Fairfax looking for $872m

A lieutenant from David Kirk's days heading Fairfax Media has left the company as it unveils its scheme to raise A$684 million ($872 million) and reduce debt from A$2.5 billion to A$2.1 billion.

Sankar Narayan stepped down after five years as chief financial officer to be replaced by former Rural Press executive Brian Cassell.

The change marks the ascendancy of the Rural Press faction - headed by Fairfax's biggest single shareholder John B. Fairfax - whose former boss Brian McCarthy replaced Kirk as Fairfax CEO in December last year.

Developments this week have been at a pivotal point at the company which announced its first half-year loss.

Under the plan announced yesterday, the company is selling stock to existing shareholders at a discount in order to lower debt.

Fairfax Media - whose New Zealand arm owns the Sunday Star Times, Dominion Post and House & Garden among other publications - is to sell the shares at A75c each - a 13 per cent discount to their last traded price.

Existing shareholders have the right to buy three shares for every five owned, the company said.

The company remained on a trading halt on the ASX yesterday.

McCarthy said in a statement: "The share sale places Fairfax Media in a much stronger financial position in the current climate of economic uncertainty and volatile market conditions and should alleviate continuing market concerns about our capital structure."

Apart from the A$12 million being spent on shares by John B. Fairfax's company Marinya Media, A$438 million of the offer was being underwritten.

The company said debt reduction provided Fairfax Media with further headroom under its covenants and reduced net interests costs.

Chairman Ron Walker attempted to head off criticism that Fairfax had constantly rejected talk of a capital raising.

"It has become clear to us in these extremely unstable times our shareholders are supportive of improving our balance sheet position," Walker said.