6, 2004 , February 17, 2004, March 2, 2004, March 8,
2004, March 24, 2004, April 30, 2004, May 10, 2004, May 19, 2004, June 9, 2004,
July 5, 2004, July 26, 2004, September 7, 2004, October 1, 2004, November 4,
2004, November 19, 2004, December 3, 2004 and January 24, 2005, and the press
releases and other public disclosure documents on the public file with the
securities commissions and other similar regulatory authorities in Canada which
can be accessed via the Internet at www.sedar.com.

                                        63
<PAGE>

                  STATEMENT OF CORPORATE GOVERNANCE PRACTICES

     The Board of Directors considers sound corporate governance structures and
practices to be essential to the effective operation and success of the
Corporation and that these practices should be reviewed regularly to ensure that
they are appropriate. In January, 2005, the Board of Directors unanimously
adopted a set of rigorous governance policies and practices. The policies were
developed by outside counsel at the request of the Independent Committee of the
Board and follow from a thorough review of existing policies and procedures at
the Corporation, best practices among Canadian and U.S. companies and current or
proposed governance requirements and guidelines. A description of the
Corporation's corporate governance practices follows. This Statement of
Corporate Governance Practices has been prepared by the Nominating and Corporate
Governance Committee of the Board of Directors and has been approved by the
Board of Directors.

     In 1995, the TSX passed a by-law containing new disclosure requirements for
listed companies regarding corporate governance. Subsequently, these disclosure
requirements were amended to require that this Statement of Corporate Governance
Practices relate the corporate governance practices of the Board of Directors to
the disclosure requirements set out in Section 473 and the guidelines set out in
Section 474 of the TSX Company Manual (the "TSX GUIDELINES"). The TSX Guidelines
require that the Corporation must provide a complete description of its system
of corporate governance with specific reference to each of the TSX Guidelines
and, where the Corporation's system is different from any of those TSX
Guidelines or where the TSX Guidelines do not apply to the Corporation's system,
an explanation of the differences or their inapplicability. In 2002, the TSX
proposed changes to its corporate governance standards creating additional
guidelines and proposing certain mandatory requirements (the "PROPOSAL"). The
Proposal is currently under review by the Ontario Securities Commission. The
Corporation is required to continue to disclose corporate governance practices
against the current TSX Guidelines.

     The following is a statement of the Corporation's existing corporate
governance practices with specific reference to the existing TSX Guidelines.

1.   The board of directors of every corporation should explicitly assume
     responsibility for the stewardship of the corporation and, as part of the
     overall stewardship responsibility, should assume responsibility for the
     following matters:

     (a)   adoption of a strategic planning process;

       The senior management team formulates strategic proposals and the
       operational plans necessary to achieve their implementation. These
       proposed strategies and related tactics and plans are considered by the
       Board before they are finalized. The final version of the proposals is
       then approved by the Board.

     (b)   the identification of the principal risks of the corporation's
           business and ensuring the implementation of appropriate systems to
           manage these risks;

       The Board through its committees, principally the Audit Committee,
       discharges these responsibilities. The Audit Committee reports to the
       Board in respect of such matters and in so doing seeks Board approval to
       develop and improve processes designed to convey to the Board, on a
       timely basis, information regarding the principal risks of the
       Corporation's business and systems to manage such risks.

     (c)   succession planning, including appointing, training and monitoring
           senior management;

       The Nominating and Corporate Governance Committee has responsibility for
       succession planning, orientation and continuing education.

     (d)   a communications policy for the corporation;

       The Corporation aims to effectively communicate with its shareholders,
       stakeholders, employees and the investing public on a timely basis
       regarding its operations and to accommodate feedback from such parties.
       Shareholder inquiries receive prompt responses from senior management.
       The Corporation conducts a comprehensive investor communications and
       relations program that includes the publication of press releases
       involving the dissemination of material information and all corporate
       disclosure documents. The Nominating and Corporate Governance Committee
       has responsibility for the review and recommendation to the Board of a
       policy for the Corporation's communications with shareholders, the
       investment community, the media, governments and their agencies,
       employees and the general public.

                                        64
<PAGE>

     (e)   the integrity of the corporation's internal control and management
           information systems.

       The Corporation's major subsidiaries observe high standards in respect of
       their internal control and management information systems. To the
       greatest extent possible, the Corporation monitors these subsidiaries
       through its appointees to their boards and management teams and through
       the subsidiaries' monthly financial reports on operations. The Audit
       Committee works with the Corporation's Chief Financial Officer and
       external auditors to assess the need for an internal audit department and
       to monitor and improve the information systems and internal financial
       controls necessary to ensure that material developments are brought to
       the attention of senior management expeditiously and, if appropriate, to
       the attention of the Board.

2.   The board of directors of every corporation should be constituted with a
     majority of individuals who qualify as unrelated directors. An unrelated
     director is a director who is independent of management and is free from
     any interest and any business or other relationship which could, or could
     reasonably be perceived to, materially interfere with the director's
     ability to act with a view to the best interests of the corporation, other
     than interests and relationships arising from shareholding. A related
     director is a director who is not an unrelated director. If the corporation
     has a significant shareholder, in addition to a majority of unrelated
     directors, the board should include a number of directors who do not have
     interests in or relationships with either the corporation or the
     significant shareholder and which fairly reflects the investment in the
     corporation by shareholders other than the significant shareholder. A
     significant shareholder is a shareholder with the ability to exercise a
     majority of the votes for the election of the board of directors.

     Of its six directors, three are currently involved in the management of the
     business and affairs of the Corporation or its affiliates. Three directors
     currently are not part of management and are free from any interest,
     business or familial relationship in or with the Corporation or the
     significant shareholder, that could or could reasonably be perceived to,
     materially interfere with the director's ability to act with a view to the
     best interests of the Corporation. In January, 2005, until such time as the
     Board may otherwise determine, a director shall be considered to be
     "independent" if that director is not a director, officer or shareholder
     (whether directly or indirectly) of RCL, regardless of the participation of
     that director in the management of the Corporation's business and affairs.
     On the basis of this definition, five directors currently are "independent"
     and are free from any interest, business or familial relationship in or
     with the Corporation or the significant shareholder, that could or could
     reasonably be perceived to, materially interfere with the director's
     ability to act with a view to the best interests of the Corporation.
     Consequently, 50% of directors are "unrelated directors" as that term is
     defined in the current TSX Guidelines and independently represent the 22%
     interest held by shareholders other than the significant shareholder. This
     exceeds the recommendation for the proportionate representation of minority
     shareholders established in accordance with the current TSX Guidelines. For
     these reasons, the Corporation believes it has an adequate number of
     unrelated and independent directors to discharge the Board's
     responsibilities.

     The categorization of directors is as follows:

<Table>
<Caption>
    RELATED                            UNRELATED
    -------                            ---------
    <S>                                <C>
    D. M. J. Vale                      P. A. Carroll, Q.C.
    G. W. Walker, Q.C                  R. J. Metcalfe
    P. G. White                        A. Wakefield
</Table>

     For the period November 21, 2003 to January 16, 2004, the board was
comprised entirely of related directors.

3.   The application of the definition of "unrelated director" to the
     circumstances of each individual director should be the responsibility of
     the board which will be required to disclose on an annual basis whether the
     board has a majority of unrelated directors or, in the case of a
     corporation with a significant shareholder, whether the board is
     constituted with the appropriate number of directors which are not related
     to either the corporation or the significant shareholder. Management
     directors are related directors. The board will also be required to
     disclose on an annual basis the analysis of the application of the
     principles supporting this conclusion.

     In determining the qualifications of directors as "unrelated directors",
     the Board takes into account relationships each director may have with the
     Corporation. For example, the Board considers whether a director has a
     business or familial relationship with the Corporation or with the
     Corporation's significant shareholder. In determining the

                                        65
<PAGE>

     composition and characterization of the Board, the Board applied the
     definition of "unrelated director" as it is defined in the current TSX
     Guidelines. Accordingly, three directors were members of management and
     therefore were considered to be related directors under the TSX Guidelines.
     The following directors were unrelated directors: Paul A. Carroll, Q.C.,
     Robert J. Metcalfe and Allan Wakefield.

4.   The board of directors of every corporation should appoint a committee of
     directors composed exclusively of outside, i.e. non-management, directors,
     a majority of whom are unrelated directors, with the responsibility for
     proposing to the full board new nominees to the board and for assessing
     directors on an ongoing basis.

     The Board has appointed a Nominating and Corporate Governance Committee, a
     majority of the members of which are unrelated directors, whose mandate
     includes the nominating and assessment functions.

     As a result of the Board being comprised entirely of inside, related
     directors for the period November 21, 2003 to January 16, 2004, the
     Corporation was not in a position to comply with this TSX Guideline.

5.   Every board of directors should implement a process to be carried out by
     the nominating committee or other appropriate committee for assessing the
     effectiveness of the board as a whole, the committees of the board and the
     contribution of individual directors.

     The assessment of the effectiveness of the Board, committees of the Board
     and the contribution of individual directors is a continuing process
     conducted by the Nominating and Corporate Governance Committee.

6.   Every corporation, as an integral element of the process for appointing new
     directors, should provide an orientation and education program for new
     recruits to the board.

     Each new director is provided with an extensive information package
     containing historical, financial and business information and information
     regarding directors' legal obligations, and is encouraged to discuss any of
     the information with senior management. In addition, prior to the Board's
     assessment of any major proposal, each director is provided with a
     comprehensive memorandum regarding his or her obligations, responsibilities
     and potential liabilities in connection with such proposal.

7.   Every board of directors should examine its size and, with a view to
     determining the impact of the number upon effectiveness, undertake, where
     appropriate, a program to reduce the number of directors to a number which
     facilitates more effective decision-making.

     The Board of directors currently consists of six members and six members
     are expected to be elected by shareholders at the next annual meeting. The
     directors and management believe the Board is of a size which is conducive
     to effective and efficient communication and decision-making. The
     Nominating and Corporate Governance Committee is required, on an annual
     basis, to examine the size and composition of the Board and, if
     appropriate, recommend to the Board a program to establish a Board
     comprised of members who facilitate effective decision-making.

8.   The board of directors should review the adequacy and form of the
     compensation of directors and ensure the compensation realistically
     reflects the responsibilities and risk involved in being an effective
     director.

     This matter is reviewed periodically by the Compensation Committee and,
     where deemed appropriate, in consultation with compensation experts, with
     reference to comparable situations.

9.   Committees of the board of directors should generally be composed of
     outside directors, a majority of whom are unrelated directors, although
     some board committees, such as the executive committee, may include one or
     more inside directors. An inside director is a director who is an officer
     or employee of the corporation or of any of its affiliates.

                                        66
<PAGE>

    Set out below is the composition of the current committees of the Board. The
    right-hand column entitled "Status" represents the Board's characterization
    of each of the members:

<Table>
<Caption>
                           COMMITTEE                              MEMBER              STATUS
                           ---------                              ------              ------
    <S>  <C>                                            <C>                           <C>       <C>   <C>
    1.   Audit Committee..............................  P. A. Carroll, Q.C.           outside    --   unrelated
                                                        R. Metcalfe                   outside    --   unrelated
                                                        A. Wakefield                  outside    --   unrelated
    2.   Nominating and Corporate Governance            P. A. Carroll, Q.C.           outside    --   unrelated
         Committee....................................
                                                        R. Metcalfe                   outside    --   unrelated
                                                        A. Wakefield                  outside    --   unrelated
    3.   Compensation Committee.......................  P. A. Carroll, Q.C.           outside    --   unrelated
                                                        R. Metcalfe
                                                        A. Wakefield
    4.   Retraction Price Committee...................  D. M. J. Vale                 inside     --     related
                                                        P. G. White                   inside     --     related
    5.   Independent Committee........................  P. A. Carroll, Q.C.           outside    --   unrelated
                                                        R. J. Metcalfe                outside    --   unrelated
                                                        D. M. J. Vale                 inside     --     related
                                                        A. Wakefield                  outside    --   unrelated
                                                        G. W. Walker, Q.C.            inside     --     related
    6.   Independent Privatization Committee..........  R. J. Metcalfe                outside    --   unrelated
                                                        A. Wakefield                  outside    --   unrelated
</Table>

     The Independent Committee was constituted by the Board of Directors on
     August 19, 2004. The Committee has been delegated all of the power of the
     Board required in order for the Committee to discharge its responsibilities
     with respect to: litigation, regulatory investigations and proceedings and
     related party transactions.

10. Every board of directors should expressly assume responsibility for, or
    assign to a committee of directors the general responsibility for,
    developing the corporation's approach to governance issues. This committee
    would, amongst other things, be responsible for the corporation's response
    to these governance guidelines.

     The Nominating and Corporate Governance Committee has been given these
     responsibilities and reports to the Board in this area.

11. The board of directors, together with the CEO, should develop position
    descriptions for the board and for the CEO, involving the definition of the
    limits to management's responsibilities. In addition, the board should
    approve or develop the corporate objectives which the CEO is responsible for
    meeting.

     The Board has adopted a Charter of the Board of Directors and position
     descriptions for the Chairman of the Board, the Chief Executive Officer and
     the Chairmen of the Audit Committee, the Compensation Committee, the
     Nominating and Corporate Governance Committee. In addition to those matters
     which must be legally approved by the Board, the Board reviews and approves
     actions proposed by management which are outside the ordinary course of
     business or are "material" to the Corporation's business. These matters
     include dispositions, acquisitions, the recommendations of the Nominating
     and Corporate Governance Committee, the Audit Committee and major capital
     expenditures of the Corporation and its wholly-owned subsidiaries.

12. Every board of directors should have in place appropriate structures and
    procedures to ensure that the board can function independently of
    management. An appropriate structure would be to: (i) appoint a chair of the
    board who is not a member of management with responsibility to ensure the
    board discharges its responsibilities; or (ii) adopt alternate means such as
    assigning this responsibility to a committee of the board or to a director,
    sometimes referred to as the "lead director". Appropriate procedures may
    involve the board meeting on a regular basis without management present or
    may involve expressly assigning the responsibility for administering the
    board's relationship to management to a committee of the board.

     The Nominating and Corporate Governance Committee has been assigned the
     responsibility for administering the Board's relationship to management.
     The Committee monitors the ability of the Board to act independently of
     management, and Board members are encouraged to discuss privately with the
     Chairman or the Chairman of the Nominating and Corporate Governance
     Committee any matter or concern that they would prefer not to raise before
     the full Board.

                                        67
<PAGE>

13. The audit committee of every board of directors should be composed only of
    outside directors. The roles and responsibilities of the audit committee
    should be specifically defined so as to provide appropriate guidance to
    audit committee members as to their duties. The audit committee should have
    direct communication channels with the internal and external auditors to
    discuss and review specific issues as appropriate. The audit committee
    duties should include oversight responsibility for management reporting on
    internal control. While it is management's responsibility to design and
    implement an effective system of internal control, it is the responsibility
    of the audit committee to ensure that management has done so.

     All members of the Audit Committee are non-management directors. The roles
     and responsibilities of the Audit Committee are set forth in a formal
     charter and include, among other things, responsibility for monitoring
     management in connection with, and reviewing:

     -  the integrity of the Corporation's financial statements;

     -  the Corporation's compliance with legal and regulatory requirements

     -  the external auditors' qualifications and independence

     -  the performance of the Corporation's internal audit function and the
        external audits.

     The Audit Committee charter sets out the criteria that should be considered
     in the appointment of Committee members as well as the Committee's roles
     and responsibilities.

     The Audit Committee has direct communication channels with the internal and
     external auditors of the Corporation and has oversight responsibility for
     management reporting on internal control. In carrying out these
     responsibilities, the Audit Committee meets regularly with Zeifman &
     Company, LLP, the Corporation's external auditors.

     As a result of the Board being comprised entirely of inside, related
     directors for the period November 21, 2003 to January 16, 2004, the
     Corporation was not in a position to comply with this TSX Guideline.

14. The board of directors should implement a system which enables an individual
    director to engage an outside adviser at the expense of the corporation in
    appropriate circumstances. The engagement of the outside adviser should be
    subject to the approval of an appropriate committee of the board.

     The directors have access to management and the Corporation's advisers in
     order to assist in their understanding of proposed Board actions and the
     implications of voting for or against such actions. Committees of the Board
     are authorized by the Board from time to time to retain outside advisers at
     the Corporation's expense and each director has the authority to retain
     outside advisors from time to time as appropriate with the approval of the
     Chairman of the Nominating and Corporate Governance Committee.

                                        68
<PAGE>

                    INFORMATION IN RESPECT OF INTERNATIONAL

GENERAL

     International is a United States public company incorporated in the State
of Delaware. International is a reporting issuer or its equivalent under the
applicable securities laws of each of the provinces of Canada. The registered
office of International is 401 North Wabash Avenue, Suite 740, Chicago, Illinois
60611.

     International is a newspaper publisher, the assets of which include the
Chicago Sun-Times, a large number of community newspapers in the Chicago area
and a portfolio of news media investments

CAPITAL STRUCTURE

     The authorized capital of International consists of 250,000,000
International A Shares and 50,000,000 International B Shares. Holders of the
International A Shares vote together with the holders of the International B
Shares as a single class, provided that: (i) the holders of the International A
Shares have one vote for each share; and (ii) the holders of the International B
Shares have ten votes for each share. The outstanding International A Shares are
listed for trading on the New York Stock Exchange under the symbol "HLR". The
outstanding International B Shares are not publicly listed but are convertible
into International A Shares on a one-for-one basis at the option of the holder,
or automatically in certain instances.

MATERIAL CHANGES IN THE AFFAIRS OF INTERNATIONAL AND OTHER MATERIAL FACTS
CONCERNING INTERNATIONAL

     For detailed information concerning International and its business and
financial affairs, reference is made to International's annual information form
filed on January 21, 2005, its management proxy circular dated March 26, 2003 in
respect of the annual meeting of shareholders held on May 22, 2003, the material
change reports dated May 27, 2003, November 27, 2003 and May 14, 2004 and the
press releases and other public disclosure documents on the public file with the
securities commissions and other similar regulatory authorities in Canada which
can be accessed via the Internet at www.sedar.com.

     In addition, International is subject to the informational requirements of
the U.S. Exchange Act and, in accordance therewith, files reports, management
proxy circulars and other information with the SEC. Such reports, management
proxy circulars and other information can be inspected and copied at prescribed
rates at the public reference facilities maintained by the SEC at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and free copies thereof
may be obtained at the SEC's Internet website (www.sec.gov). Copies of such
material can also be obtained by mail, upon payment of the SEC's customary
charges, by writing to the principal office of the SEC at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549.

     The information contained herein concerning International and its
subsidiaries (including disclosure with respect to amounts repaid to
International by former executive officers of the Corporation in 2004) has been
taken from or is based on publicly available documents or records on file with
Canadian securities regulatory authorities and other public sources and has not
been independently verified by the Corporation. The Corporation does not assume
any responsibility for the accuracy, currency or completeness of such
information.

                         INFORMATION IN RESPECT OF RCL

     RCL is a holding company, the principal asset of which is its direct and
indirect interest in the Corporation. As of March 4, 2005, RCL owned, directly
or indirectly, 27,363,170 Common Shares, representing approximately 78.3% of all
issued and outstanding Common Shares, and 66,963 Series II Preference Shares,
representing approximately 3.9% of all issued and outstanding Series II
Preference Shares. Conrad (Lord) Black indirectly controls RCL. The registered
office of RCL is 10 Toronto Street, Toronto, Ontario M5C 2B7.

     The information contained herein concerning RCL and its subsidiaries (other
than the Corporation and its subsidiaries) has been supplied by such companies
or is based on public sources and has not been independently verified by the
Corporation. The Corporation does not assume any responsibility for the
accuracy, currency or completeness of such information.

                                        69
<PAGE>

                             ADDITIONAL INFORMATION

     Additional information relating to the Corporation is available on SEDAR at
www.sedar.com. A copy of the following documents may be obtained, without
charge, upon request to the Secretary of the Corporation at 10 Toronto Street,
Toronto, Ontario M5C 2B7:

     (a)   the latest Annual Information Form of the Corporation together with
           any document, or the pertinent pages of any document, incorporated by
           reference therein;

     (b)   the comparative financial statements of the Corporation for the
           financial year ended December 31, 2002 together with the accompanying
           report of the auditors thereon, the most recently completed interim
           financial statements of the Corporation (being the interim financial
           statements of the Corporation for the nine month period ended
           September 30, 2003) and the related management's discussion and
           analysis therefor;

     (c)   the Alternative Financial Information; and

     (d)   this Circular.

                                 CONSENT OF GMP

To: The Board of Directors of Hollinger Inc.

     We refer to the valuation dated March 6, 2005 which we prepared for the
Independent Privatization Committee of the Board of Directors of Hollinger Inc.
in connection with a proposed transaction which may be a "business combination"
or "going private transaction", and ultimately including the cancellation of:
(a) all of the retractable common shares of Hollinger Inc. held by parties other
than (directly or indirectly) the major shareholder of Hollinger Inc.; and (b)
all of the exchangeable non-voting preference shares Series II of Hollinger
Inc., pursuant to share consolidations. We consent to the filing of the
valuation with the Ontario Securities Commission and the Autorite des marches
financiers (Quebec) and the inclusion of the valuation and a summary thereof in
this document.

                                       (Signed) GMP SECURITIES LTD.
Toronto, Canada
March 6, 2005

                        APPROVAL OF NOTICE AND CIRCULAR

     The contents and the sending of the Notice and this Circular have been
approved by the Board of Directors. A copy of this Circular has been sent to
each director of the Corporation, each Shareholder of the Corporation whose
proxy has been solicited in connection with the Meeting and the auditor of the
Corporation.

DATED at Toronto, Ontario, as of the 4th day of March, 2005.

