UPDATE 2.50pm: Shares in Fairfax Media have fallen after the company's largest shareholder Gina Rinehart raised the prospect of selling out should she be unable to secure seats on the board “without unsuitable conditions".
Fairfax shares closed down two cents, or 3.51 per cent, at 55 cents after touching 53 cents in earlier trade.
Mrs Rinehart's company Hancock Prospecting said yesterday the mining magnate had hoped to be viewed by the Fairfax board as a “successful business person and a necessary white knight with mutual interest in a sustainable Fairfax".
“However unless director positions are offered without unsuitable conditions, Mrs Rinehart is unable to assist Fairfax at this time,” Hancock Prospecting said in a written statement to questions from ABC Television's Four Corners program.
"HPPL may hence sell its interest, and may consider repurchasing at some other time."
Mrs Rinehart holds about 18 per cent of Fairfax stock and was seeking as many as three board seats.
However, existing directors were keen for Ms Rinehart to sign a charter of editorial independence before any offer to join the board was made.
RBS Morgans private client adviser Bill Bishop said the sell off came after media reports that Ms Rinehart will sell her 18 per cent stake in Fairfax if she can't obtain three board seats.
"It may be that has had some effect on the share price,” Mr Bishop said.
"She's been offered two seats, she said she wants three and she wants a degree of editorial control and Fairfax is saying no, so now she's upped the ante and said well I'll sell out."
Mr Bishop said it was unlikely that Ms Rinehart had already sold some shares.
"I think it's probably people taking cover,” Mr Bishop said.
"I don't think it's her.
"Some people have taken these pieces of news as a reason to sell their shares."