sir ronald brierley & alexander waislitz Tattersall's: Thorney...

sir ronald brierley & alexander waislitz Tattersall's: Thorney questions
By Christopher Webb, The Age
April 2, 2006

WHAT an interesting little $140 million substantial-shareholding notice that surfaced the other day for Tattersall's.

It was noteworthy on two fronts: firstly, it was the first "outside" substantial stake amassed since the gaming business listed in July last year.

And the next and more important point was the identity of the parties that reckon there is a quid to be made from the out-of-favour Tattersall's.

One name on the joint notice was that of Thorney Holdings, the Pratt family's investment vehicle presided over by Alexander Waislitz.

The other was Guinness Peat Group, the investment company associated with Sir Ronald Brierley, Gary Weiss and Graeme Cureton.

While Guinness Peat and Thorney might sometimes wind up on the share registers of the same small-cap companies, it is not every day that they lodge a joint notice covering $140 million of stock.

Alex Waislitz and co, at Thorney, have been quietly buying Tattersall's scrip since late November.

The shares were housed in a clutch of cloak companies, and the buying attracted no public attention.

Thorney started buying decent-sized lines of stock at $3.31 and continued soaking up stock as the Tattersall's scrip fell to about $2.90.

The buying intensified last week when Thorney picked up more than 6 million shares.

All up, Thorney's leg of buying netted about 18 million shares at a cost of close enough to $60 million.

Meanwhile, Guinness Peat bought 5 million shares last week, which added to about 13 million shares that appear to have been bought before November.

Last Monday, Tattersall's and UNiTAB, formerly known as TAB Queensland, unveiled a merger, to be achieved by Tattersall's offering shares.

While Thorney was buying in the week before the merger announcement, and paying $3.06 a share, the news of the merger appears to have prompted renewed and heavier buying by Thorney and Guinness Peat.

Last week, the two investors bought more than 11 million shares, costing nearly $37 million.

Between them they now hold slightly fewer than 42.5 million shares, worth nearly $141 million, representing 6 per cent of the Tattersall's register.

So why have Thorney and Guinness Peat teamed up to assemble — in the old days it would have been called a raid — a big stake in Tatts?

Both Tattersall's and UNiTAB are well known to both investors.

Both of them did a lot of work on Tattersall's before the lottery giant went public, and were associated with a largely unsuccessful attempt to buy stock from beneficiaries before the shares listed.

Guinness Peat knows the UNiTAB business intimately, having assembled a substantial stake shortly after it went public.

Like Tattersall's, UNiTAB was not popular with stockbroking analysts, but that did not deter Guinness Peat from buying shares by the bucketload.

Guinness Peat executive director Graeme Cureton yesterday referred to that sortie onto the UNiTAB register when asked about the latest buying of Tattersall's shares.

"You may recall that UNiTAB floated some years ago at round about the $2 mark and fell to $1.80," he said.

"Every gaming analyst in Australia was negative on it." He said the message was "sell, sell, sell".

"The analysts said, basically, that it was a dog of a stock. It turned out to be a fantastic performer, with a fantastic managing director, Mr McIlwain, who's one of the better players around town, a real human being, a really good operator.

"We actually bought and bought and bought. I think we had about 6 or 7 per cent, and, to be brutally honest, we thought it was a sensational franchise. We walked out and made a lot of money."

The exercise is still a sore point for the Guinness Peat folk.

"We got hit individually for probity by the Queensland Treasury," Mr Cureton said. He said other fund managers on the share register were left alone, but "we as individual directors of GPG got hit for probity, and (the intention) was to go through our individual finances for the Queensland Government.

"We still cannot work out why we were singled out as individual directors of GPG.

"None of us had anything to hide, but why should we be singled out for probity? It was absolutely weird — beyond belief.

"We left a lot of money on the table, and all of us were pretty unhappy about the whole exercise, I can assure you."

The similarities between the investment community's view of UNiTAB then and Tattersall's now is obvious, but Mr Cureton was not keen to spell out other than cursory details of the current strategy on Tattersall's.

"We took a view there (UNiTAB in 1999), and we've taken a view here," he said.

"We've put our money on the table — ourselves and Thorney. Let's see what happens.

"We believe we know the downside if they don't get the licence, and we think we know the upside. It's a low-risk play."

And what about the link-up with Thorney?

"I think we basically met going down the same path, and we've got a similar view on things," he said.

"Each of us has got 18.2 million shares, or thereabouts. It was like minds thinking on the same path.

"We've got a seat at the table.

"If the deal goes ahead we'll be diluted down to 3 per cent, if it doesn't go ahead, we're going to have 6 per cent. Let's see what happens.

"We are not negative on this deal, but we could be wrong, and we've been wrong before."

And what about Guinness Peat generally?

"We're firing on all cylinders at the moment — we're in good form," Mr Cureton reports.

"We've got a few things going, a lot of work in progress.

"Hopefully, we'll give our shareholders a lot of fun in the next 12 months.

"We aim to please besides making money and having fun, and if we can't do that, we shouldn't be here."

Now, there's a man who's happy in his work.

And a man who loves shares.

"I'll be seriously p-i-s-s-e-d off when I die, because the market will open the next day, and I won't be there."

Now, there's a quote for ya.

Meanwhile, Guinness Peat and Thorney's little bet on Tatts is probably breaking even.