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John McGrath is reportedly going to abandon plans to become the executive chairman of his struggling listed real estate business McGrath (ASX: MEA) as he prepares to unveil his two new directors who will sit on the board.
Last month the 54-yer-old McGrath announced to the ASX that he would lead the company with the entire board, except himself, stepping down after another earnings downgrade which capped off a nightmare two years as a listed company.
It is believed John McGrath will take a more hands-on role at the business he founded 30 years ago and will work closely with the group's 95 agencies in marketing and sales.
The new board is expected to be announced later today and The Australian is reporting that Kerry Stokes's former chief financial officer Peter Lewis will be the new chairman. Lewis is a former CFO of Seven Group and Seven West Media.
It comes after the company last week fell to a $25.5 million first-half loss on the back of a series of earnings downgrades and ongoing allegations that John McGrath has a $16 million gambling debt.
Shortly after posting the half-year results on Thursday, McGrath went into a trading halt because of "recent media comment in relation to Mr McGrath".
McGrath was forced into writing a letter to the ASX to address the claims which he has denied.
He also denied claims that he has been using company money to fund his expensive gambling habit although he admits he has an account with a bookmaker but says the account is not secured by his shares in the company.
The controversy surrounding John McGrath stems from media speculation that McGrath is in debt to gambling company William Hill Australia to the tune of $16.2 million.
Further controversy arose when it was alleged that John McGrath has a $100 million lending facility which is allegedly funding his gambling habit.
Shares in the real estate company dived to a record low of $0.42 on Tuesday after three board members resigned from the embattled company.
The departures of CEO Cameron Judson, chairman Cass O'Connor and non-executive directors Elizabeth Crouch and Cath Rogers leaves founder and 26 per cent shareholder John McGrath as the company's only remaining board member until the replacements are officially announced.
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