Seven Network to Exit from GRD Investment

Submitted by Jim Thesiger on 21 July, 2009 - 05:31

Seven Network (SEV), controlled by Kerry Stokes is about to face a massive loss of $34 million from one of its recent investments at GRD as the company declared that it is set to go for the $106 million takeover bid which came from Britain based AMEC. Seven Network owns 12.2 percent shares at GRD from which it will receive $12.9 million. The company invested $47 million in the GRD shares in May, 2007 to acquire 10.4 percent stake.

During the GRD investment, questions arose regarding the purchase through Seven Network bypassing Australian Capital Equity (Kerry Stoke’s main Private Company) since Seven is mainly a media group. In defence Seven Network mentioned that the media group was looking forward for additional investments in order to gain good growth projections and to add more value. The company authority also added that these investments might not focus on the media sector all the time.

In March, GRD shares dropped to 20 cents when it was going through difficult times to deal with its waste management division. The rumour of AMEC taking over GRD was buzzing in the corporate world for some time. It was finally confirmed by GRD authority in the last month.

Richard Court, the chairman of GRD and the former premier of West Australia who is also operating as consultant and director of Kerry Stoke’s private companies admitted that the board recommended the 55 cent per share bid unanimously. Mr. Court also added that the cash that GRD stockholders will receive through AMEC will provide a golden opportunity for them to lock a lucrative premium in the present uncertain market condition.

No comment came from a Seven Network spokesperson regarding the GRD takeover deal. It is to be mentioned that the bid presented by AMEC is a conditional one which is based on 75 percent support from stockholders for a scheme of agreement to proceed with the plan. GRD shares have seen a rise of 7 percent or 3.5 cents on Monday, closing the day at 53 cents.