Michael Curley - chairman of West Midlands exhibition and conference specialist MICE - is to walk away from the group he founded with a hefty compensation payment and about #1.6 million from the sale of his 4.6 million shares.
Mr Curley's decision followed an announcement yesterday that Coventry-based MICE is close to breaching banking covenants.
The group is now calling on shareholders for fresh funds with a placing and open offer of new shares.
Net of expenses, it plans to raise #25.1 million through a firm placing of 55.5 million new shares and an open offer of 23.8 million shares at 34p each.
The proceeds will be used to substantially reduce the group's bank borrowings, which stood at #58.5 million by the end of January. Currently MICE has available credit facilities with Barclays, RBS and HSBC of approximately #80 million.
Directors warned that if the share issue does not proceed, MICE would breach covenants during the first six months of its financial year.
They added that without renegotiation of its banking facilities MICE would not be able to meet its liabilities and would not have sufficient working capital to meet its present requirements.
Mr Curley and vicechairman Stephen Barclay will stand down at the group's next annual general meeting.
In a carefully worded statement Mr Curley said: "Having worked for the company for 45 five years and witnessed its growth from annual turnover of #20,000 to approximately #200 million I feel that, at the age of 62, it is proper that the company be handed over to my highly talented colleagues in whom I have every confidence."
However, behind the scenes Mr Curley is said to be unhappy at the turn of events.
While sources said he had not been "pushed out" of the boardroom, it was understood he was reluctant to go.
Mr Curley, whose base salary last year was over #200,000 has a one-year contract with the company. He is currently in talks over the level of his compensation.
Brian Shepherd, recently appointed chief executive of MICE, later said Mr Curley's decision to leave was was " entirely amicable".
"We've had a very good working relationship and it would have been nice if we could have spent a couple of more years together," he added.
Mr Curley brought MICE to the stock market in December 1994 at a price of 3p a share.
The shares peaked at 160p in 2000 before tougher economic conditions and cutbacks in global advertising by major customers put the stock under pressure.
Since then MICE has grown in size through a number of acquisitions - but this has led to higher debt.
Mr Shepherd told shareholders: "Beyond paying down the significant indebtedness that MICE Group incurred during this period of considerable growth, we will be in a much stronger position to generate cash as well as maintain the significant growth in profitability that MICE Group has enjoyed over this period.
"The issue will enable MICE Group to take advantage of the considerable opportunities that lie ahead and build on its established platform with further organic and profitable growth."
Meanwhile, the group confirmed that finance director David Pugh will leave MICE on April 30. Shares closed up 21/4p at 383/4p.