                                       (Signed) DONALD M.J. VALE
                                           President

                                        70
<PAGE>

                                   APPENDIX A

                          CS CONSOLIDATION RESOLUTION

BE IT RESOLVED, AS A SPECIAL RESOLUTION, THAT:

1.   the articles of Hollinger Inc. (the "CORPORATION") be amended to effect a
     consolidation (the "CS CONSOLIDATION") of the issued and outstanding
     retractable common shares of the Corporation (the "COMMON SHARES") on the
     basis of one post-CS Consolidation common share of the Corporation (a "NEW
     COMMON SHARE") for every 5,766,783 Common Shares, provided however, that:

     (a)   holders of Common Shares on the date (the "EFFECTIVE DATE") that the
           certificate of amendment is issued to give effect to the CS
           Consolidation shall not be entitled to receive certificates
           representing any fractional interests in a New Common Share following
           the CS Consolidation, and such holders shall not be entitled to
           exercise any of the rights of shareholders in respect of any
           fractional interests in a New Common Share other than the right to
           receive a cash payment equal to the aggregate of $7.60 (the "INITIAL
           PAYMENT") and the Additional Amount per Share (as such term is
           defined in the Management Proxy Circular (the "CIRCULAR") of the
           Corporation dated March 4, 2005), if any (the "FINAL PAYMENT", and
           together with the Initial Payment, the "COMMON SHARE CONSIDERATION")
           for each Common Share held immediately prior to such date and which
           would otherwise be changed into a fractional New Common Share. A
           registered holder of Common Shares who becomes entitled, on the CS
           Consolidation becoming effective, to receive, in connection with the
           Initial Payment or the Final Payment, an amount that includes a
           fraction of $0.01 will be paid an amount rounded to the nearest
           $0.01, the amount $0.005 being rounded upwards. The Initial Payment
           shall be made without interest as soon as practicable after the
           Effective Date upon presentation and surrender to the Corporation or
           the depositary designated by the Corporation (the "DEPOSITARY") of
           the requisite documents and instruments. The Final Payment, if any,
           shall be made without interest as soon as practicable after the
           Updated Valuation Delivery Date (as such term is defined in the
           Circular);

     (b)   the Corporation shall have the right at any time to deposit the
           Common Share Consideration for Common Shares registered in the names
           of shareholders (including without limitation, shareholders who have
           dissented (the "DISSENTING SHAREHOLDERS") in accordance with Section
           190 of the Canada Business Corporations Act (the "CBCA")) who have
           not at the date of such deposit presented and surrendered to the
           Corporation or the Depositary certificates representing all of their
           Common Shares which were not changed into one or more full New Common
           Shares, in a special account with a Canadian chartered bank or other
           Canadian trust company or financial institution to be paid without
           interest or to the order of the respective holders of such Common
           Shares (subject to any applicable withholding tax) upon presentation
           and surrender by them to the Corporation or the Depositary of their
           share certificates to be so presented and surrendered, provided that:
           (i) the sending to the Corporation by Dissenting Shareholders of
           certificates representing all of their respective Common Shares
           pursuant to subsection 190(8) of the CBCA shall not constitute the
           presentation and surrender thereof to the Corporation for the
           purposes of this subsection 1(b); and (ii) any interest allowed on
           such deposit shall belong to the Corporation; and

     (c)   any Common Share Consideration in the form of a cheque which has not
           been presented to the Corporation's bankers for payment or that
           otherwise remains unclaimed (including monies held on deposit in a
           special account as provided for in paragraph 1(b) above) for a period
           of six years shall be forfeited to the Corporation;

2.   the articles of the Corporation be amended to effect the PS Consolidation
     (as such term is defined in the Circular) on the terms and conditions set
     out in Appendix B to the Circular, as same may be amended;

3.   notwithstanding the approval of the CS Consolidation and the PS
     Consolidation by the holders of the Common Shares, the directors of the
     Corporation are hereby authorized to revoke this special resolution at any
     time prior to the issue of the certificate of amendment, without further
     approval of the holders of the Common Shares, and to determine not to
     proceed with the CS Consolidation and the PS Consolidation; and

4.   any one director or officer of the Corporation be and is hereby authorized
     and directed, for and on behalf of the Corporation, to execute and deliver
     all such documents and to do all such other acts and things as he or she
     may determine to be necessary or advisable to give effect to this special
     resolution (including, without limitation, the delivery of articles of
     amendment in the prescribed form to the Director appointed under the CBCA),
     the execution of any such document or the doing of any such other act or
     thing being conclusive of such determination.
                                       A-1
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                                   APPENDIX B

                          PS CONSOLIDATION RESOLUTION

BE IT RESOLVED, AS A SPECIAL RESOLUTION, THAT:

1.   the articles of Hollinger Inc. (the "CORPORATION") be amended to effect a
     consolidation (the "PS CONSOLIDATION") of the issued and outstanding
     exchangeable non-voting preference shares Series II of the Corporation (the
     "SERIES II PREFERENCE SHARES") on the basis of one post-PS Consolidation
     exchangeable non-voting preference share Series II of the Corporation (a
     "NEW SERIES II PREFERENCE SHARE") for every 1,701,995 Series II Preference
     Shares, provided however, that:

     (a)   holders of Series II Preference Shares on the date (the "EFFECTIVE
           DATE") that the certificate of amendment is issued to give effect to
           the PS Consolidation shall not be entitled to receive certificates
           representing any fractional interests in a New Series II Preference
           Share following the PS Consolidation, and such holders shall not be
           entitled to exercise any of the rights of shareholders in respect of
           any fractional interests in a New Series II Preference Share other
           than the right to receive 0.46 of a share of Class A Common Stock of
           Hollinger International Inc. (an "INTERNATIONAL A SHARE") owned,
           directly or indirectly, by the Corporation for each Series II
           Preference Share held immediately prior to such date and which would
           otherwise be changed into a fractional New Series II Preference
           Share. A registered holder of Series II Preference Shares who becomes
           entitled, on the PS Consolidation becoming effective, to receive a
           fractional interest in an International A Share will receive such
           number of International A Shares rounded to the nearest whole number,
           the number 0.5 being rounded upwards. Such consideration (the
           "PREFERRED SHARE CONSIDERATION") shall be delivered as soon as
           practicable after the Effective Date upon presentation and surrender
           to the Corporation or the depositary designated by the Corporation
           (the "DEPOSITARY") of the requisite documents and instruments;

     (b)   the Corporation shall have the right at any time to deposit the
           Preferred Share Consideration for Series II Preference Shares
           registered in the names of shareholders (including without
           limitation, shareholders who have dissented (the "DISSENTING
           SHAREHOLDERS") in accordance with Section 190 of the Canada Business
           Corporations Act (the "CBCA")) who have not at the date of such
           deposit presented and surrendered to the Corporation or the
           Depositary certificates representing all of their Series II
           Preference Shares which were not changed into one or more full New
           Series II Preference Shares, with a Canadian chartered bank or other
           Canadian trust company or financial institution to be delivered to
           the respective holders of such Series II Preference Shares (subject
           to any applicable withholding tax) upon presentation and surrender by
           them to the Corporation or the Depositary of their share certificates
           to be so presented and surrendered, provided that, the sending to the
           Corporation by Dissenting Shareholders of certificates representing
           all of their respective Series II Preference Shares pursuant to
           subsection 190(8) of the CBCA shall not constitute the presentation
           and surrender thereof to the Corporation for the purposes of this
           subsection 1(b); and

     (c)   any Preferred Share Consideration that remains unclaimed (including
           monies held on deposit in a special account as provided for in
           paragraph 1(b) above) for a period of six years shall be forfeited to
           the Corporation;

2.   notwithstanding the approval of the PS Consolidation by the holders of the
     Series II Preference Shares, the directors of the Corporation are hereby
     authorized to revoke this special resolution at any time prior to the issue
     of the certificate of amendment, without further approval of the holders of
     the Series II Preference Shares, and to determine not to proceed with the
     PS Consolidation; and

3.   any one director or officer of the Corporation be and is hereby authorized
     and directed, for and on behalf of the Corporation, to execute and deliver
     all such documents and to do all such other acts and things as he or she
     may determine to be necessary or advisable to give effect to this special
     resolution (including, without limitation, the delivery of articles of
     amendment in the prescribed form to the Director appointed under the CBCA),
     the execution of any such document or the doing of any such other act or
     thing being conclusive of such determination.

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(GMP LETTERHEAD)

                                   APPENDIX C

                                 GMP VALUATION

March 6, 2005

The Independent Privatization Committee
of the Board of Directors of Hollinger Inc.
10 Toronto Street
Toronto, Ontario
M5C 2B7

Dear Sirs:

     GMP Securities Ltd. ("WE" or "GMP") understands that the Board of Directors
(the "BOARD") of Hollinger Inc. ("HOLLINGER" or the "COMPANY") has constituted a
committee (the "INDEPENDENT PRIVATIZATION COMMITTEE" or the "IPC") to consider,
evaluate and make a recommendation to the Board regarding a proposed going
private transaction with respect to the Company (the "TRANSACTION") to be
effected by way of a consolidation of the issued and outstanding Retractable
Common Shares and the issued and outstanding Series II Preference Shares of the
Company.

     Ontario Securities Commission Rule 61-501 ("RULE 61-501") and Autorite des
marches financiers Policy Q-27 ("POLICY Q-27") require that, in addition to any
other required shareholder approval, in order to complete a business combination
or going private transaction, minority approval as defined therein be obtained.
The above description of the proposed Transaction is only summary in nature. The
specific terms and conditions of the Transaction are to be described in a
management proxy circular dated March 4, 2005 (the "CIRCULAR"), which is to be
mailed to shareholders of the Company in connection with the Transaction.
Defined terms herein have the same meanings as terms used in the Circular.

     Subject to the limitations, assumptions, qualifications and scope
limitations stated herein:

     (a)   GMP estimates, as of March 1, 2005, the fair market value of the
           Retractable Common Shares of Hollinger is in the range of $7.21 to
           $7.57 per share; and

     (b)   GMP is of the view that the value of the Series II Preference Shares
           is equivalent to 0.46 of a share of Class A Common Stock
           ("INTERNATIONAL CLASS A SHARES") of Hollinger International Inc.
           ("INTERNATIONAL"). In this regard, GMP has determined that the
           appropriate approach with respect to the Valuation of the Series II
           Preference Shares is to value it in relation to the retraction right
           to receive International Class A Shares, rather than a range of
           values expressed in dollars.

     References herein to "$" are to Canadian dollars and references to "US$"
are to U.S. dollars.

TRANSACTION SUMMARY

     On October 28, 2004, The Ravelston Corporation Limited ("RCL"), through its
Chairman and Chief Executive Officer, Conrad (Lord) Black, advised the Board in
writing of the proposed Transaction. Following receipt of RCL's written
intention with respect to the proposed Transaction, we understand that the Board
established the Independent Privatization Committee to consider, evaluate and
make a recommendation to the Board concerning the proposed Transaction. The
Independent Privatization Committee was further empowered to, among other
things, consider and advise the Board whether, in their opinion, the proposed
Transaction is in the best interests of the Company, the holders of the
Retractable Common Shares and/or the holders of the Series II Preference Shares.
On November 16, 2004, the Independent Privatization Committee received written
notification from RCL that, in connection with the proposed Transaction, RCL
would support such transaction on the following terms: (i) holders of
Retractable Common Shares (other than RCL and certain of its affiliated
entities) would receive $7.25 in cash for each share held by them; and (ii)
holders of Series II Preference Shares would receive 0.46 of an International
Class A Share for each share held by

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them. On March 6, 2005, RCL advised the Board that it would support the
Transaction on the following revised terms and conditions: (i) holders of
Retractable Common Shares (other than RCL and certain of its affiliated
entities) would receive $7.60 and the Additional Amount per Share (as defined
below), if any, in cash for each share held by them; and (ii) holders of
Retractable Common Shares would receive a contingent cash payment right (a
"CCPR") that would entitle them to participate in their proportionate interest
in the economic benefit of certain potential claims and litigation.

     A special meeting of holders of Retractable Common Shares and Series II
Preference Shares (the "SPECIAL MEETING") is required to consider and if deemed
appropriate, to pass a special resolution approving an amendment to Hollinger's
articles to implement the proposed Transaction. If the Transaction is approved
at the Special Meeting, Hollinger will consolidate its outstanding: (a)
Retractable Common Shares at a ratio which will result in RCL (directly and
indirectly) being the sole holder of Retractable Common Shares; and (b) Series
II Preference Shares at a ratio which will result in no remaining holders of
Series II Preference Shares. No fractional shares will be issued. Those holders
of Retractable Common Shares holding fewer than the set threshold number of
Retractable Common Shares (which will be all holders other than RCL, directly or
indirectly) will be entitled to be paid $7.60 cash for each Retractable Common
Share held at the date on which articles of amendment are filed. Those holders
of Series II Preference Shares holding fewer than the set threshold number of
Series II Preference Shares (which will be all holders of Series II Preference
Shares) will be entitled to 0.46 of an International Class A Share for each
Series II Preference Share held at the date on which articles of amendment are
filed. Hollinger would subsequently de-list its Retractable Common Shares and
Series II Preference Shares from the Toronto Stock Exchange and apply to cease
to be a reporting issuer in Canada.

     Any failure to obtain the approval of the holders of the Series II
Preference Shares for the special resolution in respect of the Series II
Preference Share consolidation at the Special Meeting would not prevent the
consolidation of the Retractable Common Shares from proceeding, if the special
resolution in respect of the consolidation of the Retractable Common Shares is
approved by the Common Shareholders as set out above.

ROLE OF THE BOARD

     Following receipt of RCL's written intention with respect to the
Transaction, the Board established the IPC, to evaluate and make a
recommendation to the Board concerning the Transaction. The IPC was further
empowered to, among other things, consider and advise the Board whether, in
their opinion, the Transaction is in the best interests of Hollinger, the
holders of the Retractable Common Shares and/or the holders of the Series II
Preference Shares.

ENGAGEMENT OF GMP BY THE IPC

     GMP was contacted by the IPC during the week of the 8th of November, 2004
and asked to submit a proposal outlining its credentials and services to be
provided as the financial advisor to the IPC. GMP submitted its proposal on
November 17, 2004 and was formally engaged on November 23, 2004 (the
"ENGAGEMENT") to act as the financial advisor to the IPC. In connection
therewith, GMP was asked to prepare and deliver to the IPC a formal valuation
(the "VALUATION") of Hollinger which complies with the requirements of Rule
61-501 and Policy Q-27 in form sufficient for publication to the shareholders of
the Company providing a value or range of values of (i) the Retractable Common
Shares and (ii) the Series II Preference Shares as well as, if requested, (a)
certain evaluations as to the solvency and liquidity of the Company after
completion of the Transaction and the financing transactions in connection
therewith (the "SOLVENCY EVALUATION") and (b) an opinion (a "FAIRNESS OPINION")
as to the fairness of the Transaction, from a financial point of view, from the
perspective of a shareholder or classes of shareholders of the Company other
than certain specified parties including Conrad (Lord) Black, RCL, Peter White
and David Radler (collectively, the "INTERESTED PARTIES") and any parties
related to them. On or about January 14, 2005, GMP advised the IPC that GMP
would be unable to provide a Fairness Opinion or Solvency Evaluation in light of
the factors described under "Unique and Unusual Circumstances" described below.
In addition, GMP advised the IPC that the Valuation would be subject to
limitations, qualifications, assumptions and scope limitations.

     GMP has had discussions with representatives of the Ontario Securities
Commission (the "OSC") and Investment Dealers Association of Canada regarding
the delivery of the Valuation and the qualifications, assumptions

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(GMP LOGO)

and scope limitations applied herein. While a draft of the Valuation was
submitted to the OSC for comment prior to it being finalized and included in the
Circular, neither the OSC nor the Investment Dealers Association of Canada has
been involved in the preparation of the Valuation other than in connection with
such discussions.

     Under the terms of the letter agreement governing the Engagement, as
amended by a second letter agreement dated February 25, 2005 (collectively, the
"ENGAGEMENT LETTER"), GMP has been paid a work fee of $50,000 per month since
the time of the Engagement and was entitled to be paid $500,000 upon the
delivery to the IPC of the draft Valuation and will be paid an additional
$300,000 upon mailing of the Circular.

     Hollinger has also agreed to reimburse GMP for its reasonable out-of-pocket
expenses incurred in the course of performing the Engagement and to indemnify
GMP against certain liabilities that it may incur in the performance of the
Engagement. In addition, if, after delivery of the Valuation, there are any
meetings with staff at any government commission, regulatory authority, stock
exchange, court or administrative tribunal or applicable agency, or proceedings
or hearings brought before any such body, or if GMP is otherwise required to
respond to any such body, the Company will reimburse GMP for resulting expenses
and shall pay GMP a per diem amount in respect of the individuals involved.

INDEPENDENCE OF GMP

     GMP is not an insider, associate or affiliate of Hollinger, the Interested
Parties or any of their respective affiliates or associates. GMP has neither
provided financial advisory services nor participated in any financings
involving Hollinger, the Interested Parties or any of their respective
affiliates or associates. The fees payable to GMP under the Engagement Letter on
the delivery of the Valuation are not contingent upon the conclusions reached by
GMP in the Valuation or upon the success of the Transaction. There are no
understandings, agreements or commitments between GMP, the Interested Parties or
any of their respective affiliates or associates with respect to any future
business dealings. However, GMP may in the future, in the ordinary course of
business, seek to perform financial advisory or investment banking services for
any one or more of them from time to time.

     GMP acts as a trader and dealer, both as principal and agent, in all major
Canadian financial markets and, as such, may have had or may in the future have
positions in securities of Hollinger and, from time to time, may have executed
or may execute transactions on behalf of Hollinger or on behalf of other clients
for which it receives compensation. As an investment dealer, GMP conducts
research on securities and may, in the ordinary course of business, provide
research reports and investment advice to its clients on investment matters,
including matters involving an investment in Hollinger.

CREDENTIALS OF GMP

     GMP is a Canadian-based investment bank with offices in Toronto, Calgary
and Montreal, Canada and Geneva, Switzerland, which provides research and
corporate finance advice and services, and engages in securities trading and
investment banking. GMP carries on investment banking activities, institutional
and retail securities trading activities. In Canada, GMP is an investment
banking firm with operations in all facets of corporate finance, mergers and
acquisitions, equity sales and trading and investment research. GMP has
participated in a significant number of transactions involving private and
public companies and has experience in preparing valuations. GMP is not in the
business of providing auditing services and is not controlled by a financial
institution.

EFFECTIVE DATE OF THE VALUATION

     GMP is providing the Valuation herein with an effective date of March 1,
2005 (the "EFFECTIVE DATE").

UNIQUE AND UNUSUAL CIRCUMSTANCES

     There are various unique and unusual circumstances surrounding the proposed
Transaction as described elsewhere in the Valuation and including, without
limiting the generality of the foregoing, the following:

1.   Neither Hollinger nor International is in compliance with certain aspects
     of the applicable continuous disclosure requirements of Canadian and U.S.
     securities laws, the non-compliance of which includes the failure to file

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(GMP LOGO)

     certain materials as disclosed in the Circular with respect to Hollinger
     and International. GMP does not know and has not made any independent
     inquiry or investigation as to whether the list of timely disclosure non-
     compliance by Hollinger and/or International in the Circular is complete in
     all respects.

    At this time, it is uncertain as to when Hollinger and International will be
    in a position to become current on their required disclosure.

2.   Hollinger is currently the subject of an Inspection pursuant to an Order of
     the Ontario Superior Court of Justice.

    Pursuant to the order of Mr. Justice Colin L. Campbell of the Ontario
    Superior Court of Justice dated October 13, 2004, Ernst & Young Inc. ("E&Y"
    or the "INSPECTOR") was appointed as inspector pursuant to s. 229(1) of the
    Canada Business Corporations Act (the "CBCA") to conduct an investigation of
    certain of the affairs of Hollinger (the "INSPECTION"). The mandate of the
    Inspector is principally to investigate and report to the Court upon the
    facts in relation to any "related party transaction" (as defined in the
    Court order establishing the Inspection) between Hollinger (including any of
    its subsidiaries, other than International or its subsidiaries) and a
    "related party" for the period from January 1, 1997 to the present. E&Y
    delivered a preliminary report to the Court on November 25, 2004; further
    reports were delivered to the Court on December 2, 2004, December 10, 2004,
    December 22, 2004, January 10, 2005, and January 25, 2005. The Inspector
    continues to work towards completing the Inspection. In its January 25, 2005
    report, E&Y stated that it was its preliminary estimate that the process of
    review of Hollinger's books and records and other information would take not
    less than an additional four months. As a result, a final report has not
    been filed with the Court as at the date of the Valuation and it is not
    anticipated that a final report will be filed before the completion of the
    Transaction.

    IT IS POSSIBLE THAT THE CONCLUSIONS OF THE INSPECTOR WILL PROMPT LITIGATION
    THAT MAY MATERIALLY AFFECT THE VALUE OF THE RETRACTABLE COMMON SHARES AND
    THE SERIES II PREFERENCE SHARES. GMP HAS BEEN INFORMED BY THE IPC THAT THE
    IPC INTENDS TO FORM, UNDER THE LAWS OF ONTARIO, A TRUST (THE "TRUST") IN
    ORDER TO PROVIDE A MECHANISM TO ALLOW THE HOLDERS OF THE RETRACTABLE COMMON
    SHARES AN OPPORTUNITY TO PARTICIPATE IN ANY NET PROCEEDS OF CERTAIN
    LITIGATION RECEIVED SUBSEQUENT TO THE COMPLETION OF THE TRANSACTION, ALL AS
    MORE PARTICULARLY TO BE SET OUT IN THE TRUST AND DOCUMENTATION RELATED
    THERETO.

3.   Hollinger and International are each currently engaged in litigation that
     may materially affect the value of the securities of the Company.

    GMP has made no assessment of the impact of the litigation on Hollinger
    and/or International, their respective cash balances, earnings, net asset
    value, expenses or the ability of either of them or their associates and/or
    affiliates to carry on their respective business other than (i) an estimated
    amount of certain ongoing expenses relating to the Inspection and (ii) the
    estimated cash to be initially used to establish the Trust was considered in
    connection with the cash flow and balance sheet impact.

    The Company has been named as defendant or co-defendant in a number of legal
    actions. The litigation includes those relating to the Inspection and those
    otherwise disclosed in public filings by Hollinger and/or International.

    Due to the uncertainty of outcome and length of time involved in the actual
    and potential litigation, it is beyond GMP's scope to value such litigation
    or otherwise make an assessment of the impact thereof on Hollinger and/or
    International.

4.   Hollinger and/or International may be the subject of future enforcement
     proceedings by regulatory authorities in Canada and/or the U.S.

    GMP understands that the affairs of the Company are presently under
    investigation by the U.S. Securities and Exchange Commission (the "SEC"),
    the OSC and other securities regulatory authorities and may be under
    investigation by other bodies (together, the "REGULATORY AUTHORITIES"). GMP
    understands that, among other things, the appropriateness of certain
    transactions reported in previous financial statements as filed and of the
    financial statements themselves are being questioned. At the date of the
    Valuation, it is unclear what the outcome of the investigation will be and
    if enforcement proceedings will be commenced.

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5.   A Special Committee of International has investigated certain related party
     transactions involving certain former executive officers and certain
     current and former directors of International and/or Hollinger.

    On August 30, 2004, a Special Committee of the board of directors of
    International released a report setting out the scope and results of its
    investigations into certain related party transactions involving certain
    persons, including certain former executive officers and certain current and
    former directors of International and/or Hollinger. At the date of the
    Valuation, it is unclear what, if any, actions will be taken as a result of
    the conclusions released in such report.

6.   GMP has had no access to the operational and executive management of
     International.

    GMP requested the IPC to arrange to provide GMP with access to the
    operational and executive management of International and its subsidiaries
    in order to evaluate and project the future consolidated financial
    performance of International. In the normal course of preparing a Valuation,
    GMP would expect such access since International represents the most
    significant asset held by Hollinger. Access to books, records and management
    of International was not made available to GMP. GMP's inability to receive
    such access to management has made it extremely difficult to accurately
    project the future financial performance of International.

SCOPE OF REVIEW

     In preparing the Valuation, GMP obtained information from public sources,
Hollinger, the IPC and their respective professional advisors. Where considered
appropriate, GMP has reviewed and relied upon (without attempting to verify
independently the completeness or its accuracy), among other things, the
following:

     1.    Record Books of Hollinger pertaining to (i) the March 10, 2003 Senior
           Secured Notes financing transaction, (ii) the September 30, 2004
           consent and waiver solicitation and issuance of US$15M of additional
           Senior Secured Notes, and (iii) the October 28, 2004 consent
           solicitation and contingent issuance of up to US$40M of additional
           Senior Secured Notes.

     2.    Documents relating to the subordinated indebtedness of 504468 N.B.
           Inc. to International in the principal amount of US$20.3M, guaranteed
           by Hollinger, dated March 10, 2003.

     3.    Consent Solicitation Term Sheet with respect to the 11.875% Senior
           Secured Notes due 2011 issued pursuant to an indenture among
           Hollinger, Ravelston Management Inc., as guarantor, 504468 N.B. Inc.,
           as guarantor, Wachovia Trust Company, National Association, as
           trustee, RCL and Sugra Limited, dated March 10, 2003, as amended
           September 30, 2004.

     4.    Summary of Terms and Conditions with respect to two Bridge Loan
           Facilities between (i) Hollinger and 504468 N.B. Inc. and (ii)
           Domgroup Ltd., as borrowers, and an arm's length lender, as lender,
           dated October 27, 2004.

     5.    The unaudited interim report for the quarters ended September 30,
           2003 and September 30, 2003 and the audited annual report for the
           years ended December 31, 2002 and December 31, 2001 for Hollinger.

     6.    The 10-K reports filed with the SEC for the fiscal years ended
           December 31, 2003 and December 31, 2002 for International.

     7.    Board of Director's meeting information binders for the 2 calendar
           years of 2003 and 2004.

     8.    Federal corporate tax return of Hollinger for the year ended December
           31, 2003, with corresponding notices of assessment and reassessment.

     9.    Ontario Ministry of Finance Notice of Assessment with respect to
           Hollinger for the year ended December 31, 2003.

     10.   Corporate tax returns (federal and provincial) of Hollinger for the
           year ended December 31, 2002, with corresponding notice of
           assessment.

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     11.   Escrow and Custodial Agreement dated April 7, 2004 between Hollinger,
           Westwind Partners Inc. and Computershare Trust Company of Canada,
           which provides for certain contractual arrangements pertaining to the
           Series II Preference Shares.

     12.   Domgroup Real Estate list of properties and summary market values;
           Domgroup Real Estate rent roll; and Domgroup Ltd. operating expenses
           from January through August 2004.

     13.   Summary of Capital Cost Allowance for the years ended December 31,
           2002 and 2003 for 2821354 Canada Inc. We have been advised that a
           capital asset continuity schedule is not available. Summary of
           Capital Cost Allowance for the years ended December 31, 2002 and 2003
           for 10 Toronto Street Inc., including a capital asset continuity
           schedule. Summary of Capital Cost Allowance for the years ended
           December 31, 2002 and 2003 for Domgroup Ltd., including a capital
           asset continuity schedule.

     14.   CIBC U.S. Dollar Current Account statement for the period ending
           October 31, 2004. CIBC Business Operating Account (CAD) statement for
           the period ending November 15, 2004. List of cash balances for
           Hollinger and its subsidiaries as of December 6, 2004.

