How to deal with APN’s debt profile is the crux of the boardroom battle at Herald publisher APN

 This is how the Australian Financial Review illustrated its story this morning spelling out the predicament facing APN – publisher of the New Zealand Herald and a raft of media assets across the Tasman: Regional newspapers, radio, outdoor advertising and digital.

Judging by the indepth Australian media reports the stoush boils down to a strategic choice – raise capital to strengthen APN’s balance sheet or sell assets and aggressively manage operations.

The Australian press has aggressively chased the story of the board-room turmoil at APN which went public on Friday after Ireland’s Independent News & Media (APN’s largest single shareholder) issued a statement saying it wanted APN CEO Brett Chenoweth out. INM’s statement said it had “lost confidence in Mr Chenoweth’s ability to implement the strategic initiatives necessary to resposition APN for the more challenged media landscape that has emerged in Australasia.” INM indicated it would seek an EGM to remove the CEO.

APN, countered accusing INM of trying to prevent it from proceeding with a capital raising of $A100m – a step recommended by its advisory firm Macquarie Capital – saying it stood behind Chenoweth.

The turmoil has intensified over the weekend to the point where the boardroom  is at crisis point.

INM and the second-largest shareholder Allan Gray are against the capital raising plan.  Allan Gray’s Simon Marais said last week this would be a “crazy thing to do” and that APN is not in danger of breaching banking covenants.

This morning The Australian reported APN chairman Peter Hunt, CEO Chenoweth and three non-executive directors were believed to be considering tendering their resignations – perhaps as early as this morning – after an emergency board meeting yesterday when the independent directors agreed a capital raising was required immediately to reduce debt levels of around $A470m. The three other directors are – NZ directors John Maasland and John Harvey and Australia’s Melinda Conroy.

The situation is said to be highly fluid with Marais being lobbied to change his mind on the capital raising.