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UPDATE 2-Shareholders force out Mecom CEO Montgomery

Published 09/09/2010, 09:14 AM
Updated 09/09/2010, 09:20 AM

* Mecom founder Montgomery resigns

* Shareholders fed up with high debt, falling sales

* Shares up 4.5 percent

(Adds detail, background, shares)

By Georgina Prodhan

LONDON, Sept 9 (Reuters) - Veteran British newspaper executive David Montgomery is being forced out as chief executive of Mecom after pressure from shareholders fed up with ongoing high debt levels and falling sales.

Montgomery, who founded the European newspaper group a decade ago after a career that included a seven-year stewardship of Britain's Mirror Group, will retire from the company in January, Mecom said on Thursday, lifting the company's shares.

A source close to the matter said top shareholders Aviva, Legal & General and Invesco -- who between them own more than half the company -- had been dissatisfied for more than a year with Montgomery's strategy.

Under Montgomery, British-based Mecom bought several assets it was later forced to sell, piling up debt in the process. Last May, investors participated in an emergency 140 million-pound ($217 million) rights issue to avert a debt crisis.

Mecom shares leapt as much as 7 percent and by 1312 GMT were trading up 4.6 percent at 225 pence, against a slightly firmer European media index.

The shareholders are proposing Patrick Tillieux, a former executive at European broadcasters ProSiebenSat.1 and SBS, as a replacement.

Mecom said its board would conduct a search to find the person best qualified to succeed Montgomery. It said Montgomery had decided to leave following "pressure from certain shareholders", without elaborating.

Montgomery slashed costs and jobs as he sought to drive his local-newspaper businesses in the Netherlands, Denmark, Norway and Poland into the digital age in the face of the industry's worst-ever recession.

In July, the company posted a 48 percent leap in first-half operating profit and a 2 percent fall in revenue. (Reporting by Georgina Prodhan; Editing by Will Waterman and David Cowell) ($1 = 0.6463 pound)

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