IN A day of drama at media house Avusa yesterday, the chairman resigned and the CEO was left in no doubt that his resignation is required, as shareholders flexed their muscle in response to what is seen as the company's deteriorating financial position.

Chairman Dumisa Ntsebeza and two nonexecutive directors, Tom Wixley and Babalwa Ngonyama, resigned at the annual general meeting at Avusa's Rosebank headquarters yesterday.

Shareholders, Coronation and Mvelaphanda, which each own a 21,2% stake in Avusa, and the UHC group with 16,5%, made no secret of their dissatisfaction with the direction the company was taking when they gave an irrevocable undertaking to support an unsolicited buyout bid by Capitau.

It is believed that they were concerned that printing group UHC, bought last year by Avusa for more than R900m, provided most of Avusa's recently announced 2010-11 profits.

Avusa said last month that the joint MDs and founders of UHC, now known as Retail Solutions, Colin Cary and Harish Mehta, were to be replaced by Avusa CEO Prakash Desai as acting MD. The move took UHC by surprise.

Mr Desai had already drawn the ire of Mvelaphanda last year when he clashed openly with the shareholder over the UHC deal.

Mvela later relented, but the CEO's relations with Avusa's shareholders had become increasingly strained in recent months.

Mr Cary is now the frontunner to replace Mr Desai at Avusa, at least in an acting capacity.

It is understood Mr Desai is to meet today with Avusa's new acting chairman, Mikki Xayiya, who is also chairman of Mvelaphanda Group, and another nonexecutive director, Jacques Schindehutte, to discuss his future.

Details of the meeting could not be confirmed last night.

With UHC's results included, it is difficult to estimate the state of Avusa's finances, but some analysts say the group, apart from Retail Solutions, has made a loss in the past four months.

Staff at Avusa's flagship title, the Sunday Times, as well as The Times, the Daily Dispatch, The Sowetan, Sunday World and The Herald have been asked to look at cutting costs by about 20% .

BDFM, Business Day's publisher, has not been affected yet by Avusa's search for savings.

A shareholder said that, depending on how talks went today, an appointment to replace Mr Desai was needed quickly "in order to stabilise the business".

Last night, Mr Desai was insisting that he remained Avusa's CEO. There was speculation that this was largely to protect his legal position ahead of negotiations with the acting chairman today.