APN News & Media's six independent directors are now in an untenable position after the media group's biggest shareholders defeated plans last night for a capital raising to pay down debt.
The independent directors, lead by chairman Peter Hunt, are expected to decide their future this week.
The embattled media group went into a trading halt on Friday after reports emerged APN's largest shareholder, Ireland-based Independent News & Media, and its billionaire backer Denis O'Brien, had "lost confidence" in APN chief executive Brett Chenoweth who was proposing a capital raising to pay down debt.
"The reason for the trading halt is to prevent trading taking place in a speculative or uninformed market while APN investigates INM's comments and completes its deliberations about a potential capital raising," APN said on Friday.
APN said the non-IN&M directors on APN's board unanimously supported Mr Chenoweth as CEO and the plans to reportedly raise $100 million.
The financially challenged INM is not expected to be in a position to participate in the raising and would face a significant dilution of its stake in APN, according to a report in the UK newspaper The Sunday Times.
Funds manager Allan Gray, which owns 19.8 per cent of APN has sided with INM and the two parties have requested an extraordinary general meeting to remove Mr Chenoweth as CEO and spill the board. This is expected to result in the removal of the independent directors.
The board reconvenes this morning and needs to sign off on APN's financial accounts before the announcement of its financial results on Thursday.
In December, APN said it expected net profit before exceptional items for the 2012 calendar year to come in around $51 million. This would represent a decline of up to 34 per cent from the $78 million underlying net profit for last year.
APN owns outdoor advertising, radio stations and newspapers in Australia and New Zealand. Its shares last traded at 30 cents.