Hollinger International was yesterday facing the prospect of another legal battle after the company's largest institutional shareholder demanded the newspaper group sue its own board of directors for negligence.

Tweedy Browne, which owns 18 per cent of Hollinger's stock, said in a letter to interim chief executive Gordon Paris and others that the company had until June 28 to take action against the directors, including Henry Kissinger and former Illinois governor James Thompson.

The letter coincides with the expected announcement of the £625-£675 million (€1,023 million) disposal of the Telegraph group, Hollinger's UK newspaper division. Senior directors are to select a preferred bidder in days.

The letter represents the culmination of months of haggling between Hollinger and Tweedy, which threatened to sue the group last year if it did not create a special committee to investigate hundreds of millions of dollars in management fees that were paid to Conrad Black, the ousted chief executive and chairman.

Tweedy has long asserted that Hollinger's board should be held accountable for "enabling" Lord Black and other executives to loot the company of nearly $400 million.

But a special committee of Hollinger's board, which is advised by former Securities and Exchange Commission chairman Richard Breeden, has so far appeared to adopt a different legal strategy.