     15.   The Inspector's Reports 1 through 6 including amendments.

     16.   Full corporate organizational chart dated May 15, 2003.

     17.   Formal offer letters from RCL referred to above.

ADDITIONAL ASSUMPTIONS AND LIMITATIONS

     In accordance with the Engagement, GMP has relied upon, and has, except
where noted above under "Unique and Unusual Circumstances", assumed the
completeness, accuracy and fair presentation of, all financial and other
information, data, advice, opinions and representations obtained by it from
public sources or provided by Hollinger (including certain of its officers and
directors), and the IPC and their respective professional advisors, consultants
and representatives. The Valuation is conditional upon such completeness,
accuracy and fair presentation of such information (except where noted herein).
In accordance with the Engagement but subject to its professional judgment, GMP
has not attempted to verify independently the completeness, accuracy, or fair
presentation of the information (except where noted herein). GMP has assumed
that the forecasts, projections and budgets of Hollinger provided to us and used
in our analyses have been reasonably prepared on bases reflecting the best
currently available estimates and judgements of the management of Hollinger as
to matters covered thereby and, in rendering the Valuation, we express no view
as to the reasonableness of such forecasts, projections and budgets or the
assumptions on which they are based.

     CERTAIN ASSUMPTIONS USED BY GMP IN THE PREPARATION OF THE VALUATION ARE, IN
THE PROFESSIONAL JUDGEMENT OF GMP, BASED UPON THE BEST INFORMATION REASONABLY
AVAILABLE TO GMP AT THE TIME OF THE PREPARATION OF THE VALUATION. SUCH
ASSUMPTIONS MAY PROVE TO BE INACCURATE. ACTUAL RESULTS ACHIEVED WITH RESPECT TO
MATTERS BASED UPON SUCH ASSUMPTIONS WILL VARY FROM THOSE USED BY GMP AND SUCH
VARIATIONS MAY BE MATERIAL.

     Material assumptions made by GMP in preparing the Valuation include:

     a)    the completion of the Transaction will not constitute a dissolution,
           liquidation, or winding-up of Hollinger;

     b)    there will be no material tax cost to Hollinger to complete the
           Transaction;

     c)    the consent of the holders of the Senior Secured Notes to the
           completion of the Transaction will be unconditional except as to the
           date by which the Transaction needs to be completed;

     d)    the 0.46 of an International Class A Share to be delivered in
           exchange for each Series II Preference Share is exactly the same as a
           holder of such security would be entitled to upon a retraction of
           such share in accordance with the share attributes of the Series II
           Preference Shares;

     e)    International has and will continue to carry on its business in the
           normal course of a going-concern operation;

     f)    International will be successful in its efforts to reduce/defer taxes
           relating to the gains on the sale of the International's non-U.S.
           operations;

                                       C-6
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     g)    we have relied on the unaudited Market Value Information Consolidated
           Balance Sheet and notes thereto of the Company as at September 30,
           2004 attached hereto as Appendix 1. It is our understanding that
           Zeifman & Company, LLP have performed the procedures under section
           9100 of the CICA Handbook entitled "Reports on the results of
           applying specified auditing procedures to financial information other
           than financial statements", as outlined in Appendix 1; and

     h)    The Dividend Amount (as defined in the articles of the Company
           relating to the attributes of the Series II Preference Shares) is
           zero.

     The Valuation has been rendered on the basis of securities markets,
economic, financial and general business conditions prevailing at the Effective
Date and the conditions and prospects, financial and otherwise, of Hollinger and
its subsidiaries as they are reflected in the information reviewed by GMP. In
its analyses and in preparing the Valuation, GMP made numerous judgements with
respect to industry performance, general business, market and economic
conditions and other matters, many of which are beyond its control or that of
any party involved in the Transaction.

     Senior officers and directors of Hollinger have represented to GMP that
among other things:

     1.    The information provided orally by, or in the presence of, an officer
           or employee of Hollinger or in writing by Hollinger or any of its
           subsidiaries (as such term is defined in the Securities Act (Ontario)
           or their respective agents ("BY HOLLINGER") provided to GMP for the
           purpose of preparing the Valuation was, at the date the financial and
           other information, data, advice, opinions and representations
           (collectively, the "INFORMATION") provided to GMP by Hollinger, and
           was at the Effective Date and is at the date hereof, complete, true
           and correct in all material respects, and did not and does not
           contain any untrue statement of a material fact in respect of
           Hollinger, its subsidiaries or the Transaction necessary to make the
           Information or any statement contained therein not misleading in
           light of the circumstances under which the Information was provided
           or any statement was made.

     2.    All financial material, documentation and other data concerning the
           Transaction, Hollinger and its subsidiaries, including any unaudited
           financial information and any projections or forecasts, provided to
           GMP by Hollinger:

        (a)   were prepared on a basis consistent in all material respects with
              the accounting policies applied in the audited consolidated
              financial statements of Hollinger dated as at December 31, 2002
              and in the unaudited financial statements of Hollinger prepared
              and filed on SEDAR subsequent thereto;

        (b)   reflect the assumptions disclosed therein (which assumptions
              management of Hollinger believes to be reasonable); and

        (c)   do not contain any untrue statement of a material fact or omit to
              state any material fact necessary to make such financial material,
              documentation or data or any statement contained therein not
              misleading in light of the circumstances in which such financial
              material, documentation and data was provided to GMP or any
              statement therein was made.

     3.    Since the dates on which the Information was provided to GMP by
           Hollinger, except as disclosed publicly on SEDAR by Hollinger or
           International ("DISCLOSED PUBLICLY") or as disclosed in writing to
           GMP, there has been no material change, financial or otherwise, in
           the financial condition, assets, liabilities (contingent or
           otherwise), business, operations or prospects of Hollinger or any of
           its subsidiaries and no material change has occurred in the
           Information or any part thereof which would have or which would
           reasonably be expected to have a material effect on the Valuation.

     4.    There are no off-balance sheet assets or liabilities and no
           contingent assets or liabilities, including any which are pending, or
           to the best of their knowledge, information and belief, threatened,
           against Hollinger or any of its subsidiaries or affecting in any way
           the assets, shares or business of Hollinger and its subsidiaries,
           other than as Disclosed Publicly.

                                       C-7
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     5.    Since the dates on which the Information was provided to GMP by
           Hollinger, no material transaction has been entered into by Hollinger
           or any of its subsidiaries other than as Disclosed Publicly.

     6.    The budgets, forecasts, projections and estimates provided to GMP by
           management of Hollinger were prepared using the assumptions
           identified therein which reflected the best available estimates and
           judgments by the management of Hollinger as to the expected results
           of operations and financial condition of Hollinger to which such
           budgets, forecasts, projections and estimates relate and which, in
           the reasonable belief of Hollinger are (or were at the time of
           preparation) reasonable in the circumstances and are not misleading
           in any material respect in light of the assumptions used therefor.

     7.    There are no existing written, independent appraisals or valuations
           of Hollinger or any of its subsidiaries (on a consolidated or
           unconsolidated basis) prepared as of a date within 24 months
           preceding the date hereof and no such valuation or appraisal has been
           commissioned by Hollinger or any of its subsidiaries or is known to
           Hollinger to be in the course of preparation.

     8.    There have been no written offers or negotiations, relating to the
           purchase or sale of all or a material portion of Hollinger's assets,
           made or received within 24 months preceding the date hereof other
           than as Disclosed Publicly or disclosed in writing to GMP by
           Hollinger.

     9.    There have been no communications from regulatory agencies concerning
           non-compliance with laws or regulations which could have a material
           effect on the affairs, operations, business or finances of Hollinger
           other than as has been disclosed in writing to GMP or Disclosed
           Publicly.

     10.   The Circular contains all facts relevant to a shareholder of
           Hollinger being able to make a reasoned judgment in respect of the
           Transaction.

     11.   To the knowledge of such person, the Inspector has not concluded any
           matter or fact which would have a material effect on Hollinger and
           its subsidiaries, taken as a whole or which would make any of the
           foregoing statements false or misleading in any material respect.

     12.   No confidential timely disclosure reports, written or oral, have been
           filed by Hollinger, the Board (or any committee thereof, including
           the IPC) with the applicable securities regulatory authorities in
           Canada or the United States.

     The Valuation is provided as of the Effective Date and GMP disclaims any
undertaking or obligation to advise any person of any change in any fact or
matter affecting the Valuation of which it may become aware after the Effective
Date. Without limiting the foregoing, in the event that there is any material
change in any fact or matter affecting the Valuations after the Effective Date,
GMP reserves the right to change, modify or withdraw the Valuation.

     The Valuation has been prepared and provided for the use of the IPC and for
inclusion in the Circular, and may not be used or relied upon by any other
person without GMP's prior written consent. Subject to the terms of the
Engagement, GMP will execute a consent to the publication of the Valuation in
its entirety in the Circular as necessary.

     GMP has based the Valuation on a variety of factors. Accordingly, GMP
believes that its analysis must be considered as a whole. Selecting portions of
its analyses or the factors considered by GMP without considering all factors
and analyses together, could create a misleading view of the process underlying
the Valuation. The preparation of a Valuation is a complex process and is not
necessarily susceptible to partial analysis or summary description. Any attempt
to do so could lead to undue emphasis on any particular factor or analysis.

NOT A FAIRNESS OPINION OR A SOLVENCY OPINION

     GMP expresses no opinion herein concerning the fairness of the Transaction
to the holders of the issued and outstanding Retractable Common Shares and the
issued and outstanding Series II Preferred Shares and makes no recommendation to
security holders of Hollinger with respect to the Transaction. GMP expresses no
opinion herein concerning the solvency of Hollinger.

                                       C-8
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REPORTING CURRENCY

     Hollinger reports its financial results in Canadian dollars. International
reports its financial results in U.S. dollars.

EQUITY SECURITIES AND PRINCIPAL HOLDERS OF EQUITY SECURITIES

     The authorized capital of the Company consists of an unlimited number of
preference shares, issuable in series, an unlimited number of Retractable Common
Shares, an unlimited number of exchangeable non-voting preference shares Series
I, an unlimited number of Series II Preference Shares and an unlimited number of
non-voting preference shares Series III. The issued capital of the Company
consists solely of the Retractable Common Shares and the Series II Preference
Shares.

     Hollinger has advised GMP that, on March 1, 2005, there were 34,945,776
Retractable Common Shares issued and outstanding and entitled to vote on such
matters coming before the holders of Retractable Common Shares at the Special
Meeting. GMP has been further advised that, to the knowledge of the directors
and executive officers of the Company, as at the Effective Date, no person or
company beneficially owns, directly or indirectly, or exercises control or
direction over, more than 10% of the outstanding Retractable Common Shares
except (i) RCL which beneficially owns, directly or indirectly, or exercises
control or direction over, a total of 27,363,170 Retractable Common Shares or
approximately 78.3% of the outstanding Retractable Common Shares; and (ii)
Conrad (Lord) Black indirectly controls RCL and therefore beneficially owns,
directly or indirectly, or exercises control or direction over, approximately
78.3% of the outstanding Retractable Common Shares.

     Hollinger has advised GMP that, on March 1, 2005, there were 1,701,995
Series II Preference Shares issued and outstanding and entitled to vote on such
matters coming before the holders of Series II Preference Shares at the Special
Meeting. GMP has been further advised that to the knowledge of the directors and
executive officers of the Company, as at the Effective Date, no person or
company beneficially owns, directly or indirectly, or exercises control or
direction over, more than 10% of the outstanding Series II Preference Shares
except Catalyst Fund General Partner I Inc. which beneficially owns, directly or
indirectly, or exercises control or direction over, approximately 1,398,000
Series II Preference Shares or approximately 82.1% of the outstanding Series II
Preference Shares.

SENIOR SECURED NOTES

     The Company has outstanding US$93.0 million aggregate principal amount of
Senior Secured Notes. The Senior Secured Notes are guaranteed by Ravelston
Management Inc., a wholly-owned subsidiary of RCL, and by an indirect
wholly-owned subsidiary of the Company. The Senior Secured Notes are secured by,
among other things, a first priority lien on 14,990,000 shares of Class B Common
Stock of International ("INTERNATIONAL CLASS B SHARES") owned, directly and
indirectly, by the Company. Under the terms of the Senior Secured Notes, the
Company is subject to certain financial covenants and other restrictions.

     As part of the terms of the Senior Secured Notes, the Company was required
to cause an exchange offer registration statement to be declared effective with
the SEC under the U.S. Securities Act of 1933, as amended, by November 4, 2003.
Registration of the securities is not being sought at this time. As a result of
this registration default, the annual interest rate on the Senior Secured Notes
increased by 0.5% per year from November 4, 2003. The annual interest rate
increased by an additional 0.5% per year on February 2, 2004, resulting in a
maximum additional interest rate of 1.0% per year over the 11 7/8% interest rate
on the Senior Secured Notes until all registration defaults are cured. If and
when the Company cures this registration default, the interest rate on the
Senior Secured Notes will revert immediately to the original level.

PRIOR VALUATIONS

     Hollinger has represented to GMP that there have not been any prior
valuations (as defined in Rule 61-501 and Policy Q-27) of Hollinger or its
material assets or its securities in the past 24 month period. GMP has reviewed
the fairness opinions of the financial advisors to the Independent Committee of
the Board continued in the Directors' Circular dated February 9, 2004 issued by
the Board in response to the offers of Press Acquisition Inc.

                                       C-9
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OVERVIEW OF THE COMPANY

     The Company is the continuing corporation under the CBCA, resulting from
the 1985 amalgamation of Argcen Holdings Inc., Hollinger Argus Limited
(incorporated June 28, 1910) and Labmin Resources Limited. The registered office
of the Company is 10 Toronto Street, Toronto, Ontario M5C 2B7. The Company is a
"mutual fund corporation" under the Income Tax Act (Canada).

     The Company's principal asset is its interest in International, which is a
newspaper publisher, the assets of which include the Chicago Sun-Times, a large
number of community newspapers in the Chicago area and a portfolio of news media
investments, and a portfolio of revenue-producing and other commercial real
estate in Canada, including its head office building located at 10 Toronto
Street, Toronto, Ontario. The Company advised GMP that, as of March 1, 2005, it
owned, directly or indirectly, 782,923 International A Shares and 14,990,000
International Class B Shares, being approximately 17.4% of the equity and 66.8%
of the voting interests in International.

     International is a leading publisher of English-language newspapers and
magazines in the United States and Canada. International owns or has interests
in over 200 publications, including daily and non-daily newspapers and
magazines. International's premier asset is the Chicago Sun Times, which has the
second highest daily readership and circulation of any newspaper in the Chicago
Metropolitan and had the eighth highest readership of any metropolitan newspaper
in the United States as reported in the 2003 Scarborough Report. Hollinger also
has cash and a small portfolio of real estate assets held in a subsidiary called
Domgroup Ltd.

     The following are the primary operating divisions of International:

CHICAGO GROUP

     The Chicago Group consists of more than 100 newspapers in the greater
Chicago metropolitan area. The Chicago Group's primary newspaper is the Chicago
Sun-Times, which was founded in 1948 and is one of Chicago's most widely read
newspapers. The Chicago Sun-Times is published in a tabloid format and has the
second highest daily readership and circulation of any newspaper in the
16-county Chicago metropolitan area, attracting approximately 1.6 million
readers daily as reported in the 2003 Scarborough Report. The Chicago Group
pursues a clustering strategy in the greater Chicago metropolitan market,
covering all of Chicago's major suburbs as well as its surrounding high growth
counties. This strategy enables the Chicago Group to offer joint selling
programs to advertisers, thereby expanding advertisers' reach. For the year
ended December 31, 2003, the Chicago Group had revenues of US$450.8 million and
operating income of US$24.5 million.

CANADIAN NEWSPAPER GROUP

     The Canadian Newspaper Group includes the operations of Hollinger Canadian
Publishing Holdings Co. ("HCPH CO.") that has an 87% interest in Hollinger
Canadian Newspapers, Limited Partnership ("HOLLINGER L.P."). HCPH Co. and
Hollinger L.P. own numerous daily and non-daily newspaper properties and
Canadian trade magazines and tabloids for the transportation, construction,
natural resources and manufacturing industries, among others. In addition, the
Canadian Newspaper Group administers the retirement plans, and absorbs the costs
related to post-retirement, post-employment benefit and pension plans of certain
retired employees of HCPH Co. (successor of Southam Inc.). For the year ended
December 31, 2003, the Canadian Newspaper Group had revenues of approximately
US$80.5 million and an operating loss of approximately US$5.0 million.

INVESTMENT AND CORPORATE GROUP

     The Investment and Corporate Group performs administrative and corporate
finance functions for the Company including treasury, accounting, tax planning
and compliance and the development and maintenance of the systems of internal
controls.

                                       C-10
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REVIEW AND FORECAST OF OPERATING RESULTS

HOLLINGER

     Appendix 1 contains a copy of Hollinger's unaudited Market Value
Information Consolidated Balance Sheet as at September 30, 2004. This
Consolidated Balance Sheet has been prepared in accordance with the Company's
traditional accounting policies with the exception that it has been prepared as
though the Company had always accounted for its assets and liabilities at their
market values. The Company's auditors have performed procedures on this
Consolidated Balance Sheet under Section 9100 of the Handbook of the Canadian
Institute of Chartered Accountants -- Reports on the Results of Applying
Specified Auditing Procedures to Financial Information Other Than Financial
Statements.

INTERNATIONAL

     GMP has not had access to the books, records or management of International
and has not had access to an International management forecast of operating
results. In addition, International's most recently published financial results
are for the year ended December 31, 2003. GMP has prepared a forecast of
financial performance for the period 2004F to 2009F. While such forecasts are
subjective, GMP has reinforced its views with third party support for certain
key assumption and performance drivers. While GMP believes that the third party
support for certain key assumptions was useful and the best information
reasonably available to it at this time, the information received was not
specific to the business and affairs of International and its subsidiaries. The
forecast includes estimated expected results for the Chicago Group (2004F to
2009F), the Community Group which contained the Jerusalem Post prior to its sale
on December 15, 2004 (2004F), the Canadian Newspaper Group (2004F to 2009F), and
the Investment and Corporate Group (2004F to 2009F).

     The forecast with notes and assumptions is referenced in the Appendices
hereto as follows:

<Table>
<S>                                                           <C>
1) The Chicago Group........................................  Appendix 2
2) The Community Group......................................  Appendix 3
3) The Canadian Newspaper Group.............................  Appendix 4
4) The Investment and Corporate Group.......................  Appendix 5
5) International Consolidated...............................  Appendix 6
</Table>

DEFINITION OF FAIR MARKET VALUE

     For the purposes of the Valuation, fair market value means the highest
price, expressed in terms of money or money's worth, available in an open and
unrestricted market between informed and prudent parties, each acting as arm's
length, where neither party is under any compulsion to act.

APPROACH TO VALUE OF RETRACTABLE COMMON SHARES

     The Valuation is based on techniques and assumptions that GMP considers
appropriate in the circumstances for the purposes of arriving at a range of
estimates of fair market values of the outstanding Retractable Common Shares.

     Hollinger is a holding company with no operating assets other than a
relatively small portfolio of real estate holdings. GMP believes that a net
asset value ("NAV") approach is appropriate to valuing Hollinger. Hollinger's
primary assets are its holdings of cash and its equity interest in
International. International has operating assets described above; primarily the
newspaper and publishing interests contained in the Chicago Group and the
Canadian Newspaper Group. GMP combines an NAV approach with a Transaction
Premium Approach to determine a summary value of the Retractable Common Shares.

                                       C-11
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NET ASSET VALUE ANALYSIS

     The NAV approach involves ascribing a separate value for each asset and
liability of Hollinger using an appropriate valuation method in each case, and
subtracting the sum of the total liabilities from the sum of the total assets to
determine Hollinger's NAV. The key components of Hollinger's NAV are as follows:

     a)    Holdings of equity interests in International;

     b)    Cash;

     c)    Amounts due to and from related parties;

     d)    Other investments;

     e)    Long-term debt;

     f)    Future income taxes payable;

     g)    Ongoing costs of the inspector;

     h)    Property and Equipment; and

     i)    Deferred financing costs and other assets.

     All other assets and liabilities are valued at estimated value as contained
in the September 30, 2004 unaudited Market Value Information Consolidated
Balance Sheet of the Company.

A)  VALUATION METHODOLOGIES FOR HOLLINGER'S HOLDINGS IN INTERNATIONAL

     In preparing a valuation of the Company's holdings in International, we
gave primary consideration to the following methodologies:

1)  TRADING PRICE

    The recent trading price of the International Class A Shares has been
    affected by the declaration of two Special Dividends and one regular
    dividend relating to the sale by International of its U.K. Newspaper Group
    having occurred on July 30, 2004. These Special Dividends of US$2.50 and
    US$3.00 per share affected the trading price of the International Class A
    Shares on their respective ex-dividend dates of December 29, 2004 and
    February 9, 2005, respectively. On the ex-dividend dates, the trading price
    of the International Class A Shares decreased by the approximate amount of
    the respective Special Dividends. The following chart shows the trading
    price of International shares with and without the Special Dividends
    included.

                                       C-12
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  HOLLINGER INTERNATIONAL INC. TRADING PRICE HISTORY SINCE FEBRUARY 18TH, 2004

(TRADING PRICE GRAPH)

    International Class A Shares traded between US$14.40 and US$10.80 during the
    period February 18, 2004 to February 25, 2005. The 30 day moving average
    trading price for the 30 days up to and including February 25, 2005 was
    US$11.47.

2)  DISCOUNTED CASH FLOW

    The discounted cash flow ("DCF") approach reflects the growth prospects and
    risks inherent in International by taking into account the amount, timing
    and relative certainty of projected unlevered free cash flows to be
    generated by each operating division during a specified period. The DCF
    approach requires that certain assumptions be made regarding, among other
    things, future unlevered free cash flows, discount rates, and terminal
    values at the end of the projection period. GMP selected discount rates by
    calculating the weighted average cost of capital ("WACC") of International
    and then adjusting WACC +/- 50 bps to calculate high and low values of
    International. The WACC was calculated using the capital asset pricing model
    ("CAPM") approach and the expected market cost of debt for International
    operating under an optimal or industry average capital structure. An
    estimate of future growth was subtracted from the WACC to calculate the
    terminal value with reference to GMP's view of International's growth
    prospects beyond the terminal year.

    The DCF analysis involved discounting to a present value GMP's projected
    unlevered free cash flows for the Chicago Group and the Investment and
    Corporate Group. In GMP's view, it is not appropriate to include the
    forecasted negative operating results of the Canadian Group in the DCF as it
    would have resulted in an inappropriate decrease in value. The Canadian
    Group is held in Hollinger L.P. which is listed and traded on the TSX
    Venture Exchange. GMP incorporated the International's approximate 87%
    interest in the market capitalization of Hollinger L.P. as a present value
    component to the DCF.

     Cash Balance

    DCF analysis requires an estimate of the cash balance on the day of
    valuation. Since the most recently disclosed cash balance for International
    is as at September 30, 2004, GMP prepared an estimated forecast cash balance
    of US$464.5 million for International as at March 1, 2005. Please see
    Appendix 7 for a supporting schedule.

                                       C-13
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     Discount Rate

    The projected unlevered after tax free cash flows of International were
    discounted based on the estimated WACC. The WACC was calculated based upon
    International's estimated after tax cost of debt and equity, weighted based
    upon an assumed optimal capital structure. GMP used the CAPM approach to
    determine the appropriate cost of equity. The CAPM approach calculates the
    cost of equity with reference to the risk-free rate of return, the
    volatility of equity prices relative to a benchmark ("BETA") and the equity
    risk premium. GMP reviewed a range of unlevered betas for International and
    comparable companies in the newspaper industry. The analysis showed that the
    calculated beta for International was very similar to the beta of the
    industry calculated using the optimal capital structure. GMP selected the
    calculated beta for International based on this analysis.

    Subject to the foregoing and based on this analysis of industry comparable
    volatility measures, GMP has estimated the cost of equity as 8.7% for
    International to be included in the calculation of the weighted average cost
    of capital. Please see Appendix 8 for the calculation of the estimated cost
    of equity.

    In order to calculate the WACC, the assumed optimal capital structure was
    determined based upon a review of industry comparable debt to market value
    of equity ratios for companies in the newspaper publishing industry. These
    debt to market value of equity ratios were averaged and an industry capital
    structure was inferred. Since International no longer has a material amount
    of debt and does not have a capital structure consistent with industry norms
    as described below, GMP assumed a cost of debt for International based on an
    analysis of industry credit ratings and the yield on corporate bonds of
    credit quality similar to the industry.

    Based upon the foregoing, and taking into account GMP's sensitivity analyses
    on the variables selected above and the assumptions used in the free cash
    flow estimates, GMP determined the appropriate WACC for International's free
    cash flows to be in the range of 8.2% to 7.2%. Please see Appendix 9 for
    GMP's estimate of WACC.

