MarketsMacquarie Bank is still on trail of GRD23rd March 2007,...

Markets


Macquarie Bank is still on trail of GRD

23rd March 2007, 8:00 WST





Engineering and waste group holds firm on millionaire factory’s request for due diligence

Engineering and waste handling group GRD is still being pursued by Macquarie Bank, months after its directors denied the insatiable acquirer the right to take a closer look at the $400 million company.

Despite being sent packing late last year, Macquarie was continuing to seek access to GRD’s books before a possible takeover but it had been refused requests for more details, GRD chief executive Cliff Lawrenson revealed yesterday.

“They continue to want due diligence and our board’s position remains they need to tell us more about what they want to do,” Mr Lawrenson told WestBusiness.

“We are not being difficult with them but what they’ve told us now is insufficient for us to evaluate.

“They are asking for a free option and due diligence and our position is we don’t do free options and we don’t do due diligence.”

Mr Lawrenson said he would not present proposals to shareholders that were light on detail, and that there was no such thing as friendly discussions in the world of business.

He also denied that any other groups, including private equity companies, had put forward proposals to GRD, which is chaired by former WA premier Richard Court.

“If private equity were ever to make an offer that was something reasonable, that we felt we could present to our shareholders we would do that, but right now we haven’t seen anything to make any meaningful sense out of,” he said.

“What we won’t do is present Lucy Goosey sort of proposals to our shareholders. It needs to be clear and precise and something we can respectfully present to our shareholders.”

Mr Lawrenson did not rule out future deals, saying the board would consider the right offer at the right price.

GRD’s share register has been opened up in the past four months because of sales by its former chief executive and founding director Brettney Fogarty.

Macquarie bought a 9.3 per cent stake from the one-time broker in November.

Just two weeks ago, Mr Fogarty sold another $40 million block, halving his stake to 10.7 per cent. The stock was absorbed by a mix of institutions and funds, including Singapore-based hedge fund Tantallon Fund, which picked up an initial holding of 5.72 per cent.

Other existing investors have also been increasing their exposure, with Schroder Investment Management Australia lifting its stake to 9.5 per cent from 6.8 per cent and Investors Mutual lifting its interest to 11.9 per cent from 8.2 per cent.

GRD recently won a major waste handling contract in the UK and is now bidding for another four projects in partnership with Lend Lease Corporation. The preferred bidder for at least two of those contracts is expected within the next year.

In Australia the group runs the Eastern Creek waste facility in New South Wales but has found the Australian market harder to crack.

Mr Lawrenson said GRD was continuing to push into the Melbourne market but was also looking at possible contracts in Europe and the US.

“We expect that the US will become very interested as soon as they start changing their legislation and take an environmentally friendly approach,” he said.

The group is undertaking a road show in the UK next week, meeting ethical funds interested in the waste management side of the business, which was initially set up to counter the rollercoaster effect of commodity prices on the engineering business.

GRD inched up one cent to $2.10, still down on a year ago but not far from the $2 at which it was trading when Macquarie’s interest was revealed in mid-January.

REBECCA KEENAN