APN board in crisis

Following the news on friday that APN's second largest shareholder, The Independent News and Media Group, has called for the removal of the Brett Chenoweth, the CEO (see here), the company has moved into deep crisis over the weekend.

APN, who operate both the ARN and TRN radio networks, are presently in a trading halt on the stock exchange pending a company announcement. It has been expected that announcement would be to launch a capital raising to reduce debt levels.

The capital raising was discussed, and voted on, at an emergency meeting of the APN board held yesterday. The result of the vote was that two of the groups largest shareholders voted against the move.

 As a result of losing that vote, it has emerged that CEO Brett Chenoweth, Chairman Peter Hunt and three non-executive directors; Melinda Conrad, John Harvey and John Maasland, are believed to preparing to resign from the board.

The Independent News & Media, who own 29% of APN, voted against the capital raising. This appears likely as they are under financial pressure in their European home market, and may be unable to take part, therefore resulting in their stake being reduced. Both of The INM representatives on the APN board voted against a capital raising at yesterdays board meeting.

Simon Marais, who ownes 19% of APN, also voted against the capital raising telling the Australian late last week that it would "certainly not get our approval" and would be "a crazy thing to do".

For APN, their financial situation is difficult. The company holds debt of $470 million, and it's market capitalisation is $200 million.

Despite presently being in a trading halt, APN is scheduled to release it's full year financials this Thursday. The company has already issued guidance to the market that earnings would be well below the previous years figures.

At this point, the position of the directors named above appears tenuous. Despite arguing for the capital raising to reduce debt, they have been out-voted by two of the largest shareholders.

It will be an extraordinary week for APN, with change at board level of some kind appearing inevitable, perhaps as soon as today.