Bob Ayling, the former chief executive of British Airways, has emerged as the favourite to take the chairman post at embattled music group Sanctuary.
The company will appoint a chairman after completing a £110m rescue rights issue. Mr Ayling, 58, is understood to be the fancied candidate on a shortlist of three.
Mr Ayling was ousted from BA in March 2000, amid plunging staff morale and deteriorating customer service, just before the airline was forced to announce its first loss since privatisation in 1987. He was most famous for ditching the Union flag from the tailfins of BA planes, replacing them with "ethnic" designs.
It is understood that Sanctuary was not yet taken the final decision on the chairman appointment, which will not be announced until mid or late March. Andy Taylor, co-founder of Sanctuary, has decided to split his roles, keeping the chief executive job and so creating the need for an independent chairman. The company has been looking for someone with solid public company experience and expertise in dealing with institutional shareholders.
Mr Ayling is chairman of Holidaybreak and he is on the board of the vacuum cleaner maker Dyson.
Sanctuary's otherwise successful business has been torn apart by a disastrous US acquisition, Urban Records, bought from Matthew Knowles, father of R&B star Beyoncé. Sanctuary has said that it would release no more records under the Urban label, where serious problems last year contributed to a total group loss of £143m.
At the end of last week, Sanctuary outlined the details of its fund-raising, which will see a substantial dilution of existing shareholders through the sale of £110m of shares at a price equivalent to 0.25p, 65 per cent below Friday's closing price of 0.72p.
Mr Taylor said he hoped the share issue would represent the final chapter of a catastrophic period for the company, which has seen its shares collapse from more than 45p at the start of 2005. He warned that without the restructuring, Sanctuary would run out of money before the end of the month.
The net proceeds of the share issue will be used to reduce the company's £177m of debt, which includes credit facilities at Bank of Scotland totalling about £147m and a further £30m owed to bondholders. About £96m of the money will go to Bank of Scotland, which has also agreed to write off £17m of the company's debt in return for new shares in Sanctuary. The bank will restrict Sanctuary's borrowing to £65m. Sanctuary will pay £4.7m to its bondholders, who have also accepted shares in the company in return for an £18m debt write-off.Reuse content