     Residual Value

    GMP developed a terminal enterprise value at the end of the projection
    period using a perpetuity growth rate, whereby the terminal or residual year
    free cash flow is capitalized at the WACC less a growth factor of 2.6% per
    annum determined by reference to expected free cash flow growth beyond the
    projection period. In selecting this growth rate GMP selected growth equal
    to estimated long-run inflation.

     Summary

    Based upon the foregoing, as of the Effective Date, the discounted free cash
    flow value of International is estimated to be between US$11.81 and US$12.84
    per share. Please see Appendix 10 for a supporting schedule.

3)  COMPARABLE COMPANY ANALYSIS

    For the purpose of the comparable company public market trading analysis,
    GMP reviewed the performance of 12 other publicly traded newspaper companies
    in the United States and Canada: Belo Corp., Dow Jones & Co., The EW Scripps
    Company, Gannett, Journal Register Company, Knight-Ridder Inc., Lee
    Enterprises Inc., New York Times Company, The McClatchy Company, Torstar,
    Tribune Company and Washington Post Company. Though some of these companies
    are of different size and operate in different geographic markets than
    International, all are primarily newspaper companies that compete in the
    same industry and are broadly comparable as a group.

                                       C-14
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              HOLLINGER INTERNATIONAL COMPARABLE COMPANY ANALYSIS
                                At March 1, 2005
                      (in millions, except per share data)

<Table>
<Caption>
                                                              MARKET                     EV/EBITDA
    COMPANY                                                     CAP           EV           2005F
    -------                                                 -----------    ---------    -----------
    <S>                                                     <C>            <C>          <C>
    Belo Corp.............................................  US$ 2,800.1    $ 3,718.9        9.1x
    Dow Jones & Co........................................      3,069.6      3,481.5       11.8x
    The EW Scripps Company................................      7,735.0      7,880.5       12.0x
    Gannett...............................................     20,475.1     23,685.0        9.7x
    Journal Register Company..............................        744.6      1,486.7       10.0x
    Knight-Ridder Inc.....................................      5,152.3      6,153.3        8.9x
    Lee Enterprises Inc...................................      2,077.6      2,231.1       11.3x
    New York Times Company................................      5,435.8      6,181.1        9.5x
    The McClatchy Company.................................      3,424.0      3,599.9       10.4x
    Torstar...............................................      1,841.8        2,050        7.4x
    Tribune Company.......................................     13,135.1     14,170.6        8.8x
    Washington Post Company...............................      8,756.4      8,773.8       10.5x
                                                            -----------    ---------       -----
    Average...............................................                                  9.9x
    Hollinger International Inc. (actual).................      1,020.7        564.6        9.9x
</Table>

<Table>
<Caption>
                                                     VALUE      MARKET              EV/EBITDA
    VALUATION                                      PER SHARE      CAP       EV        2005F
    ---------                                      ---------    -------    -----    ---------
    <S>                                            <C>          <C>        <C>      <C>          <C>
    Hollinger International Inc..................   $11.25      1,020.9    564.9      9.9x       High
                                                                                                 ----
    Hollinger International Inc..................   $10.35        939.2    483.1      8.5x        Low
                                                                                                 ----
</Table>

---------------

     Source:  company data, Bloomberg, IBES estimates, GMP Analysis

     (1) Based on an analysis of industry multiples, GMP has selected high and
         low values EV / EBITDA multiples to calculate a value of International.

    Based upon the foregoing, as of the Effective Date, the comparable company
    analysis value of International is estimated to be between US$10.35 and
    US$11.25 per share.

4)  SUMMARY VALUATION OF CLASS A AND CLASS B SHARES OF INTERNATIONAL

    GMP applied weights according to its estimate of the relative importance to
    each valuation method in determining the value of International shares under
    the circumstances.

                                       C-15
<PAGE>

(GMP LOGO)

         HOLLINGER INTERNATIONAL INC. SUMMARY VALUE ESTIMATE PER SHARE
                                At March 1, 2005

VALUATION SUMMARY

<Table>
<Caption>
                                                                   HIGH      LOW
                                                                  ------    ------
                                                                      (in US$)
    <S>                                                           <C>       <C>
    Methodology:
      Discounted cash flow value per share......................  $12.84    $11.81
      Comparable company analysis value per share...............  $11.25    $10.35
    30 day moving average adjusted share price (1)..............  $11.47    $11.47
    Weight (2):
      Discounted cash flow value per share......................    40.0%     40.0%
      Comparable company analysis value per share...............    25.0%     25.0%
      30 day moving average price per share.....................    35.0%     35.0%
                                                                  ------    ------
    Summary estimated value per share:..........................  $11.96    $11.33
                                                                  ======    ======
</Table>

---------------

     (1) Price adjusted by size of dividends declared per share as shown in
         historical price chart.

     (2) Weights are based on GMP estimates of relative importance.

    Based upon and subject to the foregoing, GMP is of the view that, as of the
    Effective Date, the fair market value of the International Class A Shares
    and the International Class B Shares is in the range of US$11.33 to
    US$11.96.

B)  VALUATION OF CASH

     Hollinger has forecast its cash balance at February 28, 2005. GMP has
adjusted that cash balance to reflect the special dividend paid on January 18,
2005 in regards of the Series II Preferred Shares by reducing the cash balance
by the amount of the special dividend net of withholding tax. See Appendix 10
for the Hollinger and subsidiaries consolidated cash balance at March 1, 2005.
Note also that US$98.7M of long-term debt is collateralized partially by $13.2
million of cash in addition to a pledge of 14,990,000 International Class B
Shares. GMP has valued cash balances at full value.

C)  VALUATION OF AMOUNTS DUE TO AND FROM RELATED PARTIES

     GMP has valued Amounts Due To Related Parties and Amounts Due From Related
Parties as defined in Appendix 1 at face value as described in the September 30,
2004 unaudited Market Value Information Consolidated Balance Sheet of the
Company and included under "Review and Forecast of Operating Results" in this
letter.

D)  VALUATION OF OTHER INVESTMENTS

     The Company has several real-estate holdings. Colliers International was
engaged to provide an estimate of value as at February 28, 2005 for the three
largest properties in this portfolio. GMP conducted discussions with management
of the Company and the current property manager in respect of the balance of the
properties to determine an estimate of value. Such aggregate value is presented
in Other Investments in GMP's net asset value calculation of the Company.

     The Company also owns an interest in the Cayman Free Press which is
included in GMP's net asset value calculation at estimated market value and
Hollinger L.P. which is included at the current trading price per unit of $1.06
on the TSX Venture Exchange.

E)   VALUATION OF LONG-TERM DEBT

     GMP has adjusted the value of the liability represented by the Senior
Secured Notes to reflect the increase in US government interest rates on bonds
of similar maturity since the time when the senior notes were issued in March,
2003.

                                       C-16
<PAGE>

(GMP LOGO)

F)   VALUATION OF INCOME TAXES PAYABLE

     The September 30, 2004 unaudited Market Value Information Consolidated
Balance Sheet contained herein includes a $67.7 million future income tax
liability related to the sale of shares of International on a dissolution or
wind-up of the Company. Since GMP's net asset valuation does not contemplate a
wind-up of the Company, GMP has eliminated this liability in its calculation of
NAV.

G)  VALUATION OF THE ONGOING COSTS OF THE INSPECTOR

     The ongoing cost of the Inspector has been estimated at $8.0 million and
has been accrued in accounts payable and accrued expenses in the September 30,
2004 unaudited Market Value Information Consolidated Balance Sheet contained
herein.

H)  VALUATION OF PROPERTY AND EQUIPMENT

     The September 30, 2004 unaudited Market Value Information Consolidated
Balance Sheet contained herein contains land and building values in respect of
real estate held at the corporate level. This amount has been included in the
value of Other Investments in GMP's NAV calculation.

I)   VALUATION OF DEFERRED FINANCING COSTS AND OTHER ASSETS

     Based on discussions with the Company, GMP has determined that Deferred
Financing Costs and other assets includes only accruals related to previous
financing expenses. These amounts are valued at zero in GMP's NAV calculation.

SUMMARY OF NAV ANALYSIS

     Appendix 11 summarizes GMP's analysis of the fair market value of the
Retractable Common Shares at the Effective Date using the NAV method. GMP
estimates the NAV at between $7.72 and $8.06.

TRANSACTION PREMIUM ANALYSIS

     GMP believes an analysis of the transaction premium is also important to
determining a summary value of the Retractable Common Shares. This analysis
examines the trading price pre-announcement of the transaction to the bid price
per share and compares that premium to the market transaction premium for other
privatization transactions.

                  HOLLINGER INC. TRANSACTION PREMIUM VALUATION
                                AT MARCH 1, 2005

<Table>
<S>                                                             <C>
Closing price on October 28, 2004 (1).......................    $4.31
Proposed transaction price..................................     7.25
                                                                -----
Implied transaction premium.................................     68.2%
</Table>

<Table>
<Caption>
                                                              HIGH      LOW
                                                              -----    -----
<S>                                                           <C>      <C>
Closing price on October 28, 2004...........................  $4.31    $4.31
Market transaction premium (2)..............................   41.8%    31.8%
                                                              -----    -----
Implied price per share.....................................   6.11     5.68
</Table>

---------------

(1)  The proposed transaction was announced on October 28, 2004

(2)  GMP measured the transaction premium for 29 going private transactions. The
     average transaction premium was 36.8%.

     GMP estimates the high and low transaction premium by adjusting the average
     market transaction premium +/- 5%.

     The transaction premium analysis estimates the high and low price per share
to be between $5.68 and $6.11.

                                       C-17
<PAGE>

(GMP LOGO)

VALUATION CONCLUSION IN RESPECT OF RETRACTABLE COMMON SHARES

     Subject to the limitations, assumptions, qualifications and scope
limitations stated herein, GMP estimates, as of the Effective Date, the fair
market value of the Retractable Common Shares of Hollinger is in the range of
$7.21 to $7.57 per share.

                HOLLINGER INC. SUMMARY VALUE ESTIMATE PER SHARE
                                At March 1, 2005

VALUATION SUMMARY

<Table>
<Caption>
                                                              HIGH      LOW
                                                              -----    -----
<S>                                                           <C>      <C>
Methodology:
  NAV approach..............................................  $8.06    $7.72
  Takeover transaction premium to market price approach.....  $6.11    $5.68
Weight:
  NAV approach..............................................   75.0%    75.0%
  Takeover transaction premium to market price approach.....   25.0%    25.0%
                                                              -----    -----
Summary estimated value per share:..........................  $7.57    $7.21
                                                              =====    =====
</Table>

     Our approach involves a synthesis of the net asset value ("NAV") based
approach and the transaction premium approach. GMP believes that more emphasis
should be place on the NAV approach because of various factors negatively
influencing the public market trading price of the Company prior to the
announcement of the transaction. These factors are as follows: (i) the lack of
current financial information due to the failure of the Company or International
to file its financial statements in accordance with applicable securities laws
has the effect of artificially lowering the public trading price of shares in
the Company, (ii) the various litigation and contingent assets and liabilities
related to the "Unique and Unusual Circumstances" described above has the effect
of artificially lowering the public trading price of shares in the Company, and
(iii) the relative illiquidity of Hollinger shares at the time of the
announcement of the proposed Transaction. On October 28, 2004, the transaction
announcement date, the 20 day average volume traded for Hollinger was 10,057
shares versus the 20 day average volume traded for International of 296,410 for
International during the same time period.

VALUATION CONCLUSION IN RESPECT OF SERIES II PREFERENCE SHARES

     GMP has determined that the appropriate approach with respect to the
valuation of the Series II Preference Shares is to value it in relation to the
retraction right to receive International Class A Shares, rather than a range of
values expressed in dollars. Accordingly, GMP is of the view that, subject to
the limitations, assumptions, qualifications and scope limitations stated
herein, and based upon the advice by Hollinger that each holder of a Series II
Preference Share is entitled to receive 0.46 of an International Class A Share
on a retraction of a Series II Preference Share, the value of the Series II
Preference Shares is equivalent to 0.46 of an International Class A Share.

Sincerely,

(Signed) GMP Securities Ltd.

                                       C-18
<PAGE>

                          APPENDIX 1 -- HOLLINGER INC.

                                 HOLLINGER INC.

                            MARKET VALUE INFORMATION

                           CONSOLIDATED BALANCE SHEET
                               September 30, 2004
                       (in thousands of Canadian dollars)
                                  (unaudited)

<Table>
<S>                                                            <C>
                                ASSETS
CURRENT ASSETS
Cash and cash equivalents...................................   $ 15,328
Restricted cash (note 3)....................................     13,743
Accounts receivable.........................................      1,051
Amounts due from related parties (note 4)...................     72,127
Prepaid expenses............................................      1,148
                                                               --------
                                                                103,397
Investments (note 5)........................................    367,463
Property and equipment (note 6).............................      8,495
Deferred financing costs....................................     14,078
                                                               --------
                                                               $493,433
                                                               ========
                              LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued expenses.......................   $ 32,646
Amounts due to related parties (note 4).....................     28,183
Income taxes payable (note 7)...............................      6,358
                                                               --------
                                                                 67,187
Long-term debt (note 9).....................................    117,626
Retractable preference shares (note 8)......................     17,352
Amounts due to related parties (note 4).....................     25,738
Future income taxes (note 7)................................     39,147
Other liabilities (note 4)..................................        679
                                                               --------
                                                                267,729
                                                               --------
NET ASSETS REPRESENTING SHAREHOLDERS' EQUITY
Capital stock (note 10).....................................    286,602
Net unrealized decline in assets............................    (67,354)
Net unrealized decrease in liabilities......................        603
Retained earnings...........................................      5,853
                                                               --------
                                                                225,704
                                                               --------
                                                               $493,433
                                                               ========
Net asset value per retractable common share................   $   6.46
                                                               ========
Contingencies and commitments (note 11)
Subsequent events (note 13)
</Table>

                            See accompanying notes.
                                       C-19
<PAGE>
HOLLINGER INC.
NOTES TO CONSOLIDATED BALANCE SHEET
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)

1.  SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION

   As part of the Company's 1997 issuer bid, Hollinger Inc. (the "Corporation")
   became an open-end investment holding company. The Corporation's retractable
   common shares (the "Common Shares") are retractable at the option of the
   holder for an amount based on the market value of the Corporation's assets,
   on a non-consolidated basis, and during 1999, the Corporation's Series II
   preference shares became retractable for an amount based on the market value
   of Hollinger International Inc. ("International") common shares.

   This consolidated balance sheet includes the accounts of the Corporation and
   those wholly-owned subsidiaries which carry out head office functions and
   which do not represent investments (together, the "Company"). Investments in
   other companies and subsidiaries are not consolidated but rather are carried
   as investments and are accounted for at their market value.

   This consolidated balance sheet has been prepared in accordance with the
   Corporation's traditional accounting policies with the exception that it has
   been prepared as though the Corporation had always accounted for its assets
   and liabilities at their market values.

   This consolidated balance sheet has not been audited or reviewed by the
   Corporation's auditors. This alternative financial information is presented
   in lieu of statutory financial statements as a result of the Corporation's
   inability to file its statutory financial statements as at and for the year
   ended December 31, 2003 and the first three quarters of 2004. This inability
   results from a series of difficulties the Corporation has experienced
   including the Corporation's loss of control of International on or about
   November 17, 2003 and International's and International's auditors' continued
   insufficient co-operation with the Corporation.

   As a result of the inability by the Corporation to file its statutory
   financial statements on a timely basis, the Ontario Securities Commission and
   certain other provincial securities regulatory authorities issued cease trade
   orders that prohibit certain current and former directors, officers and
   insiders of the Corporation from trading in securities of the Corporation,
   until two full business days after the Corporation's required filings are
   brought up to date in compliance with applicable Canadian securities law. The
   Corporation has been granted an extension of the time for calling its 2004
   annual meeting of shareholders to June 30, 2005.

   The Company has experienced significant operating cash flow deficiencies and
   is restricted from making certain payments under the terms of the senior
   secured notes (note 9) and escrow agreement (notes 13 d) and e)). Because of
   International special dividends received in 2005 (note 13), despite the funds
   being held in escrow, the Company has sufficient funds available for general
   corporate purposes. This consolidated balance sheet has been prepared on the
   basis that the Company will continue to operate as a going concern.

    Accrual method of accounting

   This consolidated balance sheet has been prepared using the accrual method of
   accounting.

    Foreign currency translation

   Monetary items denominated in foreign currency are translated to Canadian
   dollars at exchange rates in effect at the balance sheet date and non-
   monetary items are translated at exchange rates in effect when the assets
   were acquired or obligations incurred. Foreign exchange gains and losses are
   included in shareholders' equity on the balance sheet.

    Cash and cash equivalents

   Cash and cash equivalents include certain highly liquid investments with
   original maturities of three months or less.

    Investments

   Investments are carried at market value determined on the following bases:

    (i)    Liquid investments such as cash, short-term government bonds and
           deposit certificates are valued at cost plus accrued interest.

    (ii)   Investments having quoted market values on a recognized stock
           exchange are valued at the closing market price. Investments that are
           not listed on a recognized exchange but that are convertible or
           exchangeable into such an investment are valued based on the quoted
           market value of the investment into which they are exchangeable or
           convertible.

    (iii)  Other investments are valued at management's estimate of market
           value.

    (iv)   If an investment is denominated or quoted in a foreign currency its
           market value is converted to Canadian dollars at the mid-day Toronto
           exchange rate at the balance sheet date.

   The difference between cost and market value has been recorded as an
   unrealized gain or loss on investments and included in shareholders' equity
   on the consolidated balance sheet.

                                       C-20
<PAGE>
HOLLINGER INC.
NOTES TO CONSOLIDATED BALANCE SHEET
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)

    Property and equipment

   Property and equipment are stated at either cost or market value where
   determinable. Cost represents the cost of acquisition, including the direct
   costs of financing until the asset is ready for use.

   Property and equipment are amortized over their estimated useful lives as
   follows:

<Table>
    <S>                              <C>
    Buildings                        straight line over 25 to 40 years
    Machinery and equipment          straight line over 4 to 20 years or 7% to 12% on the
                                     diminishing balance basis
    Leasehold interests              straight line over the term of the lease ranging from 5 to
                                     40 years
</Table>

    Liabilities

   Liabilities for which there is a public market, other than the senior secured
   notes (note 9), or which are associated with a recognized stock exchange are
   recorded at the greater of principal amount plus accrued interest or
   equivalent market value; or, the present value of all payments that
   management expects will be made in respect of the liability. For liabilities
   that are exchangeable or convertible, if management expects that investments
   will be delivered in satisfaction of those rights, payments will include
   those investments at their market values.

   Liabilities include shares that are redeemable at the option of the holder
   other than Common Shares.

   With respect to the Corporation's Series II preference shares (as more fully
   described in note 8), the liability is marked to market for fluctuations in
   the market price of the shares of Class A Common Stock of International and
   foreign exchange rates. The resulting gains or losses have been recorded as
   an unrealized gain or loss on liabilities and included in shareholders'
   equity on the balance sheet.

    Derivative financial instruments

   Derivative financial instruments include options, forward contracts and swaps
   related to investments or to liabilities. These are valued based on
   management's estimates of their asset value or liability value. Management is
   guided by public market information in assessing these values where such
   information is available. Any gain or loss is included in unrealized gain on
   investments, until sold or cancelled.

    Deferred financing costs

   Deferred financing costs consist of certain costs incurred in connection with
   debt financings. They are stated at cost and are amortized on a straight-line
   basis over the term of the related debt being up to eight years.

    Income taxes

   Future income tax assets and liabilities are recognized for the future income
   tax consequences attributable to differences between the financial statement
   carrying amounts of existing assets and liabilities and their respective tax
   bases. Future income tax assets and liabilities are measured using enacted or
   substantively enacted tax rates expected to apply to taxable income in the
   years in which those temporary differences are expected to be recovered or
   settled. A valuation allowance is recorded against any future income tax
   asset if it is more likely than not that the asset value will not be
   realized.

    Stock-based compensation and other stock-based payments

   Effective January 1, 2004, the Company adopted Section 3870 of the CICA
   Handbook, "Stock based Compensation and Other Stock-based Payments". This
   standard requires the Company to recognize an expense in the financial
   statements for all forms of employee stock-based compensation, including
   stock options. The adoption of this new accounting principle did not have an
   impact on the consolidated balance sheet.

    Use of estimates

   The preparation of this consolidated balance sheet requires the Corporation
   to make estimates and judgments that affect the reported amounts of assets,
   liabilities, and related disclosure of contingent assets and liabilities. On
   an on-going basis, the Corporation evaluates its estimates, including those
   related to bad debts, investments, income taxes, pensions and other
   post-retirement benefits, and contingencies and litigation. The Corporation
   relies on historical experience and on various other assumptions that are
   believed to be reasonable under the circumstances in making judgments about
   the carrying values of assets and liabilities that are not readily apparent
   from other sources. Actual results may differ from these estimates under
   different assumptions or conditions.

   Certain of the Company's investments and liabilities are valued at
   management's estimate of market value. These fair value estimates are made at
   a specific point in time, based on assumptions concerning amount and timing
   of estimated future cash flows and assumed discount rates. The estimates are
   subjective in nature and involve uncertainties and matters of significant
   judgment and therefore may not accurately represent future realizable values.

                                       C-21
<PAGE>
HOLLINGER INC.
NOTES TO CONSOLIDATED BALANCE SHEET
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)

2.  CHANGE IN ACCOUNTING PRESENTATION

   As described in note 1 above, the Corporation is an open-end investment
   corporation. Following accepted accounting practices for such corporations,
   the Corporation has retroactively adopted "investment company" accounting
   practices. The most significant results of this change in the basis of
   presentation are:

    (a)  investments are carried at market value rather than on the basis of
         cost, equity or consolidation;

    (b)  dividends from investees are recorded as investment income and
         unrealized gains and losses on investments are recorded in
         shareholders' equity as they occur, and realized gains and losses are
         credited directly to retained earnings, rather than recording such
         investments on an equity or consolidated basis;

    (c)  liabilities, other than the senior secured notes, are recorded at their
         fair values, where determinable;

    (d)  financial instruments other than the Common Shares are recorded
         entirely as liabilities rather than partly as liabilities and partly as
         equity; and

    (e)  net unrealized gains and losses on assets and liabilities are included
         in shareholders' equity and realized gains and losses on assets and
         liabilities are credited directly to retained earnings.

3.  RESTRICTED CASH

   Restricted cash is comprised as follows:

<Table>
    <S>                                                             <C>
    Cash security under senior secured notes payable (note 9)...    $13,243
    Cash security for directors' indemnities (note 12)..........        500
                                                                    -------
                                                                    $13,743
                                                                    =======
</Table>

   On February 7, 2005, an additional $1,500,000 of cash was placed in trust,
   which is intended to be used as additional security for directors'
   indemnities.

4.  RELATED PARTIES

    AMOUNTS DUE FROM AND TO RELATED PARTIES ARE COMPRISED AS FOLLOWS:

<Table>
    <S>                                                             <C>
    CURRENT AMOUNTS DUE FROM:
    The Ravelston Corporation Limited ("RCL"), a parent company
      (a).......................................................    $14,374
    Ravelston Management Inc. ("RMI"), a company subject to
      common control (b)........................................     57,393
    International and its subsidiaries..........................         79
    Former director.............................................        281
                                                                    -------
                                                                    $72,127
                                                                    =======
    AMOUNTS DUE TO:
    Former directors, under share unit plan.....................    $   556
    Lord Black (c)..............................................     19,868
    International and its subsidiaries (d) and (e)..............     33,030
    Companies controlled by former directors....................        467
                                                                    -------
                                                                     53,921
    LESS CURRENT PORTION:.......................................     28,183
                                                                    -------
                                                                    $25,738
                                                                    =======
</Table>

    (a)  This balance relates primarily to three loans made to RCL. The loans,
         in the principal amounts of $4,728,000, $4,803,000 and $5,175,000, were
         made to assist RMI in meeting its obligations to the Corporation under
         the Support Agreement and thereby assisting the Corporation in meeting
         its obligations under the Indentures (note 9). Each of the loans is
         supported by a demand promissory note bearing interest at the prime
         lending rate plus 4% per annum, calculated and payable monthly and a
         general security agreement of RCL. The principal amounts of these loans
         and interest thereon remain outstanding.

    (b)  This balance is due in connection with RMI's obligations under the
         Support Agreement (note 9). Amounts owing by RMI under the Support
         Agreement do not accrue interest and are unsecured obligations of RMI.
         RCL has unconditionally guaranteed RMI's obligations under the
         Contribution Agreement (note 9), with such guarantee supported by a
         pledge of RCL's shares of RMI.

