The regional newspaper publisher's shares dropped by as much as 13% on the news this morning to 117.75p.
The company has revealed that its total ad revenues for the 17 weeks to April 26 have dropped 5.7%, as the existing downward trend worsened.
Print advertising was down 9.1%, but digital advertising was up 56.8%.
The company warned it may have to take asset write-downs, particularly on recent acquisitions (it did not name them but they include The Scotsman), because of the fall in ad revenues.
It has decided it needs to strengthen its balance sheet to avoid running the risk of breaching covenants on its loans; its net debt position is currently at £700m.
This has led it to raise equity by means of a £212m rights issue combined with selling a 20% stake to Malaysian investment holding company Usaha Tegas.
The rights issue gives existing shareholders the ability to buy one new share at 53p, a 61% discount to the company's closing price on May 13, for every share they currently own.
Usaha Tegas approached Johnston Press, which had not been looking for a strategic investor, according to Tim Bowdler, Johnston Press chief executive.
Bowdler described Usaha Tegas as a very large company active in large parts of Australasia and with interests across pay TV, satellite technology, radio broadcasting and telecoms.
Usaha Tegas is backed by Malaysian billionaire Ananda Krishnan, whose name has turned up previously in relation to two other UK media companies.
In 2006 as a shareholder in media buying and market research company Aegis, Krishnan supported Vincent Bollore's attempt to gain board seats.
More recently his company Astro All Asia Networks was among the bidders for Virgin Radio.
Some members of the Johnston family are selling £43m worth of shares to Usaha Tegas, reducing their aggregate shareholding from 19.5% to 7.6%.
Bowdler said: "We're facing changes. We depend very significantly on print advertising for our revenues. This is being challenged in several ways. The economic environment in which we are operating in a tough one."
Johnson Press added that the investment would help it transform the company into what it described as a "multi-channel community media company".
"The directors believe that Usaha Tegas' knowledge and expertise in the media sector as a whole and its track record of investing in companies will provide the company with valuable insight and guidance through the current macroeconomic climate and assist the company in executing its business plan.".jpg)
.jpg)