Cosgrove at helm in APN rebuild

APN has appointed long-time director Peter Cosgrove as chairman a day after the embattled media group lost its chief executive and most of its board in a showdown with its two largest investors over a proposed capital raising.

Mr Cosgrove, who has been a director for more than nine years, has strong ties to APN's largest shareholder Independent News & Media, (INM), which has effectively regained control of the Australian operation.

The company is still without a CEO following the resignation of Brett Chenoweth, but speculation has grown that APN director Vincent Crowley - currently chief executive of INM - will return to APN as chief executive after more than a decade's absence.

Other names in the mix include former Fairfax chief Brian McCarthy, who took an advisory role at APN last year.

APN shares were pummelled on Tuesday with the stock down as much as 15 per cent to a low of 25.5¢ when a trading halt was lifted and APN announced that the capital raising was being abandoned and most of its board had jumped ship.

This included chairman Peter Hunt, Melinda Conrad, John Harvey and John Maasland. Another independent director, Kevin Luscombe will retire as planned in April.

APN said it had appointed a recruitment firm to help in the search for a new CEO and board members.

APN said earlier this week that INM and Allan Gray, which control more than 50 per cent of the share register, had requested a shareholders meeting to remove the five directors and Mr Chenoweth.

The board-level distractions are expected to further hinder APN, which is struggling under a heavy debt load and from a poor media environment. On Thursday the company will announce its full-year results and has flagged a significant decline in earnings.

Analysts at Citi said that in the absence of senior management, "we expect little affirmative action on business transformation at the group level for at least 12 months".

A saving grace for APN is that it effectively operates as a holding company for stand-alone businesses with strong divisional management teams, according to Citi.

Asset disposals, or a strong recovery for the media sector, are now the only options for APN, which has $470 million worth of debt.

Citi said APN needed a "broad-based cyclical ad recovery, including growth in newspapers" to justify its share price, which then stood at 30¢.

"Outdoor and radio are feasible assets to sell and APN may have to accept a less than desirable multiple for these businesses," Credit Suisse said in a research note on Tuesday.

INM - which is in talks with its banks over its own debt load - announced it had reached a tentative agreement to sell its South African publishing business for €170 million ($220.3 million).

INM is not in a position to support a capital raising, and would face a massive dilution of its 29 per cent stake. Last year, Irish billionaire Denis O'Brien seized control of INM after a drawn-out brawl with Sir Anthony O'Reilly's family.