UPDATE 1-Dawson may seek orderly exit from news unit

* CEO to step down, replacement named

* To create three new subsidiary companies

* Slips to H1 loss, shares fall 11 pct (Adds details)

May 28 (Reuters) - British newspaper and magazine distributor Dawson Holdings Plc (DWN.L: Quote, Profile, Research) said on Thursday it may seek an orderly exit from its main news business after the division lost most of its major contracts, and it said it was suspending its interim dividend to preserve cash.

The company said Peter Harris, its chief executive, would step down, effective June 30 and would be replaced by Finance Director Hugh Cawley. It named Adrian Wood, the company's company secretary, as finance director.

Dawson said the lost contracts, worth 463 million pounds ($738 million) a year, make up about 67 percent of the news division's annual turnover, and in the absence of regulatory intervention the group will have no viable alternative other than to seek an orderly exit from the market.

The company said the timing and implications of such a move are as yet uncertain, but it will be looking to maximise value for the stakeholders of the news business.

John Menzies (MNZS.L: Quote, Profile, Research), along with rival Smiths News Plc (SNWS.L: Quote, Profile, Research), recently won new distribution deals, taking market share from smaller rival Dawson.

The company said it would reorganise itself, creating three new subsidiary companies -- Dawson Media Direct Ltd, Dawson Books Ltd and Dawson Marketing Services Ltd.