Davidson Kempner Capital Management has launched a proxy battle to oust the board of directors and CEO of the Sun-Times Media Group, which publishes the Chicago Sun-Times and dozens of other newspapers in Illinois and Indiana.

The hedge rejected a series of proposals made by the company as inadequate, nominating four candidates for a board that would be cut to five seats. Davidson Kempner owns a 5.9% stake in SMTG.

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

Last week, SMTG Chairman Raymond Seitz and two other directors resigned. But Davidson Kempner wants the scalps of the remaining directors, excepting Robert Poile of fellow hedge fund Polar Securities, as well as that of CEO Cyrus Freidheim.