      The Company has been informed by RMI that it may dispute all but
      approximately $4,100,000 of this receivable.

                                       C-22
<PAGE>
HOLLINGER INC.
NOTES TO CONSOLIDATED BALANCE SHEET
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)

    (c)  The Corporation had a joint obligation, pursuant to a judgment, to
         repay non-compete amounts of US$16,549,950 received by the Company in
         prior years plus interest. This amount is included as part of the
         receivable from RMI under the Support Agreement. Pursuant to an Order
         and Final Judgment of the Delaware Court of Chancery dated June 28,
         2004 (the "Order"), the Corporation and Lord Black, the Corporation's
         controlling shareholder and former Chairman and Chief Executive
         Officer, were ordered to jointly pay to International the non-compete
         amounts plus interest. On July 16, 2004, the Company repaid to
         International US$5,964,000 and the balance was paid by Lord Black. The
         terms of the Company's obligation to make restitution to Lord Black, if
         any, have not been resolved. Until such determination is made, the
         balance sheet shows a payable to Lord Black. The Corporation is
         currently appealing the Order.

    (d)  (i)    This balance relates to an amended promissory note of the
                Company dated March 10, 2003 in the principal amount of
                US$20,349,000. The principal amount bears interest at a rate of
                14.25% per annum if interest is paid in cash (and 16.50% per
                annum if paid in kind where certain conditions restrict payment
                of interest under the Corporation's senior secured notes) for an
                aggregate of $31,171,000 at September 30, 2004. Interest is
                payable quarterly and the principal is payable on demand after
                March 2, 2011. The reimbursement obligations under this note are
                to be secured by a cash collateral account that RCL was required
                to fund. The loan is guaranteed by RCL and secured by its
                receivables under RCL's management services agreement with
                CanWest Global Communications Corp. ("CanWest"). All amounts
                owing under the note are subordinated to the Corporation's
                senior secured notes for so long as the notes are outstanding
                (note 9).

         (ii)   The remaining amount due to International of $1,859,000 is the
                result of prior shared business services.

    (e)  The Company had an informal agreement with International whereby the
         Company would pay the costs of computer equipment and related products
         and services at the Company's offices in Toronto in 2002 and
         International would pay the costs in 2003. The Company and
         International were to reconcile the spending and share the combined
         costs equally. Based upon International's evaluation of the combined
         costs under this arrangement, the Company owed approximately $200,000
         to International. This amount has not been agreed to by the Company but
         has been recorded. The Company has not yet paid its share of the costs
         incurred and continues to retain possession of the computer and related
         equipment it had acquired.

    (f)   Included in accounts payable and accrued expenses on the consolidated
          balance sheet is approximately $6,500,000 with respect to legal fees
          incurred by Lord Black and F. David Radler, the Corporation's former
          President, the reimbursement of which is being sought from the Company
          under its indemnity of its directors and officers. The Company has
          not, at this time, agreed to reimburse these amounts.

    RELATED PARTY CONTRACTUAL OBLIGATIONS:

    (g)  The Company entered into a consulting agreement with Peter G. White
         Management Ltd. ("PGWML"), a company controlled by Peter G. White, a
         director and executive officer of the Corporation, effective December
         23, 2003, which provides that Mr. White renders various services to the
         Company. The agreement terminated on January 22, 2005 and was extended
         for a further six-month term to July 22, 2005. The agreement may be
         terminated on 30 days' notice. For its services under the agreement,
         PGWML receives $75,000 per month.

    (h)  At 10 Toronto Street, RCL and RMI make use of the Company premises and
         currently pay no rent. The Company is in discussion with RCL and RMI
         with respect to a potential lease and related financial arrangements.

    (i)   Certain employees of the Company provide services to RCL, RMI and
          Argus Corporation Limited, a parent company. As well, certain
          employees of RMI provide services to the Company. No re-allocation of
          these costs has been made to date. This is currently under review.

      All such employees were formerly employees of RMI. Employment contracts of
      these employees were transferred to the Company effective January 1, 2004.
      The employees retained all seniority, pension benefits and other
      entitlements earned while at RMI upon transfer. As a result, the Company
      has fully provided for the actuary's estimate of the pension obligation
      with respect to these employees in this consolidated balance sheet. No
      agreement with RCL and RMI as to the Company's and their legal obligations
      with respect to the RCL pension plan has been made to date.

5.  INVESTMENTS

    (I)   INVESTMENTS HAVING QUOTED MARKET VALUES

<Table>
<Caption>
                                                                         NUMBER OF
                                                                       SHARES/ UNITS    AMOUNT
                                                                       -------------   --------
         <S>                                                           <C>             <C>
         International Class A Shares (a) (note 8)...................      792,560     $ 17,352
                   Class B Shares (a) (note 9).......................   14,990,000      328,186
                                                                        ----------     --------
                                                                        15,782,560      345,538
                                                                        ==========     ========
         Hollinger Canadian Newspapers, Limited Partnership Units....      150,000          150
</Table>

                                       C-23
<PAGE>
HOLLINGER INC.
NOTES TO CONSOLIDATED BALANCE SHEET
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)

    (II)  INVESTMENTS AT ESTIMATED MARKET VALUES

<Table>
<Caption>
                                                                                        PERCENTAGE
                                                                                           HELD
                                                                                        ----------
         <S>                                                           <C>             <C>            <C>
         Cayman Free Press...........................................  Common shares      39.993%        3,670
         Real estate division of Domgroup Ltd. ("DRE") (b)...........             --         100%       17,998
         Other.......................................................             --          --           107
                                                                                                      --------
                                                                                                      $367,463
                                                                                                      ========
</Table>

    (a)  International Class A and Class B Common Shares

      International's shares of Class A Common Stock ("International Class A
      Shares") and Class B Common Stock ("International Class B Shares") have
      identical rights with respect to cash dividends and in any sale or
      liquidation, but different voting rights. Each International Class A Share
      is entitled to one vote per share and each International Class B Share is
      entitled to ten votes per share on all matters, where the two classes vote
      together as a single class, including the election of International
      directors. International Class B Shares are convertible at any time at the
      option of the Company into International Class A Shares on a
      share-for-share basis and are transferable by the Company under certain
      conditions. Where the Company does not meet these conditions, and there is
      a change of control of International, the International Class B Shares are
      automatically converted on a share-for-share basis into International
      Class A Shares. The market value of the International Class B Shares,
      which do not trade, is stated at the closing market price of the
      International Class A Shares with no control premium taken into account.

    (b)  DRE includes the Vancouver division of Domgroup Ltd. and all of the
         cash of Domgroup Ltd.
6.  PROPERTY AND EQUIPMENT

<Table>
    <S>                                                           <C>
    Carried at cost
      Machinery, equipment and other............................  $4,008
    Accumulated depreciation and amortization
      Machinery, equipment and other............................   3,113
                                                                  ------
                                                                     895
    Carried at market value
      Land and buildings........................................   7,600
                                                                  ------
    Net book value..............................................  $8,495
                                                                  ======
</Table>

7.  INCOME TAXES

    (A)  CURRENT INCOME TAX LIABILITY

      Current income tax includes the estimated tax liability arising on the
      2004 retraction of Series II preference shares.

      A substantial portion of the current income tax liability, once paid,
      could be refundable to the Company upon payment of dividends or upon
      retraction or redemption of Common Shares or Series II preference shares
      including on a going private transaction.

    (B)  FUTURE INCOME TAXES

      The Company has operating losses carried forward for tax purposes of
      approximately $56,600,000, the tax benefit of which has been reflected in
      the consolidated balance sheet as a reduction of future income taxes.
      These losses expire as follows:

<Table>
<S>                                                                  <C>
          2007..............................................         $ 3,000
          2008..............................................             300
          2009..............................................          11,700
          2010..............................................          38,000
          2011..............................................           3,600
                                                                     -------
                                                                     $56,600
                                                                     =======
</Table>

                                       C-24
<PAGE>
HOLLINGER INC.
NOTES TO CONSOLIDATED BALANCE SHEET
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)

      The tax effects of temporary differences that give rise to significant
      portions of the future tax assets and future tax liabilities are presented
      below:

<Table>
         <S>                                                             <C>
         Future tax assets:
           Net operating loss carry forwards.........................    $23,434
           Compensation and accrued pension..........................        245
           Investments...............................................      1,860
           Other.....................................................      4,304
                                                                         -------
         Gross future tax assets.....................................     29,843
         Less valuation allowance....................................         --
                                                                         -------
         Net future tax assets.......................................     29,843
                                                                         -------
           Future tax liabilities:
           Property and equipment, principally due to differences in
             depreciation............................................        306
           Investments...............................................     67,669
           Other.....................................................      1,015
                                                                         -------
         Gross future tax liabilities................................     68,990
                                                                         -------
         Net future income tax liabilities...........................    $39,147
                                                                         =======
</Table>

      Due to the Corporation's mutual fund corporation status for tax purposes,
      it is possible that some or a large portion of the income taxes disclosed
      above could be refundable.

8.  RETRACTABLE PREFERENCE SHARES

   The 1,722,951 outstanding Series II preference shares are exchangeable at the
   holder's option for 0.46 of an International Class A Share held by the
   Company for each Series II preference share for an aggregate of 792,560
   International Class A Shares. The Company has the option to make a cash
   payment of equivalent value on the redemption of any of the Series II
   preference shares.

   At September 30, 2004, a licensed trust company was holding 792,560
   International Class A Shares held by the Company in support of exchange
   requests made by holders of Series II preference shares from time to time.
   The Company intends to honour any future retractions of its Series II
   preference shares with these International Class A Shares.

9.  LONG-TERM DEBT

   At September 30, 2004, the Company had US$78,000,000 ($98,654,000) aggregate
   principal amount of 11.875% senior secured notes due March 1, 2011 (the
   "Senior Notes") and US$15,000,000 ($18,972,000) aggregate principal amount of
   11.875% senior secured notes due March 1, 2011 (the "Second Priority Notes"
   and, together with the Senior Notes, the "Notes"). The Notes are carried at
   cost on this consolidated balance sheet as they are not subject to redemption
   until March 1, 2007, at which time a premium is to be paid on the redemption
   of any of the Notes.

   The Senior Notes are secured by a first priority lien on 14,990,000
   International Class B Shares held by the Company plus $13,243,000 of cash
   collateral. The cash collateral amount may be used to satisfy future interest
   payment obligations on the outstanding Senior Notes. The Senior Notes are
   fully and unconditionally guaranteed by RMI. The Second Priority Notes are
   guaranteed by RMI and are secured by a second priority lien on the collateral
   securing the Senior Notes.

   Under the terms of the Indentures governing the Senior Notes and the Second
   Priority Notes (collectively, the "Indentures"), the Company is subject to
   certain financial covenants and other restrictions. As part of the terms of
   the Notes, the Corporation was required to cause an exchange offer
   registration statement to be declared effective with the United States
   Securities and Exchange Commission (the "SEC") under the United States
   Securities Act of 1933, as amended, within a certain period of time. The
   registration of the securities is not being sought by the Corporation at this
   time. As a result of this registration default, the annual interest rate of
   the Notes has increased up to a maximum additional interest rate of one
   percent per annum over the 11 7/8% interest rate until such time as the
   registration default is cured, whereupon the interest rate will revert to the
   original level. As at September 30, 2004, the Corporation was in compliance
   with all other covenants and other restrictions in respect of the Senior
   Notes.

   On March 10, 2003, the date the Corporation issued the Senior Notes, RMI
   entered into a support agreement (the "Support Agreement") with the
   Corporation under which RMI agreed to make annual support payments in cash to
   the Corporation on a periodic basis by way of contributions to the capital of
   the Corporation (without receiving any shares of the Corporation) or
   subordinated debt. The Corporation, RMI and RCL also entered into a
   contribution agreement (the "Contribution Agreement") in this regard. The
   amount of the annual support payments is equal to the greater of: (a) the
   non-consolidated negative net cash flow of the Corporation (which does not
   extend to outlays for retractions and redemptions in respect of the share
   capital of the Corporation), or (b) US$14,000,000 per year (less any future
   payments of services

                                       C-25
<PAGE>
HOLLINGER INC.
NOTES TO CONSOLIDATED BALANCE SHEET
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)

   agreement fees directly to the Company, and any excess in the net dividend
   amount received by the Company on the shares of International that is over
   US$4,650,000 per year), in either case, as reduced by any permanent repayment
   of debt owing by RCL to the Corporation. The timing of payment of the annual
   support amount on a quarterly basis is specifically defined in the Indentures
   to be within 45 days after the first three quarters of the year and within 90
   days of the last quarter of the year. The Support Agreement terminates upon
   the repayment in full of the Notes.

   As a result of the Corporation's inability to file its statutory financial
   statements as at and for the year ended December 31, 2003 and file its 2003
   Form 20-F with the SEC, subsequent to June 30, 2004, the Corporation was not
   in compliance with its obligations to deliver to relevant parties such
   filings under the Indentures. This non-compliance led to the occurrence of an
   event of default under the Indentures, however on September 30, 2004, the
   Corporation sought and obtained a waiver with respect of this event of
   default. At such time, the Corporation also sought and obtained a consent for
   a temporary suspension of the Corporation's obligation under the Indentures
   to furnish to relevant parties periodic and other reports under applicable
   U.S. federal securities laws until January 1, 2006.

10. CAPITAL STOCK

<Table>
    <S>                                                             <C>
    AUTHORIZED
    Unlimited number of retractable common shares
      and an unlimited number of preference shares
    Issued and fully paid
    PREFERENCE SHARES
      1,722,951 Series II shares................................    $     --
    RETRACTABLE COMMON SHARES
      34,945,776 shares.........................................     286,602
                                                                    --------
                                                                    $286,602
                                                                    ========
</Table>

    (a)  The Common Shares have terms equivalent to common shares, except that
         they are retractable at any time by the holder for their retraction
         price, which is fixed from time to time, in exchange for International
         Class A Shares of equivalent value or, at the Corporation's option,
         cash. The retraction price determined each quarter (or, in certain
         specific cases more frequently) is between 90% and 100% of the
         Company's current value, being the aggregate fair market value of all
         of its assets less the aggregate of (i) the maximum amount payable at
         such date by the Corporation on its liquidation, dissolution or
         winding-up in respect of any outstanding preference shares, and (ii)
         its liabilities, including any tax liabilities that would arise on a
         sale by International of all or substantially all of its assets, which,
         in the opinion of the Board, would not be refundable at such date,
         divided by the number of Common Shares outstanding on such date.

    (b)  There is continued uncertainty regarding the Corporation's future
         ability to complete retractions of the Common Shares and cash
         retractions of Series II preference shares. Dividends on the Series II
         preference shares are not payable until declared by the Board of
         Directors which will take into account when dividends are considered
         from time to time, among other things, the support payments to be made
         to the Corporation by RMI. Under applicable corporate law, the
         Corporation cannot redeem Common Shares or declare or pay dividends in
         certain circumstances, including if there are reasonable grounds for
         believing that the Company is, or would after such payment be, unable
         to pay its liabilities as they become due. In such circumstances,
         shareholders do not become creditors of the Corporation and remain as
         shareholders until such time as the retraction is able to be completed
         under applicable law. At present, the Corporation's uncertain ability
         to make payments on future retractions of Common Shares or dividends on
         Common Shares is because of the fact that liquidity of its assets is
         limited under the terms of the Notes. Substantially all of the
         Company's International shares were provided as security for the Notes
         limiting the liquidity of the Company's assets. As of February 25,
         2005, there are retraction notices from holders of 395,665 Common
         Shares which are unable to be completed at the present time.

    (c)  The Company has a stock option plan for its employees.

      Details of the Corporation's stock option plan are as follows:

      The Corporation has an Executive Share Option Plan, under which the
      Corporation may grant options to certain key executives of the Company,
      its subsidiaries or affiliated companies or its parent company, for up to
      5,560,000 Common Shares.

      These options give the holder the right to purchase, subject to the
      executive's entitlement to exercise, one Common Share for each option
      held. The options are exercisable to the extent of 25% thereof at the end
      of each of the first through fourth years following granting, on a
      cumulative basis. Options expire six years after the date of grant.
      Unexercised options expire one month following the date of termination of
      the executive's employment, except in the case of retirement at normal
      retirement age, death or certain offers made to all or substantially all
      of the holders of Common Shares, in which events, all unexercised options
      become exercisable in full.

      At September 30, 2004, there were 913,000 options outstanding having an
      exercise price of $13.72 per share and a remaining contractual life to
      December 8, 2004. All of the outstanding options at September 30, 2004
      expired unexercised on December 8, 2004.

                                       C-26
<PAGE>
HOLLINGER INC.
NOTES TO CONSOLIDATED BALANCE SHEET
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)

11. CONTINGENCIES AND COMMITMENTS

   The Company has been named as defendant or co-defendant in a number of legal
   actions. All claims made against the Company are being defended vigorously.
   Except as otherwise stated, no provisions have been made for any potential
   liability under these actions. Legal fees expected to be incurred with
   respect to these actions total approximately $11,500,000. This amount has
   been accrued in accounts payable and accrued expenses in this consolidated
   balance sheet. The following actions have been taken against or by the
   Company:

    (a)  The Company is named as a co-defendant in a complaint filed in the
         State of Illinois by International claiming damages and recovery for
         alleged breaches of fiduciary duty relating to management fees, sales
         and transfers of assets and non-competition and other payments made.
         International is seeking damages from all defendants of US$542,000,000
         including pre-judgment interest of US$117,000,000. International is
         seeking to hold the Company jointly and severally liable for the full
         amount of the alleged damages under conspiracy and other theories.
         Repayment has been made of certain non-compete payments (see note 4).

    (b)  The Company is named as a co-defendant in a number of class action
         suits in Canada and the United States that allege, among other things,
         securities fraud with respect to the use of management service fees to
         misappropriate funds from International, improper non-compete payments,
         inadequate Board oversight of executive pay, improper expenses and
         related party transactions.

    (c)  International has named the Company as co-defendant in a suit seeking
         enforcement of a November 15, 2003 restructuring proposal to uphold a
         Shareholders' Rights Plan, a declaration that corporate by-laws were
         invalid and to prevent the closing of a certain transaction. The
         Company filed a counterclaim seeking to restrict the Shareholders'
         Rights Plan that International sought to adopt to prevent a certain
         transaction and claiming that the restructuring proposal was not
         negotiated in good faith and had been breached by International. A
         decision on International's claim was delivered on February 26, 2004
         finding in favour of International which was confirmed on March 4, 2004
         through a partial final judgment confirming the February 26, 2004
         findings. Also on March 4, 2004, the Company filed a notice of appeal
         of the February 26, 2004 decision, which has not yet been decided. On
         May 19, 2004, the Court issued a decision on a summary judgment motion
         brought by International finding in favour of International and
         dismissing in large part the Company's counterclaims. The ruling also
         is on appeal.

    (d)  International has named the Company as co-defendant in a suit seeking
         injunctive relief for the return of documents it claims ownership of
         and the assistance and co-operation of the defendants in recovering the
         documents and in having International and its auditors' access to the
         corporate headquarters of the Company. No examinations for discovery
         have been conducted to date. The parties negotiated and executed a
         Protocol dated March 25, 2004, providing for access and possession by
         International to the claimed records.

    (e)  On September 3, 2004, Mr. Justice Colin Campbell of the Ontario
         Superior Court of Justice ordered (and on October 13, 2004 delivered
         his reasons for) the appointment of an Inspector of the affairs of the
         Company pursuant to section 229 of the Canada Business Corporations Act
         (the "Order") upon the application of Catalyst Fund General Partner I
         Inc. By further order (together with the Order, the "Orders") dated
         October 27, 2004, Ernst & Young Inc. was named as inspector and
         commenced its work (the "Inspection") soon thereafter. The Orders
         broadly require an investigation into the affairs of the Company and
         specifically into related party transactions, non-competition payments
         for the period January 1, 1997 to the present and the current status of
         the Company's audited financial statements for the year ended December
         31, 2003. The Inspector has provided certain interim reports to the
         court, primarily outlining its need for more time to conduct its work.
         It is unclear as to whether ultimately the costs of the Inspection may
         be shared more broadly, but initial costs of the Inspection are being
         borne by the Company at a rate approaching $1,000,000 per month. The
         cost of the inspection is anticipated to total approximately
         $8,000,000. This amount has been accrued in addition to the legal fee
         accrual of $11,500,000 described above in accounts payable and accrued
         expenses in this consolidated balance sheet.

    (f)   CanWest filed suit against the Company and others including
          International claiming damages under the agreement for the sale by
          International of certain Canadian newspapers in November 2000,
          including $22,500,000 for future losses relating to The National Post,
          $2,745,000 for capital and operating requirements and $752,000 for
          payment of newsprint rebates. International paid $26,500,000 of
          principal plus interest with respect to the future losses relating to
          The National Post in November 2004 in settlement of an August 2004
          order.

      Exchange of documents and examinations for discovery in respect of the
      remaining two matters referred to above which have not yet been settled is
      expected to proceed in early 2005.

    (g)  The Company was the guarantor under an aircraft lease that was
         prematurely terminated in January, 2004. The lessor has commenced an
         action against the Company for damages of approximately US$5,000,000.

    (h)  On November 15, 2004, the SEC filed an action in the United Status
         District court for the Northern District of Illinois against Lord
         Black, F. David Radler and the Company seeking injunctive, monetary and
         other equitable relief.

      The SEC's allegations against the Company are as follows: (i) the Company
      made material misstatements and omissions in its responses to
      International's 1999 and 2000 proxy questionnaires and the Company's 2001
      Form 40-F filing and 2002 Form 2-F, Form 40-F and proxy statement filings
      with the SEC concerning US$16,500,000 in payments it allegedly
      fraudulently received in connection with non-compete agreements associated
      with certain sales transactions; (ii) the Company allegedly knew or was
      reckless in not knowing that
                                       C-27
<PAGE>
HOLLINGER INC.
NOTES TO CONSOLIDATED BALANCE SHEET
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)

      International's filings with the SEC were false and misleading because
      they failed to disclose the non-compete payments made to the Company; and
      (iii) the Company is liable for International's violations of certain
      federal securities laws during this period as a result of its alleged
      failure to properly disclose the non-compete payments it received.

      The SEC complaint seeks the following from the Company: (i) disgorgement
      of ill-gotten gains by the Company and unspecified civil penalties; (ii) a
      voting trust upon the shares of International held directly or indirectly
      by the Company; and (iii) an order enjoining the Company from further
      violations of the federal securities laws.

    (i)   The affairs of the Company are presently under investigation by
          certain securities regulatory authorities. The appropriateness of
          certain transactions reported in previous financial statements as
          filed, of the financial statements themselves and the completeness of
          other regulatory filings are being questioned.

    (j)   The Company is subject to litigation from time to time in the ordinary
          course of business. Although the amount of any liability with respect
          to any such litigation cannot be determined, in the opinion of
          management, such liability, if any, will not have a material adverse
          effect on the Company's financial condition.

    (k)  The Company has incurred legal expense in the defence of various
         actions brought against it and others in both the United States and
         Canada. The Company has in turn advanced a claim against its directors'
         and officers' liability insurers asserting that, under the terms and
         conditions of the policies of insurance, these insurers are required to
         indemnify the Company in respect of this legal expense incurred in
         connection with some of the actions brought against the Company. The
         claims made total approximately $3,700,000, however, the actual amount
         of recovery is not determinable at the present time. The Company has
         not recorded any recovery with respect to these claims in this
         consolidated balance sheet.

12. GUARANTEES

    NOTES

   In connection with the issuance of the Senior Notes, the Corporation has
   agreed to indemnify the initial purchaser of the Senior Notes against any
   losses or damages resulting from inaccuracy of financial statements, taxes
   and compliance with securities legislation. The Corporation also indemnified
   the Senior Noteholders against any related tax liabilities arising from
   payments made with respect to the Senior Notes, except taxes on Senior
   Noteholder's income. These indemnifications generally extend for the term of
   the Senior Notes and do not provide for any limit on the maximum potential
   liability.

   The Corporation is unable to estimate the maximum potential liability for
   these types of indemnifications as the Indentures and related purchase
   agreement do not specify a maximum amount and the amounts are dependent upon
   future contingent events, the nature and likelihood of which cannot be
   determined at this time. No amount has been accrued in this consolidated
   balance sheet with respect to these indemnifications and the Corporation is
   unable to estimate amounts due for withholding taxes, if any, at this time.
   Any such amounts will increase the future effective cost of borrowing.

    PROPERTY LEASES

   DRE has agreed to indemnify lessors of its operating leases against
   liabilities, damages, costs, claims and actions resulting from damaged
   property, violations of any lease covenants or any accident or injury
   occurring on the leased premises.

