The board of SMG, the struggling media group that owns Virgin Radio, threatened to resign en masse after Fidelity, one of the most powerful UK fund managers, attempted to force the resignation of Dr Chris Masters, the company's chairman.
It is believed the non-executive directors at SMG promised to walk out of the company if Fidelity did not desist in its bid to replace Dr Masters with Richard Findlay, the former chief executive of Scottish Radio Holdings.
The prospect of mass resignations forced Fidelity to back down, but it is understood that the relationship between SMG and the institution, which holds a 15 per cent stake in the company, has broken down.
The threat of a boardroom walkout at a listed company is without recent precedent.
A banker close to SMG, said: "I have never seen a whole board threaten to resign before.
"It was a last-ditch attempt to win back the right to control its own destiny. Fidelity has been dealt a bloody nose."
The non-executive line-up at SMG includes David Dunn, the former chief executive of Scapa; Steve Maine, the former chief executive of Kingston Communications; M T Rainey, also a non-exec at WH Smith; Martyn Smith, the finance director of car hire group Avis Europe; and Tim Gardam, the former head of television at Channel 4.
Mr Findlay had teamed up with Rob Woodward, the former commercial director of Channel 4, to make a takeover bid for SMG with the backing of SVG, a 4.8 per cent shareholder in the media company. The pair's second approach, made about a month ago, was rebuffed by the SMG board.
It is believed that Fidelity joined the Findlay-Woodward camp last month in clamouring for boardroom change at SMG.
Mr Woodward would have been favourite to become chief executive had Fidelity succeeded in forcing through Mr Findlay's appointment as chairman. SMG is searching for a new chief after the resignation of Andrew Flanagan in the summer.
The company has also held abortive merger talks with UTV, its Belfast-based rival. But a profits warning this month has seen its share price plummet to Friday's close of just 56p.
It is believed shareholders in SMG have demanded the company choose an external candidate to replace Mr Flanagan. Fru Hazlitt, chief executive of Virgin Radio, who was tipped to take over, is no longer in the running.Reuse content