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Gina Rinehart - Source: Getty Images -
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Mining billionaire Gina Rinehart has dumped part of her stake in Fairfax Media amid an ongoing battle over boardroom seats.
Rinehart's mining outfit Hancock Prospecting sold 86.5 million shares worth $A50.1 million to an Australian fund manager minutes after the market closed at 1600 AEST on Thursday.
The move reduces her stake in the troubled media company, which owns The Sydney Morning Herald and The Age newspapers, from 18.7% to about 15%.
However she still remains Fairfax's biggest shareholder.
Rinehart is locked in a battle with Fairfax chairman Roger Corbett over securing three board seats.
They have been in a stand-off over Corbett's desire for Rinehart to sign the media company's charter of independence before any offer to join the board was made.
He also wanted Rinehart to agree not to sue fellow board members.
Fairfax's professional insurance policy, which is designed to offer legal protection to board members, does not apply to shareholders who hold more than 15% of Fairfax shares.
In a statement Hancock Prospecting said as Corbett had not raised the 15% limit, Rinehart's company had decided to offload some shares to reduce her stake in Fairfax.
While the sale was officially about insurance issues, analysts have interpreted it as being an aggressive move against the Fairfax board.
CMC Markets' chief market strategist Michael McCarthy acknowledged the insurance issue but said he saw it as a fascinating "shot across the bows".
Apart from Hancock Prospecting, which is chiefly a mining company, nobody else was interested in acquiring Fairfax at the moment, he said.
That meant Thursday evening's move was bad news for shareholders and good news for Rinehart's prospects of possibly bidding for the whole company.
"They've played hardball with her, she's been forced to sell down and it's game on here," he said.
"It's quite possible the current board could be the losers out of this."
Fairfax's share price is about two cents weaker than when Rinehart bought much of her stake, meaning Hancock Prospecting would have incurred a loss of more than $1.7 million.
The shares were sold for 58 cents, just off their close of 58.5 cents.
The stand-off between Rinehart and Fairfax over her push to join the board has escalated in recent weeks with the billionaire calling on Corbett to resign if he failed to turn around the company's ailing share price, revenue and circulation by November.
Hancock again on Thursday denied it was about to make a takeover bid for Fairfax, but renewed its calls for Corbett to commit to meeting the performance milestones.
"We continue to monitor the performance of our investment in Fairfax noting that the shares are trading at record or near record lows, which is an independent assessment of the chairman's performance," the statement said.
"We again urge the chairman to tell concerned shareholders that he will accept proposed milestones regarding his performance in the interests of Fairfax and its shareholders, or propose other reasonable KPI (key performance indicators) to meet for the continuance of his chairmanship past the AGM (annual general meeting) in November 2012."