   The Company is unable to estimate the maximum exposure for these types of
   indemnifications as the operating leases do not specify a maximum amount and
   the amounts are dependent upon future contingent events, the nature and
   likelihood of which cannot be determined at this time. No amount with respect
   to these indemnifications has been considered in the determination of the
   market value of the Company's investment in DRE in this consolidated balance
   sheet.

    DISPOSITIONS

   In connection with certain dispositions of assets and/or businesses, the
   Company has provided customary representations and warranties whose terms
   range in duration and may not be explicitly defined. The Company has also
   retained certain liabilities for events occurring prior to sale, relating to
   tax, environmental, litigation and other matters. Generally, the Company has
   indemnified the purchasers in the event that a third party asserts a claim
   against the purchaser that relates to a liability retained by the Company.
   These types of indemnification guarantees typically extend for a number of
   years or in some cases extend indefinitely.

   The Company is unable to estimate the maximum potential liability for these
   indemnifications as the underlying agreements do not always specify a maximum
   amount and the amounts are dependent upon the outcome of future contingent
   events, the nature and likelihood of which cannot be determined at this time.

   Historically, the Company has not made any significant indemnification
   payments under such agreements and no amount has been accrued in this
   consolidated balance sheet with respect to these indemnification guarantees.
   The Company continues to monitor the conditions that are

                                       C-28
<PAGE>
HOLLINGER INC.
NOTES TO CONSOLIDATED BALANCE SHEET
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)

   subject to guarantees and indemnifications to identify whether it is probable
   that a loss has occurred, and would recognize any such losses under any
   guarantees or indemnifications when those losses are probable and estimable.

    DIRECTORS

   The Corporation has entered into customary indemnification agreements in
   favour of its current and former directors. With respect to one current and
   one former director, the Corporation has entered into a trust and
   contribution agreement with a third party trustee and deposited in trust the
   amount of $500,000 to defend such directors from any claims made for which
   they would be entitled to indemnity pursuant to their indemnification
   agreements (see note 3). In February 2005, the Corporation placed an
   additional $1,500,000 of cash in trust which is intended to be used as
   additional security for directors' indemnities.

13. SUBSEQUENT EVENTS

    (a)  On October 28, 2004, the Corporation was advised that RCL intends to
         support a going private transaction involving the Corporation,
         structured as a consolidation of the outstanding Common Shares and
         Series II preference shares (the "Proposed Transaction"). The Board
         established a committee of independent directors to consider, evaluate
         and make a recommendation to it concerning the Proposed Transaction.

      On October 28, 2004, the Board approved the following transactions which
      would permit the Proposed Transaction to proceed and be considered by the
      shareholders of the Corporation and would provide the necessary financing
      to complete the Proposed Transaction:

       (i)   The Corporation received consents from holders of a majority in
             aggregate principal amount of its outstanding Notes approving
             amendments to the Indentures. The amendments permit, among other
             things, the retirement of all outstanding Common Shares (other than
             those held directly or indirectly by RCL) for cash pursuant to (i)
             the Proposed Transaction, (ii) retraction requests, and/or (iii)
             payments in respect of the due exercise of dissent rights of such
             shares in connection with the Proposed Transaction and the
             retirement of all outstanding Series II preference shares for
             International Class A Shares owned by the Company pursuant to the
             Proposed Transaction and/or payments in respect of the due exercise
             of dissent rights of such shares in connection with the Proposed
             Transaction. The amendments to the Indentures also permit the
             Corporation to incur additional indebtedness in an aggregate amount
             outstanding not to exceed US$40,000,000 through the issuance of
             Second Priority Notes.

         The amendments will become effective if, and only if, all necessary
         corporate and regulatory approvals in connection with the consolidation
         of the outstanding Common Shares (the "Common Share Approvals") have
         been obtained on or prior to March 31, 2005.

       (ii)  The Corporation received binding commitments for the issuance and
             sale of up to US$40,000,000 in aggregate principal amount of Second
             Priority Notes, such amount to be drawn down by the Corporation if,
             and only if, the Common Share Approvals have been obtained on or
             prior to March 31, 2005.

       (iii)  The Corporation entered into a non-binding commitment with an
              arm's length lender with respect to bridge credit facilities with
              a term of 12 months providing up to $16,000,000 in borrowings,
              which credit facilities may only be drawn down if, among other
              things, the Common Share Approvals have been obtained. If
              proceeded with, the Company would be providing security to the
              lender in support of the credit facilities, including first
              priority mortgages on certain real estate assets owned by the
              Company.

         On November 16, 2004, RCL indicated that it intends to support the
         Proposed Transaction on the basis of $7.25 in cash for each Common
         Share (other than the shares owned by it and certain of its affiliates)
         and 0.46 of an International Class A Share for each Series II
         preference share.

    (b)  On November 2, 2004, Lord Black resigned his positions as Chairman,
         Chief Executive Officer and a director of the Corporation. On November
         18, 2004, Mr. Justice Campbell of the Ontario Superior Court of Justice
         ordered the removal of three other related directors, F. David Radler,
         J.A. Boultbee and Barbara Amiel Black. The Board is now comprised of
         six directors. Gordon W. Walker was appointed as the initial Chairman
         of the Board and Donald M.J. Vale assumed the function of President.

    (c)  On January 18, 2005, International filed its 2003 Form 10-K with the
         SEC, which included restated audited financial results for the fiscal
         years ended December 31, 1999 to 2002.

      The foregoing was a necessary but not sufficient condition to permit the
      Corporation to complete and file its 2003 annual consolidated financial
      statements as the completion and audit of such consolidated financial
      statements will require a level of co-operation from International, which
      is in negotiation, and International's auditors.

    (d)  On January 18, 2005, International paid a special dividend on the
         International Class A Shares and the International Class B Shares,
         which resulted in approximately US$39,000,000 being received by the
         Company. As part of its settlement discussions with staff of the SEC
         relating to the action commenced by the SEC against the Company, Lord
         Black and F. David Radler in the U.S. District Court, Northern District
         of Illinois, the Company voluntarily agreed that it would enter into an
         arrangement whereby it would deposit such amount and, subject to any
         overriding rights of the holders of Notes, the amount of any subsequent
         distribution made by International, net of applicable
                                       C-29
<PAGE>
HOLLINGER INC.
NOTES TO CONSOLIDATED BALANCE SHEET
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)

         withholding taxes, into an escrow account with a licensed trust
         company. The escrow will terminate upon the conclusion of the SEC
         action as to all parties. The escrow provides that the Company will
         have access to the escrowed funds for ordinary business and certain
         other enumerated purposes.

    (e)  On March 1, 2005, International paid a second special dividend on the
         International Class A Shares and the International Class B Shares. The
         total amount of this second special dividend received by the Company
         was approximately US$47,300,000. The net proceeds received are subject
         to the same escrow agreement referred to in (d) above.

    (f)   On February 25, 2005, certain of the directors of the Corporation
          filed a motion in the Ontario Superior Court of Justice for, inter
          alia, advice and direction as to whether in the circumstances the
          Proposed Transaction should be put to the Corporation's shareholders
          before Ernst & Young Inc. delivers its final Inspection report. The
          motion also seeks an order approving an increase of $10,000,000 as
          additional security for directors' indemnities, confirmation of the
          deposit of $1,500,000 as additional security for directors'
          indemnities (note 3) and the establishment of an indemnification fund
          in favour of two financial executives of the Corporation with a
          deposit of $500,000. The motion further seeks an order approving
          payments to the directors of the Corporation (other than Mr. White) in
          the event of the termination of their tenure as directors and a
          retention bonus in the event that the Corporation continues as a
          public company after March 31, 2005, in each case, in an amount equal
          to a multiple of fees paid to such directors since November 18, 2004.
          The motion is scheduled to be heard on March 7, 2005.

      Materials filed with the court indicate that certain of the directors of
      the Corporation have been advised that the Corporation and its
      subsidiaries have claims against RCL and related corporations and
      individuals for in excess of $200,000,000 and that the Corporation should
      commence legal proceedings forthwith to enforce those claims. The
      directors have further been informed that RCL intends to strenuously
      resist any such claims.

                                       C-30
<PAGE>

<Table>
<S>                                   <C>

(ZEIFMAN LETTERHEAD)
                                      To GMP Securities Ltd.
                                      and to the
                                      Directors of Hollinger Inc.
                                      As specifically agreed, and except as noted in the
                                      exceptions described below, we have performed the following
                                      procedures on the consolidated balance sheet ("CBS") of
                                      Hollinger Inc. (the "Company") as at September 30, 2004
                                      released by the Company on March 4, 2005 by press release,
                                      in connection with the proposed going private transaction of
                                      the Company:
                                      1.   We agreed all amounts from the trial balance of the
                                      Company and its wholly owned subsidiaries which carry out
                                           head office functions, consolidated in the CBS, to the
                                           consolidation working papers.
                                      2.   We recalculated the additions and cross-additions of
                                      the consolidation working papers to verify mathematical
                                           accuracy.
                                      3.   We agreed all amounts from the consolidation working
                                      papers to the CBS.
                                      4.   We recalculated the additions of the CBS for
                                      mathematical accuracy.
                                      5.   We agreed dollar amounts in the notes to the CBS to
                                      schedules provided by the Company.
                                      6.   For all schedules provided by the Company, we
                                      recalculated the additions and cross-additions for
                                           mathematical accuracy.
                                      7.   We agreed the cash balance on the bank reconciliation
                                      to a confirmation obtained from the bank.
                                      8.   We agreed the cash balance on the bank reconciliation
                                      as at the CBS date to the opening balance on the subsequent
                                           month's bank statement.
                                      9.   We vouched all outstanding cheques on the bank
                                      reconciliation greater than $50,000 to a subsequent bank
                                           statement to determine whether they have cleared the
                                           bank.
                                      10. We confirmed cash equivalents with the counterparty.
                                      11. We confirmed cash security for secured notes payable as
                                      disclosed in the CBS with Wachovia Bank of Delaware
                                          ("Wachovia") and cash security for directors' liability
                                          as disclosed in the CBS with Aird & Berlis.
                                      12. We agreed accounts receivable greater than $50,000 to
                                      subsequent receipts.
                                      13. We obtained written confirmation of the amounts due from
                                      and due to the following related parties as at the CBS date:
                                          The Ravelston Corporation Limited ("RCL"), Ravelston
                                          Management Inc. ("RMI") and former directors, and we
                                          agreed the amounts to the CBS.
                                      14. We agreed amounts receivable from and payable to
                                      Hollinger International Inc. ("International") and its
                                          subsidiaries to the trial balance.
                                      15. We agreed amounts and dates of prepaid expenses greater
                                      than $50,000 to invoices and we recalculated the prepaid
                                          portion for mathematical accuracy.
</Table>

                                       C-31
<PAGE>

(ZEIFMAN LOGO)

     16.   We agreed the number of shares of International to confirmations
           obtained from Wachovia and Computershare Trust Company of Canada
           ("Computershare") of collateral held.

     17.   We agreed the market value of International's Class A shares used by
           the Company to the market value at the CBS date shown on the Yahoo
           Finance website.

     18.   We multiplied the number of shares of International by the market
           value and agreed the result to the value given for the investment in
           the CBS.

     19.   We agreed the number of units of Hollinger Canadian Newspapers,
           Limited Partnership ("HCNLP") to a copy of the unit certificate.

     20.   We agreed the market price of the units of HCNLP to the Yahoo Finance
           website at the CBS date.

     21.   We multiplied the number of units of HCNLP by the market price and
           agreed the result to the value given for the investment in the CBS.

     22.   We agreed the value given for the investment in Cayman Free Press in
           the CBS to a schedule provided by the Company.

     23.   For the investment in the real estate division of Domgroup Ltd.
           ("DRE"):

        (a)   We agreed the investment amount to a schedule provided by the
              Company showing the investment amount as the total of the market
              value of the properties held by DRE, their cash and short-term
              investments, their vendor take back mortgage receivable, net of
              pension liabilities.

        (b)   we agreed the market value of the DRE properties to a copy of a
              valuation.

        (c)   We confirmed cash and short-term investments with the
              counterparty.

        (d)   We compared the amount of the vendor take back mortgage resulting
              from the sale of one of the DRE properties to a copy of the
              mortgage document.

        (e)   We obtained written confirmation of the vendor take back mortgage
              from the debtor.

        (f)   We agreed the DRE pension liability to a schedule provided by the
              Company that reflects the balance of the December 31, 2003
              actuarial report (the last available report) and subsequent
              changes to the pension liabilities.

        (g)   We agreed the December 31, 2003 balance on the schedule to an
              actuarial report for that date.

        (h)   We agreed the changes to the pension liabilities greater than
              $50,000 during 2004 on the schedule to payment support.

     24.   We agreed other investments greater than $50,000 to the trial
           balance.

     25.   We agreed property and equipment additions greater than $50,000 for
           the period from January 1, 2003 to the CBS date to invoices.

     26.   We checked the mathematical accuracy of the calculations of
           amortization of property and equipment.

     27.   We agreed additions to deferred financing cost to invoices or other
           supporting documents.

     28.   We checked the mathematical accuracy of the calculation of
           amortization of the deferred financing costs.

     29.   We agreed the amount of accounts payable to listings provided by the
           Company.

     30.   We agreed amounts in accounts payable as at the CBS date greater than
           $50,000 to invoices.

                                       C-32
<PAGE>

(ZEIFMAN LOGO)

     31.   For all payments made between the CBS date and February 28, 2005 and
           greater than $50,000, we determined whether or not such payment was
           in respect of services rendered or goods received prior to the CBS
           date. We compared the amounts that related to the period prior to the
           CBS date to those amounts listed on the accounts payable and accruals
           listing.

     32.   We reviewed a listing of unpaid invoices as at February 28, 2005
           provided to us by the Company and determined whether or not any
           invoices greater than $50,000 were in respect of services rendered or
           goods received prior to the CBS date. We agreed such amounts to the
           listing of accounts payable and accrued expenses.

     33.   We recalculated the amounts due to former directors under the DSUP
           program by multiplying the number of shares owed at the CBS date as
           per a schedule obtained from the Company by the market value of the
           Company's common shares as quoted by Yahoo Finance website as at the
           CBS date.

     34.   We obtained written confirmation of the amount accrued in the CBS as
           owing to the former Chairman and Chief Executive Officer.

     35.   We agreed the amount in the CBS owing to companies controlled by
           former directors to the trial balance.

     36.   We agreed income taxes payable to a schedule prepared by the Company
           and checked the mathematical accuracy of the calculations.

     37.   We obtained written confirmation from Wachovia and HSBC Bank USA,
           National Association of the amount of secured notes payable and
           agreed to the trial balance.

     38.   We confirmed the number of Series II preference shares and common
           shares outstanding with Computershare as at the CBS date.

     39.   We multiplied the number of Series II preference shares confirmed in
           the previous step by the market value of International's Class A
           shares at the CBS date and by the conversion factor stated in the
           articles of the Company and compared the result to the carrying value
           of the Series II preference shares on the CBS.

     40.   We checked the mathematical accuracy of the calculation of accrued
           interest payable with reference to the agreement between the Company
           and the issuer of the secured notes payable and agreed the amount to
           the trial balance.

     41.   We agreed future income taxes to a schedule prepared by the Company.
           We checked the numerical calculations of future income taxes payable
           for mathematical accuracy.

     42.   We agreed other liabilities to a schedule obtained by the Company
           from its actuary.

     43.   We communicated with insurance counsel to enquire if they are in
           agreement with the disclosure and presentation in note 11(j) to the
           CBS.

     44.   We communicated with the Company's lead Canadian and U.S. legal
           counsel to enquire if they are in agreement with the disclosure and
           presentation in the notes to the CBS.

     45.   We obtained a summary of the status of legal actions.

     46.   We agreed the U.S. dollar / Canadian dollar exchange rate used by the
           Company for the CBS to the noon buying rate for the CBS date listed
           on the website of the Federal Reserve Bank of New York www.ny.frb.org
           and checked that this rate was used in all relevant calculations.

                                       C-33
<PAGE>

(ZEIFMAN LOGO)

As a result of applying the above procedures, we found the following exceptions
(with referencing consistent with the steps listed above):

Step 7             Bank confirmations were not returned for the bank accounts of
                   the Company and the head office division of Domgroup Ltd.

Step 10            Confirmations of a guaranteed investment certificate in the
                   amount of $700,000 and a money market investment in the
                   amount of US$10,500,000 (Cdn.$13,280,400) included in cash
                   and cash equivalents were not returned. However, we did agree
                   the amounts to a copy of a document held by the Company.

Step 12            The withholding tax receivable of $166,255 has not been
                   subsequently received.

Step 13            In response to the request for written confirmation of the
                   amount receivable from RMI of $57,392,868, the respondent
                   indicated that the amount owing was only $4,136,102. The
                   difference is $53,256,766.

Step 13            Written confirmation was not received for the amount of
                   $281,000 recorded as receivable from a former director.

Steps 17, 18 and 39In the calculation of the market value of the investment in
                   International, the Company used a stock price of US$17.31.
                   The Yahoo Finance website indicated the closing price for
                   International's Class A shares at the CBS date to be
                   US$17.29. If this latter price was used, the investment in
                   International would be $345,139,209 as compared to the
                   balance of $345,538,444 in note 5 to the CBS, for a
                   difference of $399,235. Similarly, the Company's Series II
                   preference shares would be $17,331,947 as compared to the
                   balance of $17,352,006 in note 8 to the CBS, for a difference
                   of $20,059.

Step 20            We could not obtain a price for September 30, 2004. We did
                   agree the price used by the Company to the closing price on
                   October 20, 2004 as reported by Bloomberg.

Step 23(b)         No independent valuation was provided for the DRE properties
                   other than the Dufferin/ Lawrence property.

Step 23(c)         Written confirmation of a $1,000,000 guaranteed investment
                   certificate was not returned. However, we agreed the amount
                   to a copy of a document held by the Company.

Step 23(c)         Bank confirmations were not returned for the bank accounts of
                   DRE. However, all bank balances were agreed to the opening
                   balance as reported on the subsequent bank statement with the
                   exception of one account with a general ledger balance of
                   $15,848.

Step 25            The only addition to capital assets in excess of $50,000 that
                   we identified was an acquisition of hardware and software
                   from International in the amount of $138,614 for which no
                   invoice was obtained. This was agreed to a schedule provided
                   by the Company.

Step 31            The Company could not locate support for two items that were
                   paid subsequent to the CBS date. Accordingly, we could not
                   determine whether these items related to the period before
                   the CBS date. The aggregate of these two items is $170,828.

Step 39            The conversion factor for the Series II preference shares is
                   not in the articles. We agreed it to the Company's May 6,
                   1999 press release as it appears on the Company's website
                   www.hollingerinc.com

                                       C-34
<PAGE>

(ZEIFMAN LOGO)

These procedures do not constitute an audit of the CBS and therefore we express
no opinion on the CBS.

This letter is being furnished for the sole benefit of the addressees hereof for
the purpose of the valuation report being prepared by the recipient GMP
Securities Ltd. in connection with the proposed going private transaction of the
Company (the "Valuation Report"), and may not be relied upon by any other person
or entity or for any other purpose without our prior written consent. We
acknowledge that this letter may be referred to or included in the Valuation
Report.

Toronto, Ontario                                 (Signed) Zeifman & Company, LLP
March 4, 2005                                              Chartered Accountants

                                       C-35
<PAGE>

(GMP LOGO)

                    APPENDIX 2 -- THE CHICAGO GROUP FORECAST

                 HOLLINGER INTERNATIONAL INC. -- CHICAGO GROUP

                            STATEMENT OF OPERATIONS
        For the Years Ended December 31, 2003, 2002 and 2001 and for the
          pro-forma years ended 2009, 2008, 2007, 2006, 2005 and 2004
                 (In thousands US$, except percentage amounts)
<Table>
<Caption>
                         1999       2000       2001       2002         2003        2004F      2005F      2006F      2007F
                       --------   --------   --------   --------   ------------   --------   --------   --------   --------
<S>                    <C>        <C>        <C>        <C>        <C>            <C>        <C>        <C>        <C>
Operating revenues:
Advertising..........  $294,124   $305,027   $338,521   $341,262     $352,029     $366,110   $388,077   $393,898   $393,898
Circulation..........    80,551     80,261     92,716     89,427       86,532       89,041     92,069     94,094     94,565
Job printing and
 other...............    15,798     16,129     11,647     11,089       12,228       12,350     12,474     12,599     12,725
                       --------   --------   --------   --------     --------     --------   --------   --------   --------
Total operating
 revenues............   390,473    401,417    442,884    441,778      450,789      467,502    492,619    500,591    501,187
Operating costs:
Newsprint............    64,408     69,238     76,399     60,146       65,109       74,945     84,093     84,011     80,507
Compensation costs...   147,951    151,648    178,672    170,895      170,483      173,893    177,371    180,918    184,536
Other operating
 costs...............   112,925    123,197    144,963    136,141      154,985      147,176    152,027    154,487    154,671
Depreciation.........     8,929     11,141     17,955     18,847       19,344       19,731     20,125     20,528     20,939
Amortization.........    11,026     12,942     19,933     17,151       16,354       16,354     16,354     16,354     16,354
                       --------   --------   --------   --------     --------     --------   --------   --------   --------
Total operating
 costs...............   345,239    368,166    437,922    403,180      426,275      432,098    449,970    456,298    457,007
                       --------   --------   --------   --------     --------     --------   --------   --------   --------
Operating income.....    45,234     33,251      4,962     38,598       24,514       35,404     42,650     44,293     44,181
Operating revenue
 growth:
Advertising..........                 3.7%      -6.7%       0.8%         3.2%         4.0%       6.0%       1.5%       0.0%
Circulation..........                -0.4%      -3.5%      -3.5%        -3.2%         2.9%       3.4%       2.2%       0.5%
Job printing and
 other...............                 2.1%     -27.8%      -4.8%        10.3%         1.0%       1.0%       1.0%       1.0%
                                  --------   --------   --------     --------     --------   --------   --------   --------
Total operating
 revenues............                 2.8%      10.3%      -0.2%         2.0%         3.7%       5.4%       1.6%       0.1%
Newsprint tonnes:....                         127,000    132,000      138,000      137,724    137,586    137,449    137,174
 Growth..............                                       3.9%         4.5%        -0.2%      -0.1%      -0.1%      -0.2%
Cost per tonne:......                             602        456          472          544        611        611        587

<Caption>
                        2008F      2009F
                       --------   --------
<S>                    <C>        <C>
Operating revenues:
Advertising..........  $411,623   $433,851
Circulation..........    97,213    100,615
Job printing and
 other...............    12,852     12,980
                       --------   --------
Total operating
 revenues............   521,688    547,446
Operating costs:
Newsprint............    83,921     89,480
Compensation costs...   188,227    191,992
Other operating
 costs...............   160,998    168,947
Depreciation.........    21,357     21,784
Amortization.........    16,354     16,354
                       --------   --------
Total operating
 costs...............   470,857    488,557
                       --------   --------
Operating income.....    50,831     58,890
Operating revenue
 growth:
Advertising..........      4.5%       5.4%
Circulation..........      2.8%       3.5%
Job printing and
 other...............      1.0%       1.0%
                       --------   --------
Total operating
 revenues............      4.1%       4.9%
Newsprint tonnes:....   136,899    136,626
 Growth..............     -0.2%      -0.2%
Cost per tonne:......       613        655
</Table>

<Table>
<Caption>
                                                                   SEASONALITY
                         2002       2003       2002       2003        INDEX
                       --------   --------   --------   --------   ------------
<S>                    <C>        <C>        <C>        <C>        <C>
SEASONALITY
 ASSUMPTIONS:
Q1 revenue............  104,735    106,014        24%        24%          24%
Q2 revenue............  113,464    115,985        26%        26%          26%
Q3 revenue............  110,445    111,994        25%        25%          25%
Q4 revenue............  113,134    116,796        26%        26%          26%
                       --------   --------   --------   --------     --------
Total revenue.........  441,778    450,789       100%       100%         100%
</Table>
<Table>
<Caption>
                                                                                   2004F      2005F      2006F      2007F
                                                                                  --------   --------   --------   --------
<S>                        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
WORKING CAPITAL ACCOUNTS:
 Days receivable
   assumption:............                  78                                     100,407    105,802    107,514    107,642
 Days payable
   assumption:............                  69                                      75,101     78,416     79,539     79,596
 Days inventory
   assumption:............                  49                                       9,959     11,174     11,163     10,698
                                      --------                                    --------   --------   --------   --------
Total working capital
 invested.................                                                          35,265     38,561     39,138     38,744
                                                                                  --------   --------   --------   --------
Change in working
 capital..................                                                                      3,296        577       (394)
                                                                                  --------   --------   --------   --------

<Caption>
                             2008F      2009F
                            --------   --------
<S>                         <C>        <C>
WORKING CAPITAL ACCOUNTS:
 Days receivable
   assumption:............   112,045    117,577
 Days payable
   assumption:............    82,143     85,419
 Days inventory
   assumption:............    11,151     11,890
                            --------   --------
Total working capital
 invested.................    41,053     44,049
                            --------   --------
Change in working
 capital..................     2,309      2,995
                            --------   --------
</Table>

                                       C-36
<PAGE>

(GMP LOGO)

                       APPENDIX 3 -- THE COMMUNITY GROUP

        HOLLINGER INTERNATIONAL INC. -- COMMUNITY GROUP (JERUSALEM POST)

                            STATEMENT OF OPERATIONS
        For the Years Ended December 31, 2003, 2002 and 2001 and for the
          pro-forma years ended 2009, 2008, 2007, 2006, 2005 and 2004
                 (In thousands US$, except percentage amounts)

<Table>
<Caption>
                                                                                                 2004F         2004F
                                                               2001       2002       2003      FULL YEAR     TO DEC 15
                                                              -------    -------    -------    ---------    -----------
<S>                                                           <C>        <C>        <C>        <C>          <C>
Operating revenues:
Advertising.................................................  $ 5,806    $ 3,937    $ 3,585     $ 3,689       $ 3,541
Circulation.................................................    7,751      6,082      5,717       5,774         5,543
Job printing and other......................................    5,558      3,212      1,095       1,117         1,072
                                                              -------    -------    -------     -------       -------
Total operating revenues....................................   19,115     13,231     10,397      10,580        10,156
Operating costs:
Newsprint...................................................    2,031      1,501        949         958           920
Compensation costs..........................................    9,817      7,161      6,735       6,004         5,764
Other operating costs.......................................    9,613      7,417      7,969       6,454         6,195
Depreciation................................................    1,268      2,370      1,345       1,399         1,343
Amortization................................................      873          0          0           0             0
                                                              -------    -------    -------     -------       -------
Total operating costs.......................................   23,602     18,449     16,998      14,815        14,221
                                                              -------    -------    -------     -------       -------
Operating income............................................   (4,487)    (5,218)    (6,601)     (4,235)       (4,066)
</Table>

<Table>
<Caption>
                                                                   2004F
                                                                -----------
<S>                                                             <C>
ASSUMPTIONS:
(1) Assume advertising revenue growth of:...................       2.9%
(2) Assume circulation revenue growth of:...................       1.0%
(3) Assume job printing and other revenue growth of:........       2.0%
(4) Assume newsprint is a function of circulation and use
  2003 percentage of sales to forecast......................        17%
(5) Compensation costs are a function of total revenue
  (average last 3 years)....................................        57%
(6) Other operating costs are a function of total revenue
  (average last 3 years)....................................        61%
(7) Depreciation expense growth of :........................         4%
(8) Amortization expense growth of:.........................         0%
</Table>

<Table>
<Caption>
                                                                                     SEASONALITY    INCLUDE UP       REVENUE
                                             2002      2003     2002      2003          INDEX       TO DEC 15TH    TO DEC 15TH
                                            ------    ------    ----    ---------    -----------    -----------    -----------
<S>                                         <C>       <C>       <C>     <C>          <C>            <C>            <C>
SEASONALITY ASSUMPTIONS:
Q1 revenue................................   3,225     2,742    24%        26%            25%          100%            25%
Q2 revenue................................   3,877     2,589    29%        25%            27%          100%            27%
Q3 revenue................................   3,042     2,490    23%        24%            23%          100%            23%
Q4 revenue................................   3,087     2,576    23%        25%            24%           83%            20%
                                            ------    ------    ---        ---          -----          ----           ----
Total revenue.............................  13,231    10,397    100%      100%           100%                          96%
                                            ======    ======    ===        ===          =====          ====           ====
</Table>

                                       C-37
<PAGE>

(GMP LOGO)

                   APPENDIX 4 -- THE CANADIAN NEWSPAPER GROUP

            HOLLINGER INTERNATIONAL INC. -- CANADIAN NEWSPAPER GROUP

                            STATEMENT OF OPERATIONS

        For the Years Ended December 31, 2003, 2002 and 2001 and for the
          pro-forma years ended 2009, 2008, 2007, 2006, 2005 and 2004
                 (In thousands US$, except percentage amounts)

<Table>
<Caption>
                                       2001      2002      2003      2004F       2005F       2006F     2007F     2008F     2009F
                                     --------   -------   -------   -------   -----------   -------   -------   -------   -------
<S>                                  <C>        <C>       <C>       <C>       <C>           <C>       <C>       <C>       <C>
Operating revenues:
Advertising........................  $130,377   $49,355   $58,854   $59,384     $59,918     $60,637   $61,365   $62,101   $62,846
Circulation........................    41,761    10,864    11,688    12,050      12,472      12,759    12,848    13,234    13,710
Job printing and other.............    25,810     9,407    10,000    10,100      10,201      10,303    10,406    10,510    10,615
                                     --------   -------   -------   -------     -------     -------   -------   -------   -------
Total operating revenues...........   197,948    69,626    80,542    81,534      82,591      83,699    84,619    85,845    87,172
Operating costs:
Newsprint..........................    32,769     5,210     6,810     6,276       7,050       7,050     6,769     7,070     7,554
Compensation costs.................    77,005    33,713    43,511    36,947      37,426      37,928    38,345    38,900    39,501
Other operating costs..............   122,300    31,539    33,648    40,457      40,981      41,531    41,988    42,596    43,254
Depreciation.......................     6,661     1,301     1,556     1,587       1,619       1,651     1,684     1,718     1,752
Amortization.......................     5,167         0         0         0           0           0         0         0         0
                                     --------   -------   -------   -------     -------     -------   -------   -------   -------
Total operating costs..............   243,902    71,763    85,525    85,267      87,076      88,160    88,786    90,285    92,062
                                     --------   -------   -------   -------     -------     -------   -------   -------   -------
Operating income...................   (45,954)   (2,137)   (4,983)   (3,733)     (4,484)     (4,461)   (4,167)   (4,440)   (4,890)
Operating revenue growth:
Advertising........................              -62.1%     19.2%      0.9%        0.9%        1.2%      1.2%      1.2%      1.2%
Circulation........................              -74.0%      7.6%      3.1%        3.5%        2.3%      0.7%      3.0%      3.6%
Job printing and other.............              -63.6%      6.3%      1.0%        1.0%        1.0%      1.0%      1.0%      1.0%
                                     --------   -------   -------   -------     -------     -------   -------   -------   -------
Total operating revenues...........              -64.8%     15.7%      1.2%        1.3%        1.3%      1.1%      1.4%      1.5%
Newsprint tonnes:..................    13,200    10,900    11,534    11,534      11,534      11,534    11,534    11,534    11,534
Growth.............................              -17.4%      5.8%      0.0%        0.0%        0.0%      0.0%      0.0%      0.0%
Cost per tonne:....................       516       576       611       544         611         611       587       613       655
</Table>

<Table>
<Caption>
                                                                              SEASONALITY
                                       2002      2003      2002      2003        INDEX
                                     --------   -------   -------   -------   -----------
<S>                                  <C>        <C>       <C>       <C>       <C>           <C>       <C>       <C>       <C>
SEASONALITY ASSUMPTIONS:
Q1 revenue.........................    15,464    17,036       22%       21%         22%
Q2 revenue.........................    18,978    22,433       27%       28%         28%
Q3 revenue.........................    16,017    18,639       23%       23%         23%
Q4 revenue.........................    19,167    22,434       28%       28%         28%
                                     --------   -------   -------   -------     -------
Total revenue......................    69,626    80,542      100%      100%        100%
                                     ========   =======   =======   =======     =======
</Table>

<Table>
<Caption>
                                                                              2004F    2005F    2006F    2007F    2008F    2009F
                                                                              ------   -----    ------   ------   ------   ------
<S>                                               <C>       <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
WORKING CAPITAL ACCOUNTS:
  Days receivable assumption:............................       78            17,511   17,738   17,976   18,174   18,437   18,722
  Days payable assumption:...............................       69            15,869   16,206   16,406   16,518   16,796   17,127
  Days inventory assumption:.............................       49               834      937      937      900      940    1,004
                                                            ------            ------   ------   ------   ------   ------   ------
Total working capital invested...........................                      2,476    2,469    2,507    2,555    2,581    2,599
                                                                              ------   ------   ------   ------   ------   ------
Change in working capital................................                                  (7)      38       48       25       19
                                                                              ======   ======   ======   ======   ======   ======
</Table>

                                       C-38
<PAGE>

(GMP LOGO)

<Table>
<Caption>
                                                              2004F    2005F    2006F    2007F    2008F    2009F
                                                              ------   -----    ------   ------   ------   ------
<S>                                                           <C>      <C>      <C>      <C>      <C>      <C>
ASSUMPTIONS:
(1) Assume advertising revenue growth of:...................    0.9%     0.9%     1.2%     1.2%     1.2%     1.2%
(2) Assume circulation growth of:...........................    0.0%     0.0%     0.0%     0.0%     0.0%     0.0%
(3) Assume circulation price increase of:...................    3.1%     3.5%     2.3%     0.7%     3.0%     3.6%
(4) Assume circulation revenue growth of:...................    3.1%     3.5%     2.3%     0.7%     3.0%     3.6%
(5) Assume job printing and other revenue growth of:........    1.0%     1.0%     1.0%     1.0%     1.0%     1.0%
(6) Compensation costs are a function of total revenue
    (average last 3 years)..................................   45.3%    45.3%    45.3%    45.3%    45.3%    45.3%
(7) Other operating costs are a function of total revenue
    (average last 3 years)..................................   49.6%    49.6%    49.6%    49.6%    49.6%    49.6%
(8) Depreciation expense growth of :........................    2.0%     2.0%     2.0%     2.0%     2.0%     2.0%
(9) Amortization expense growth of:.........................    0.0%     0.0%     0.0%     0.0%     0.0%     0.0%
</Table>

                                       C-39
<PAGE>

(GMP LOGO)

                  APPENDIX 5 -- INVESTMENT AND CORPORATE GROUP

         HOLLINGER INTERNATIONAL INC. -- INVESTMENT AND CORPORATE GROUP

                            STATEMENT OF OPERATIONS
        For the Years Ended December 31, 2003, 2002 and 2001 and for the
          pro-forma years ended 2009, 2008, 2007, 2006, 2005 and 2004
                               (In thousands US$)

<Table>
<Caption>
                                   2001       2002       2003      2004F      2005F      2006F      2007F      2008F      2009F
                                 --------   --------   --------   --------   --------   --------   --------   --------   --------
<S>                              <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Operating costs:
Compensation costs.............  $  2,773   $  3,171   $ 10,686   $  4,066   $  4,147   $  4,230   $  4,315   $  4,401   $  4,489
Other operating costs..........    13,544     14,324     31,089     14,983     15,282     15,588     15,900     16,218     16,542
Depreciation...................     1,356      1,720      1,821      1,857      1,895      1,932      1,971      2,011      2,051
Amortization...................       681          0          0          0          0          0          0          0          0
                                 --------   --------   --------   --------   --------   --------   --------   --------   --------
Total operating costs..........    18,354     19,215     43,596     20,906     21,324     21,751     22,186     22,629     23,082
                                 --------   --------   --------   --------   --------   --------   --------   --------   --------
Operating income...............   (18,354)   (19,215)   (43,596)   (20,906)   (21,324)   (21,751)   (22,186)   (22,629)   (23,082)
</Table>

<Table>
<Caption>
                                                                   2004F      2005F      2006F      2007F      2008F      2009F
                                                                  --------   --------   --------   --------   --------   --------
<S>                                         <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
WORKING CAPITAL ACCOUNTS:
  Days payable assumption:................        69                 3,612      3,685      3,758      3,834      3,910      3,988
                                            --------              --------   --------   --------   --------   --------   --------
Total working capital invested............                          (3,612)    (3,685)    (3,758)    (3,834)    (3,910)    (3,988)
                                                                  --------   --------   --------   --------   --------   --------
Change in working capital.................                                        (72)       (74)       (75)       (77)       (78)
                                                                  ========   ========   ========   ========   ========   ========
</Table>

<Table>
<Caption>
                                                               2004F      2005F      2006F      2007F      2008F      2009F
                                                              --------   --------   --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>        <C>        <C>
ASSUMPTIONS:
(1) Compensation costs growth of:...........................      2.0%       2.0%       2.0%       2.0%       2.0%       2.0%
(2) Other operating costs growth of:........................      2.0%       2.0%       2.0%       2.0%       2.0%       2.0%
(3) Depreciation expense growth of :........................      2.0%       2.0%       2.0%       2.0%       2.0%       2.0%
(4) Amortization expense growth of:.........................      0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
</Table>

                                       C-40
<PAGE>

(GMP LOGO)

                 APPENDIX 6 -- CONSOLIDATED FINANCIAL FORECAST

                 HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS
        For the Years Ended December 31, 2003, 2002 and 2001 and for the
          pro-forma years ended 2009, 2008, 2007, 2006, 2005 and 2004
                               (In thousands US$)
<Table>
<Caption>
                                   2001         2002         2003       2004F      2005F      2006F      2007F      2008F
                                ----------   ----------   ----------   --------   --------   --------   --------   --------
<S>                             <C>          <C>          <C>          <C>        <C>        <C>        <C>        <C>
Operating revenues:
  Advertising.................  $  804,462   $  710,849   $  733,826   $619,568   $447,995   $454,535   $455,263   $473,725
  Circulation.................     278,321      247,175      277,264    208,950    104,541    106,853    107,413    110,446
  Job printing and other......      25,092       16,669       16,427     39,045     22,675     22,902     23,131     23,362
  Other.......................      38,446       31,469       33,686          0          0          0          0          0
                                ----------   ----------   ----------   --------   --------   --------   --------   --------
Total operating revenues......   1,146,321    1,006,162    1,061,203    867,562    575,211    584,290    585,806    607,533
Operating costs and expenses
  Newsprint...................     127,025       86,935       72,868    126,651     91,142     91,061     87,276     90,991
  Newsprint incurred through
    joint ventures............      77,399       60,589       75,402          0          0          0          0          0
  Compensation................     361,676      309,032      338,903    281,764    218,943    223,076    227,196    231,529
  Other operating costs.......     494,003      388,670      459,493    370,272    208,291    211,607    212,560    219,813
  Other operating costs
    incurred through joint
    ventures..................      48,473       46,677       49,667          0          0          0          0          0
  Depreciation................      37,968       37,001       38,499     32,995     23,671     24,145     24,628     25,120
  Amortization................      35,760       17,151       16,354     16,354     16,354     16,354     16,354     16,354
                                ----------   ----------   ----------   --------   --------   --------   --------   --------
Total operating costs and
  expenses....................   1,182,304      946,055    1,051,186    828,037    558,402    566,243    568,014    583,807
                                ----------   ----------   ----------   --------   --------   --------   --------   --------
Operating income (loss).......     (35,983)      60,107       10,017     39,526     16,809     18,047     17,793     23,725

<Caption>
                                 2009F
                                --------
<S>                             <C>
Operating revenues:
  Advertising.................  $496,697
  Circulation.................   114,325
  Job printing and other......    23,595
  Other.......................         0
                                --------
Total operating revenues......   634,618
Operating costs and expenses
  Newsprint...................    97,033
  Newsprint incurred through
    joint ventures............         0
  Compensation................   235,983
  Other operating costs.......   228,745
  Other operating costs
    incurred through joint
    ventures..................         0
  Depreciation................    23,835
  Amortization................    16,354
                                --------
Total operating costs and
  expenses....................   601,950
                                --------
Operating income (loss).......    32,668
</Table>

<Table>
<Caption>
                                                2002         2003      AVERAGE
                                             ----------   ----------   --------
<S>                             <C>          <C>          <C>          <C>
WORKING CAPITAL RATIOS:
Days receivables..........................           75           82         78
Days payable..............................           66           72         69
Days inventory............................           43           54         49
</Table>

RATIO NOTES:

Days receivable = (Accounts receivable / Total operating revenues) * 365
Days payable = (Labor and benefits + Other accounts payable / (newsprint +
compensation + other operating costs)) * 365
Days inventory = (Inventory / newsprint) * 365

                                       C-41
<PAGE>

(GMP LOGO)

            APPENDIX 7 -- INTERNATIONAL CASH BALANCE RECONCILIATION

           HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED

                          CASH BALANCE RECONCILIATION
                                At March 1, 2005
                               (in thousands US$)

<Table>
<S>                                                             <C>
CASH:
Balance at September 30th, 2004.............................    $ 747,661
  Special Dividend..........................................     (227,000)
  Special Dividend..........................................     (273,000)
  Sale of Trump JV..........................................       70,700
  Sale of Community Group...................................       13,200
  CanWest Debentures........................................      121,922
  Interest on CanWest Debentures............................        1,053
  Interest on Horizon Notes.................................          225
  Regular dividend..........................................       (4,534)
  Dividend paid by HCN L.P. ................................         (740)
  Repayment of 9% Senior Notes..............................       (6,000)
  Estimated EBITDA from Chicago.............................       30,871
  Estimated EBITDA from Canadian............................       (1,008)
  Estimated EBITDA from Corporate...........................       (8,780)
  Estimated EBITDA from Community...........................         (114)
                                                                ---------
Estimated balance at March 1, 2005..........................      464,455
                                                                =========
</Table>

                                       C-42
<PAGE>

(GMP LOGO)

              APPENDIX 8 -- INTERNATIONAL ESTIMATED COST OF EQUITY

            HOLLINGER INTERNATIONAL INC. CAPITAL ASSET PRICING MODEL

                        THE CAPITAL ASSET PRICING MODEL
C(e) = R(f) + BETA ( R(m) - R(f) )

WHERE C(e) = the estimated cost of equity
Where R(f) = the risk free rate (10 year US Government Bonds)
Where R(m) = the expected return on the market
Where BETA = the observed BETA of Hollinger International Inc. versus the S&P
500 index

FOR HOLLINGER INTERNATIONAL INC.:

Where R(f) = 4.3%
Where R(m) = 9.5%
Where BETA = 0.84
---------------

*  Source: Bloomberg
So, C(e) = 8.7%

<Table>
<Caption>
COMPARABLE COMPANIES                                          BETA    UNLEVERED    ADJUSTED(1)
--------------------                                          ----    ---------    -----------
<S>                                                           <C>     <C>          <C>
Belo Corp...................................................  1.06      0.83          0.97
Dow Jones & Co..............................................  1.08      0.99          1.14
The EW Scripps Company......................................  0.77      0.74          0.86
Gannett.....................................................  0.70      0.62          0.71
Journal Register Company....................................  0.84      0.50          0.58
Knight-Ridder Inc...........................................  0.86      0.72          0.84
Lee Enterprises Inc.........................................  0.83      0.78          0.91
New York Times Company......................................  0.75      0.66          0.77
The McClatchy Company.......................................  0.75      0.72          0.83
Tribune Company.............................................  0.72      0.66          0.76
Washington Post Company.....................................  0.82      0.79          0.92
                                                              ----      ----          ----
Average:....................................................  0.83      0.73          0.85
</Table>

---------------

* Source: Bloomberg

(1) The adjusted beta has been re-levered using the industry average capital
    structure.

(2) The adjusted industry SS of 0.85 closely approximates Hollinger
    International's actual SS of 0.84.

                                       C-43
<PAGE>

(GMP LOGO)

     APPENDIX 9 - INTERNATIONAL ESTIMATED WEIGHTED AVERAGE COST OF CAPITAL

         HOLLINGER INTERNATIONAL INC. WEIGHTED AVERAGE COST OF CAPITAL
                                At March 1, 2005
                   (In thousands, except percentage amounts)

WACC CALCULATIONS

<Table>
<Caption>
                                                              INDUSTRY     REQUIRED
                                                               CAPITAL     RATE OF     AFTER-TAX
                                                              STRUCTURE     RETURN      RETURN
                                                              ---------    --------    ---------
<S>                                                           <C>          <C>         <C>
Debt(1).....................................................      20         5.9%        3.7%
Equity......................................................      80         8.7%        8.7%
                                                                 ---         ----        ----
                                                                 100                     7.7%
                                                                 ===                     ====
</Table>

<Table>
<S>                                                           <C>      <C>
Estimated tax rate(2).......................................   37.0%
Weighted average cost of capital(3):........................    7.7%
</Table>

COMPARABLE COMPANIES

<Table>
<Caption>
                                                                    DEBT /
                                                                EQUITY RATIO %
                                                                --------------
<S>                                                             <C>
Belo Corp...................................................         42.7%
Dow Jones & Co..............................................         14.8%
The EW Scripps Company......................................          6.4%
Gannett.....................................................         22.4%
Journal Register Company....................................        106.0%
Knight-Ridder Inc...........................................         29.8%
Lee Enterprises Inc.........................................          9.5%
New York Times Company......................................         19.5%
The McClatchy Company.......................................          7.8%
Tribune Company.............................................         15.7%
Washington Post Company.....................................          5.7%
                                                                    ------
Average:....................................................         25.5%
</Table>

---------------

* Source: Bloomberg

                                       C-44
<PAGE>

(GMP LOGO)

           APPENDIX 10 -- INTERNATIONAL DISCOUNTED CASH FLOW ANALYSIS

        HOLLINGER INTERNATIONAL INC. DISCOUNTED FREE CASH FLOW ANALYSIS
                                At March 1, 2005
                    (In thousands, except per share amounts)

<Table>
<Caption>
                                    1-MAR-05     2005F      2006F      2007F      2008F      2009F
                                   ----------   --------   --------   --------   --------   --------
<S>                                <C>          <C>        <C>        <C>        <C>        <C>
CASH FLOW AVAILABLE TO ALL
  HOLDERS OF CAPITAL:
  Chicago operating income.......               $ 42,650   $ 44,293   $ 44,181   $ 50,831   $ 58,890
  Corporate operating income.....                (21,324)   (21,751)   (22,186)   (22,629)   (23,082)
  Less: estimated adjusted
     taxes.......................                (13,942)   (14,392)   (14,189)   (16,486)   (19,300)
                                                --------   --------   --------   --------   --------
     Net operating profit less
       adjusted taxes............                  7,384      8,151      7,806     11,716     16,508
  Add: depreciation and
     amortization................                 38,374     38,814     39,264     39,722     40,189
                                                --------   --------   --------   --------   --------
     Gross cash flow.............                 45,758     46,965     47,070     51,438     56,697
  Required capital
     expenditures................                (17,298)   (18,227)   (18,522)   (18,544)   (19,302)
  Estimated working capital
     changes.....................                 (3,223)      (504)       469     (2,233)    (2,917)
                                                --------   --------   --------   --------   --------
Cash flow available to all
  holders of capital.............                 25,237     28,234     29,017     30,661     34,478
Prorate 2005F cash flow available
  to all holders of capital......                 21,031
PRESENT VALUE OF PRO-FORMA CASH
  FLOWS:
  Weighted average cost of
     capital.....................         7.7%
  Fraction of a year to
     discount....................                   5/12     1 4/12     2 4/12     3 4/12     4 4/12
  PV of free cash flow...........                 20,394     25,589     24,427     23,975     25,041
RESIDUAL PRESENT VALUE:
  Residual year free cash flow...      35,355
  Residual year free cash flow
     growth rate assumption......        2.55%
  Residual year capitalization
     rate (WACC -- assumed
     growth).....................        5.11%
  Residual value.................     674,281
                                   ----------
Residual present value...........     471,983
NET PRESENT VALUE:
  Present value of free cash
     flows.......................     119,425
  Cash...........................     394,455
  Present value of debt
     outstanding.................       8,396
  Market value of holdings in
     Canadian Group..............     136,406
                                   ----------
Net present value................   1,113,873     High       Low
                                   ----------   --------   --------
ESTIMATED VALUE PER SHARE........  $    12.28   $  12.84   $  11.81
                                   ----------   --------   --------
</Table>

                                       C-45
<PAGE>

(GMP LOGO)

               APPENDIX 11 -- HOLLINGER ESTIMATED NET ASSET VALUE

            HOLLINGER INC. ESTIMATED NET ASSET VALUE BASED VALUATION
                                At March 1, 2005
                       (In thousands, except share data)

<Table>
<Caption>
                                                                 HIGH            LOW
                                                              -----------    -----------
<S>                                                           <C>            <C>
                                         ASSETS
CURRENT:
  Cash......................................................  $    65,614    $    65,614
  Cash from International dividend..........................       55,532         55,532
  Accounts receivable.......................................        1,051          1,051
  Amounts due from related parties..........................       72,127         72,127
  Prepaid expenses..........................................        1,148          1,148
OTHER:
Investments in Hollinger International Inc. (1).............      221,463        209,686
Other investments...........................................       33,955         33,955
Property and equipment......................................          895            895
Deferred financing costs and other assets...................            0              0
Future income tax asset.....................................       28,522         28,522
                                                              -----------    -----------
TOTAL ASSETS................................................  $   480,308    $   468,531
                                                              ===========    ===========
                                      LIABILITIES
CURRENT:
Accounts payable and accrued expenses.......................  $    32,646    $    32,646
Amounts due to related parties..............................       28,183         28,183
LONG-TERM:
Long-term debt..............................................      111,381        111,381
Amounts due to related parties..............................       25,738         25,738
Other liabilities and deferred credits......................          697            697
                                                              -----------    -----------
TOTAL LIABILITIES...........................................  $   198,645    $   198,645
                                                              ===========    ===========
NET ASSET VALUE.............................................      281,663        269,886
Retractable common shares outstanding.......................   34,945,776     34,945,776
NET VALUE PER SHARE.........................................  $      8.06    $      7.72
</Table>

---------------

Note:

(1)  This amount excludes the value of Class A Shares of International held for
     exchange of Series II Preferred Shares of Hollinger.

                                       C-46
<PAGE>

(GMP LOGO)

           HOLLINGER INC. AND SUBSIDIARIES CONSOLIDATED CASH BALANCE
                                At March 1, 2005
                                 (in thousands)

<Table>
<Caption>
                                                                US$          C$ (2)
                                                              -------        -------
<S>                                                           <C>            <C>
CASH:
  Balance at February 28th, 2005 (1)........................  $54,994        $67,911
  Less: dividends owing to Series II Preferred shares from
     Special dividend paid January 18th, 2005 (3)...........   (1,859)        (2,296)
                                                              -------        -------
Balance at March 1, 2005....................................  $53,134        $65,614
                                                              =======        =======
</Table>

---------------

Notes:

(1)  Cash balance taken from schedule provided by Hollinger Inc.

(2)  Converted at US$0.8098/$.

(3)  This amount due to the Series II Preferred Shares.

             HOLLINGER INC. MARCH 1, 2005 SPECIAL DIVIDEND SCHEDULE
                                At March 1, 2005
                                 (in thousands)

<Table>
<Caption>
                                                                US$     C$ (1)
                                                              -------   -------
<S>                                                           <C>       <C>
Special dividend paid March 1, 2005 (2).....................  $44,970   $55,532
</Table>

---------------

Notes:

(1)  Converted to C$ at US$0.8098/$.

(2)  Based on 14,990,000 Class B Shares of International at US$3.00 per share.
     Hollinger Inc. expects to recover withholding tax therefore no 5%
     withholding tax deducted from these amounts.

           HOLLINGER INC. INVESTMENTS IN HOLLINGER INTERNATIONAL INC.
                                At March 1, 2005
                    (In thousands, except per share amounts)

<Table>
<Caption>
                                                                HIGH       LOW
                                                              --------   --------
<S>                                                           <C>        <C>
Value per Class B shares of Hollinger International Inc.
  (1).......................................................  $  14.77   $  13.99
Value of 14,990,000 Class B Shares held (2).................  $221,463   $209,686
</Table>

---------------

Notes:

(1)  Converted at US$0.8098/$.

(2)  Withholding tax of 5% is not removed from distribution. The Company expects
     to recover withholding tax amounts.

                        HOLLINGER INC. OTHER INVESTMENTS
                                At March 1, 2005
                                 (In thousands)

<Table>
<S>                                                             <C>
Investment in Hollinger Canadian Newspapers L.P. (1)........    $   159
Cayman Free Press (2).......................................      3,670
Domgroup Real Estate........................................     30,126
                                                                -------
                                                                $33,955
                                                                =======
</Table>

---------------

Notes:

(1)  150,000 units owned @ market of $1.06 per unit.

(2)  See September 30, 2004 Consolidated Statement of Net Assets Note 5. this
     asset was accounted for using the equity method and was written down by 50%
     based on Hollinger Inc.'s estimate of damage that occurred to the property
     and buildings owned by Cayman Free Press.

                                       C-47
<PAGE>

(GMP LOGO)

                     HOLLINGER INC. PROPERTY AND EQUIPMENT
                                At March 1, 2005
                                 (In thousands)

<Table>
<S>                                                             <C>
Machinery, equipment and other..............................    $4,008
Less: accumulated depreciation and amortization.............     3,113
                                                                ------
                                                                $  895
                                                                ======
</Table>

            HOLLINGER INC. DEFERRED FINANCING COSTS AND OTHER ASSETS
                                At March 1, 2005
                                 (In thousands)

<Table>
<S>                                                             <C>
Deferred financing costs (1)................................    $  0
Other assets (2)............................................       0
                                                                ----
                                                                $  0
                                                                ====
</Table>

---------------

Notes:

(1)  Deferred financing costs are valued at zero.

(2)  There are no other assets, other than deferred financing costs. [Source
     Hollinger Inc. management.]

                          HOLLINGER INC. FUTURE TAXES
                                At March 1, 2005
                                 (In thousands)

<Table>
<S>                                                             <C>
Future tax assets:
  Net operating loss carry forwards.........................    $23,434
  Compensation and accrued pension..........................        245
  Investments...............................................      1,860
  Other.....................................................      4,304
                                                                -------
Gross future tax assets.....................................     29,843
                                                                -------
Less valuation allowance....................................          0
                                                                -------
Net future tax assets.......................................     29,843
                                                                -------
Future tax liabilities:
  Property and equipment principally due to differences in
     depreciation...........................................        306
  Investments (1)...........................................          0
  Other.....................................................      1,015
                                                                -------
Gross future tax liabilities................................      1,321
                                                                -------
Future income tax asset.....................................    $28,522
                                                                =======
</Table>

---------------

(1)  The September 30, 2004 NAV statement provided by the company contemplates a
     tax event on disposition. GMP's analysis contemplates no disposition.

                                       C-48
<PAGE>

                                   APPENDIX D

                 SUMMARY OF PROCEDURE TO EXERCISE DISSENT RIGHT

     Following is a summary of the procedure set out in Section 190 of the CBCA
to be followed by a Common Shareholder or a Preferred Shareholder who intends to
dissent from the CS Consolidation Resolution and/or PS Consolidation Resolution,
as applicable, approving the CS Consolidation and the PS Consolidation described
in the accompanying Circular and who wishes to require the Corporation to
acquire his or her Common Shares or Series II Preference Shares and pay him or
her the fair value thereof, determined as of the close of business on the day
before the CS Consolidation Resolution and PS Consolidation Resolution are
adopted.

     Section 190 of the CBCA provides that a shareholder may only exercise the
right to dissent with respect to all the shares of a class held by him on behalf
of any one beneficial owner and registered in the shareholder's name. One
consequence of this provision is that A SHAREHOLDER MAY ONLY EXERCISE THE RIGHT
TO DISSENT UNDER SECTION 190 IN RESPECT OF SHARES WHICH ARE REGISTERED IN THAT
SHAREHOLDER'S NAME. In many cases, shares beneficially owned by a person (a
"NON-REGISTERED HOLDER") are registered either: (i) in the name of an
intermediary that the Non-Registered Holder deals with in respect of the shares
(such as banks, trust companies, securities dealers and brokers, trustees or
administrators of self-administered RRSPs, RRIFs, RESPs and similar plans, and
their nominees); or (ii) in the name of a clearing agency (such as The Canadian
Depositary for Securities Limited (CDS)) of which the intermediary is a
participant. Accordingly, a Non-Registered Holder will not be entitled to
exercise the right to dissent under Section 190 directly (unless the shares are
re-registered in the Non-Registered Holder's name). A Non-Registered Holder who
wishes to exercise the right to dissent should immediately contact the
intermediary who the Non-Registered Holder deals with in respect of the shares
and either: (i) instruct the intermediary to exercise the right to dissent on
the Non-Registered Holder's behalf (which, if the shares are registered in the
name of CDS or other clearing agency, would require that the share first be
re-registered in the name of the intermediary); or (ii) instruct the
intermediary to re-register the shares in the name of the Non-Registered Holder,
in which case the Non-Registered Holder would have to exercise the right to
dissent directly.

     IN ADDITION, SHAREHOLDERS WHO PREVIOUSLY SUBMITTED THEIR COMMON SHARES
AND/OR SERIES II PREFERENCE SHARES FOR RETRACTION WHO WISH TO DISSENT SHOULD BE
AWARE THAT SECTION 190 OF THE CBCA REQUIRES, AMONG OTHER THINGS, THAT A
DISSENTING SHAREHOLDER HAVE A SHARE CERTIFICATE. ACCORDINGLY, IF YOU ARE SUCH A
SHAREHOLDER, YOU MUST MAKE ARRANGEMENTS TO WITHDRAW YOUR RETRACTION REQUEST AND
OBTAIN THE RETURN OF YOUR SHARE CERTIFICATE(S). IN ORDER TO EXERCISE YOUR
WITHDRAWAL RIGHT, SHAREHOLDERS SHOULD CONTACT THE COMPUTERSHARE CALL CENTRE --
SHAREHOLDER SERVICES AT 1 (800) 564-6253.

     A registered holder of Common Shares who wishes to invoke the provisions of
Section 190 of the CBCA must send to the Corporation a written objection to the
CS Consolidation Resolution (a "CS NOTICE OF DISSENT") at or before the time
fixed for the shareholders' meeting at which the CS Consolidation Resolution is
to be voted on. A registered holder of Series II Preference Shares who wishes to
invoke the provisions of Section 190 of the CBCA must send to the Corporation a
written objection to the CS Consolidation Resolution and/or PS Consolidation
Resolution (a "PS NOTICE OF DISSENT", and together with the CS Notice of
Dissent, a "NOTICE OF DISSENT") at or before the time fixed for the
shareholders' meeting at which the CS Consolidation Resolution and PS
Consolidation Resolution are to be voted on. The sending of a Notice of Dissent
does not deprive a Registered Shareholder of his right to vote on the CS
Consolidation Resolution or PS Consolidation Resolution, as applicable, but A
VOTE EITHER IN PERSON OR BY PROXY AGAINST THE CS CONSOLIDATION RESOLUTION OR PS
CONSOLIDATION RESOLUTION DOES NOT CONSTITUTE A NOTICE OF DISSENT. A VOTE IN
FAVOUR OF THE CS CONSOLIDATION RESOLUTION OR PS CONSOLIDATION RESOLUTION, AS
APPLICABLE, WILL DEPRIVE THE REGISTERED SHAREHOLDER OF FURTHER RIGHTS UNDER
SECTION 190 OF THE CBCA.

     Within ten days after the adoption of the CS Consolidation Resolution or PS
Consolidation Resolution by the Common Shareholders and the Preferred
Shareholders, respectively, the Corporation is required to notify in writing
each Common Shareholder and Preferred Shareholder who has filed a Notice of
Dissent and has not voted for the CS Consolidation Resolution or PS
Consolidation Resolution, as applicable, or withdrawn his objection (a
"DISSENTING SHAREHOLDER") that the CS Consolidation Resolution or PS
Consolidation Resolution has been adopted. A Dissenting Shareholder shall,
within 20 days after he receives notice of adoption of the CS Consolidation
Resolution or PS Consolidation Resolution, as applicable or, if he does not
receive such notice, within 20 days after he learns that the CS Consolidation
Resolution or PS Consolidation Resolution, as applicable, has been adopted, send
to the Corporation a written notice (the "DEMAND FOR PAYMENT") containing his
name and address, the number and class of shares in

                                       D-1
<PAGE>

respect of which he dissents, and a demand for payment of the fair value of such
shares. Within 30 days after sending his Demand for Payment, the Dissenting
Shareholder shall send the certificates representing the shares in respect of
which he dissents to the Corporation or its transfer agent. The Corporation or
the transfer agent shall endorse on the share certificates notice that the
holder thereof is a Dissenting Shareholder under Section 190 of the CBCA and
shall forthwith return the share certificates to the Dissenting Shareholder.

     If a Dissenting Shareholder fails to send the Notice of Dissent, the Demand
for Payment or his share certificates, he may lose his right to make a claim
under Section 190 of the CBCA.

     After sending a Demand for Payment, a Dissenting Shareholder ceases to have
any rights as a holder of the shares in respect of which he has dissented other
than the right to be paid the fair value of such shares as determined under
Section 190 of the CBCA, unless: (i) the Dissenting Shareholder withdraws his
Demand for Payment before the Corporation makes a written offer to pay (the
"OFFER TO PAY"); (ii) the Corporation fails to make a timely Offer to Pay to the
Dissenting Shareholder and the Dissenting Shareholder withdraws his Demand for
Payment; or (iii) the directors of the Corporation revoke the CS Consolidation
Resolution or PS Consolidation Resolution, as applicable, relating to the CS
Consolidation and PS Consolidation, respectively, in all of which cases the
Dissenting Shareholder's rights as a shareholder are reinstated.

     Not later than seven days after the later of the Effective Date of the CS
Consolidation and PS Consolidation and the day the Corporation receives the
Demand for Payment, the Corporation shall send, to each Dissenting Shareholder
who has sent a Demand for Payment, an Offer to Pay for the shares of the
Dissenting Shareholder in respect of which he has dissented in an amount
considered by the directors of the Corporation to be the fair value thereof,
accompanied by a statement showing how the fair value was determined. Every
Offer to Pay made to Dissenting Shareholders for shares of the same class shall
be on the same terms. The amount specified in an Offer to Pay which has been
accepted by a Dissenting Shareholder shall be paid by the Corporation within ten
days after it has been accepted, but an Offer to Pay lapses if the Corporation
has not received an acceptance thereof within 30 days after the Offer to Pay has
been made.

     If an Offer to Pay is not made by the Corporation or if a Dissenting
Shareholder fails to accept an Offer to Pay, the Corporation may, within 50 days
after the Effective Date or within such further period as a court may allow,
apply to the court to fix a fair value for the shares of any Dissenting
Shareholder. If the Corporation fails to so apply to the court, a Dissenting
Shareholder may apply to the court for the same purpose within a further period
of 20 days or within such further period as the court may allow. A Dissenting
Shareholder is not required to give security for costs in any application to the
court. An application to the court by either the Corporation or the Dissenting
Shareholder must be in the Province of Ontario or in the province in which the
Dissenting Shareholder resides if the Corporation carries on business in that
province.

     On an application to the court, the Corporation shall give to each
Dissenting Shareholder notice of the date, place and consequences of the
application and of such shareholder's right to appear and be heard in person or
by counsel. All such Dissenting Shareholders shall be joined as parties to any
such application to the court to fix fair value and shall be bound by the
decision rendered by the court in the proceedings commenced by such application.
The court is authorized to determine whether any other person is a Dissenting
Shareholder who should be joined as a party to such application.

     The court shall fix fair value for the shares of all Dissenting
Shareholders and may in its discretion allow a reasonable rate of interest on
the amount payable to each Dissenting Shareholder from the Effective Date until
the date of payment of the amount ordered by the court. The fair value fixed by
the court may be more or less than the amount specified in an Offer to Pay. The
final order of the court in the proceedings commenced by an application by the
Corporation or a Dissenting Shareholder shall be rendered against the
Corporation and in favour of each Dissenting Shareholder who has not accepted an
Offer to Pay.

     THE ABOVE IS ONLY A SUMMARY OF THE DISSENTING SHAREHOLDER PROVISIONS OF THE
CBCA, WHICH ARE TECHNICAL AND COMPLEX. THE FULL TEXT OF SECTION 190 OF THE CBCA
IS ATTACHED AS APPENDIX E TO THIS CIRCULAR. IT IS SUGGESTED THAT A COMMON
SHAREHOLDER OR PREFERRED SHAREHOLDER WISHING TO EXERCISE A RIGHT TO DISSENT
SHOULD SEEK LEGAL ADVICE, AS FAILURE TO COMPLY STRICTLY WITH THE PROVISIONS OF
THE CBCA MAY RESULT IN THE LOSS OR UNAVAILABILITY OF THE RIGHT TO DISSENT.

                                       D-2
<PAGE>

                                   APPENDIX E

              SECTION 190 OF THE CANADA BUSINESS CORPORATIONS ACT

RIGHT TO DISSENT -- S.190(1)

(1)  Subject to sections 191 and 241, a holder of shares of any class of a
     corporation may dissent if the corporation is subject to an order under
     paragraph 192(4)(d) that affects the holder or if the corporation resolves
     to:

     (a)   amend its articles under section 173 or 174 to add, change or remove
           any provisions restricting or constraining the issue, transfer or
           ownership of shares of that class;

     (b)   amend its articles under section 173 to add, change or remove any
           restriction on the business or businesses that the corporation may
           carry on;

     (c)   amalgamate otherwise than under section 184;

     (d)   be continued under section 188;

     (e)   sell, lease or exchange all or substantially all its property under
           subsection 189(3); or

     (f)   carry out a going-private transaction or a squeeze-out transaction.

FURTHER RIGHT -- S.190(2)

(2)  A holder of shares of any class or series of shares entitled to vote under
     section 176 may dissent if the corporation resolves to amend its articles
     in a manner described in that section.

IF ONE CLASS OF SHARES -- S.190(2.1)

(2.1) The right to dissent described in subsection (2) applies even if there is
      only one class of shares.

PAYMENT FOR SHARES -- S.190(3)

(3)  In addition to any other right the shareholder may have, but subject to
     subsection (26), a shareholder who complies with this section is entitled,
     when the action approved by the resolution from which the shareholder
     dissents or an order made under subsection 192(4) becomes effective, to be
     paid by the corporation the fair value of the shares in respect of which
     the shareholder dissents, determined as of the close of business on the day
     before the resolution was adopted or the order was made.

NO PARTIAL DISSENT -- S.190(4)

(4)  A dissenting shareholder may only claim under this section with respect to
     all the shares of a class held on behalf of any one beneficial owner and
     registered in the name of the dissenting shareholder.

OBJECTION -- S.190(5)

(5)  A dissenting shareholder shall send to the corporation, at or before any
     meeting of shareholders at which a resolution referred to in subsection (1)
     or (2) is to be voted on, a written objection to the resolution, unless the
     corporation did not give notice to the shareholder of the purpose of the
     meeting and of their right to dissent.

NOTICE OF RESOLUTION -- S.190(6)

(6)  The corporation shall, within ten days after the shareholders adopt the
     resolution, send to each shareholder who has filed the objection referred
     to in subsection (5) notice that the resolution has been adopted, but such
     notice is not required to be sent to any shareholder who voted for the
     resolution or who has withdrawn their objection.

DEMAND FOR PAYMENT -- S.190(7)

(7)  A dissenting shareholder shall, within twenty days after receiving a notice
     under subsection (6) or, if the shareholder does not receive such notice,
     within twenty days after learning that the resolution has been adopted,
     send to the corporation a written notice containing:

     (a)   the shareholder's name and address;

     (b)   the number and class of shares in respect of which the shareholder
           dissents; and

     (c)   a demand for payment of the fair value of such shares.
                                       E-1
<PAGE>

SHARE CERTIFICATE -- S.190(8)

(8)  A dissenting shareholder shall, within thirty days after sending a notice
     under subsection (7), send the certificates representing the shares in
     respect of which the shareholder dissents to the corporation or its
     transfer agent.

FORFEITURE -- S.190(9)

(9)  A dissenting shareholder who fails to comply with subsection (8) has no
     right to make a claim under this section.

ENDORSING CERTIFICATE -- S.190(10)

(10) A corporation or its transfer agent shall endorse on any share certificate
     received under subsection (8) a notice that the holder is a dissenting
     shareholder under this section and shall forthwith return the share
     certificate to the dissenting shareholder.

SUSPENDING OF RIGHTS -- S.190(11)

(11) On sending a notice under subsection (7), a dissenting shareholder ceases
     to have any rights as a shareholder other than to be paid the fair value of
     their shares as determined under this section except where:

     (a)   the shareholder withdraws that notice before the corporation makes an
           offer under subsection (12);

     (b)   the corporation fails to make an offer in accordance with subsection
           (12) and the shareholder withdraws the notice; or

     (c)   the directors revoke a resolution to amend the articles under
           subsection 173(2) or 174(5), terminate an amalgamation agreement
           under subsection 183(6) or an application for continuance under
           subsection 188(6), or abandon a sale, lease or exchange under
           subsection 189(9),

    in which case the shareholder's rights are reinstated as of the date the
    notice was sent.

OFFER TO PAY -- S.190(12)

(12) A corporation shall, not later than seven days after the later of the day
     on which the action approved by the resolution is effective or the day the
     corporation received the notice referred to in subsection (7), send to each
     dissenting shareholder who has sent such notice:

     (a)   a written offer to pay for their shares in an amount considered by
           the directors of the corporation to be the fair value, accompanied by
           a statement showing how the fair value was determined; or

     (b)   if subsection (26) applies, a notification that it is unable lawfully
           to pay dissenting shareholders for their shares.

SAME TERMS -- S.190(13)

(13) Every offer made under subsection (12) for shares of the same class or
     series shall be on the same terms.

PAYMENT -- S.190(14)

(14) Subject to subsection (26), a corporation shall pay for the shares of a
     dissenting shareholder within ten days after an offer made under subsection
     (12) has been accepted, but any such offer lapses if the corporation does
     not receive an acceptance thereof within thirty days after the offer has
     been made.

CORPORATION MAY APPLY TO COURT -- S.190(15)

(15) Where a corporation fails to make an offer under subsection (12), or if a
     dissenting shareholder fails to accept an offer, the corporation may,
     within fifty days after the action approved by the resolution is effective
     or within such further period as a court may allow, apply to a court to fix
     a fair value for the shares of any dissenting shareholder.

SHAREHOLDER APPLICATION TO COURT -- S.190(16)

(16) If a corporation fails to apply to a court under subsection (15), a
     dissenting shareholder may apply to a court for the same purpose within a
     further period of twenty days or within such further period as a court may
     allow.

                                       E-2
<PAGE>

VENUE -- S.190(17)

(17) An application under subsection (15) or (16) shall be made to a court
     having jurisdiction in the place where the corporation has its registered
     office or in the province where the dissenting shareholder resides if the
     corporation carries on business in that province.

NO SECURITY FOR COSTS -- S.190(18)

(18) A dissenting shareholder is not required to give security for costs in an
     application made under subsection (15) or (16).

PARTIES -- S.190(19)

(19) On an application to a court under subsection (15) or (16),

     (a)   all dissenting shareholders whose shares have not been purchased by
           the corporation shall be joined as parties and are bound by the
           decision of the court; and

     (b)   the corporation shall notify each affected dissenting shareholder of
           the date, place and consequences of the application and of their
           right to appear and be heard in person or by counsel.

POWERS OF COURT -- S.190(20)

(20) On an application to a court under subsection (15) or (16), the court may
     determine whether any other person is a dissenting shareholder who should
     be joined as a party, and the court shall then fix a fair value for the
     shares of all dissenting shareholders.

APPRAISERS -- S.190(21)

(21) A court may in its discretion appoint one or more appraisers to assist the
     court to fix a fair market value for the shares of the dissenting
     shareholders.

FINAL ORDER -- S.190(22)

(22) The final order of a court shall be rendered against the corporation in
     favour of each dissenting shareholder and for the amount of the shares as
     fixed by the court.

INTEREST -- S.190(23)

(23) A court may in its discretion allow a reasonable rate of interest on the
     amount payable to each dissenting shareholder from the date the action
     approved by the resolution is effective until the date of payment.

NOTICE THAT SUBSECTION (26) APPLIES -- S.190(24)

(24) If subsection (26) applies, the corporation shall, within ten days after
     the pronouncement of an order under subsection (22), notify each dissenting
     shareholder that it is unable lawfully to pay dissenting shareholders for
     their shares.

EFFECT WHERE SUBSECTION (26) APPLIES -- S.190(25)

(25) If subsection (26) applies, a dissenting shareholder, by written notice
     delivered to the corporation within thirty days after receiving a notice
     under subsection (24), may:

     (a)   withdraw their notice of dissent, in which case the corporation is
           deemed to consent to the withdrawal and the shareholder is reinstated
           to their full rights as a shareholder; or

     (b)   retain a status as a claimant against the corporation, to be paid as
           soon as the corporation is lawfully able to do so or, in a
           liquidation, to be ranked subordinate to the rights of creditors of
           the corporation but in priority to its shareholders.

LIMITATION -- S.190(26)

(26) A corporation shall not make a payment to a dissenting shareholder under
     this section if there are reasonable grounds for believing that:

     (a)   the corporation is or would after the payment be unable to pay its
           liabilities as they become due; or

     (b)   the realizable value of the corporation's assets would thereby be
           less than the aggregate of its liabilities.

                                       E-3