Kerry Stokes' Seven Network buys GRD stake16-May-07 by Mark...

Kerry Stokes' Seven Network buys GRD stake
16-May-07 by Mark Beyer
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Kerry Stokes' Seven Network has emerged as the surprise buyer of the 10.4 per cent stake in engineering and infrastructure company GRD Ltd that was sold early this week by GRD founder Brettney Fogarty.

The purchase will fuel speculation about the future of the Perth-based company, including the possibility that its waste treatment arm Global Renewables could be separated from its engineering arm GRD Minproc.

One left-field possibility is that Kerry Stokes may want to follow the lead of fellow media mogul Rupert Murdoch, who declared this month that he wanted News Corporation to become carbon neutral.

One way for Seven to achieve that goal would be to acquire Global Renewables, which has built its first waste treatment plant in Sydney and finalised contracts earlier this year to build much larger waste treatment plants in Lancashire in the UK.

GRD chief executive Cliff Lawrenson has previously flagged the possibility that it could make sense to separate the two businesses but a GRD spokesman said the company's current view was the two two businesses provided a good balance.

Minproc generates solid profits and provides engineering services to Global Renewables, which is not yet generating significant revenue.

Seven paid $43 million for the 20 million GRD shares that were sold earlier this week by Mr Fogarty, who was GRD's executive chairman until last year.

In a statement released by GRD, a Seven spokesman said the company was seeking investments which add value and have good growth prospects, and that these investments may not always be in media or related sectors.

Seven joins Macquarie Bank as a major shareholder in GRD. Macquarie lifted its stake to 9.3 per cent stake by buying shares from Mr Fogarty last November.

Mr Lawrenson subsequently disclosed that Macquarie had sought approval to conduct due diligence on GRD, which is normally a precursor to a takeover approached. The GRD board declined Macquarie's request.

Other major shareholders include Investors Mutual with 11.9 per cent, Schroder Investment Management with a 9.5 per cent stake and Singapore's Tatallon Capital with 5.7 per cent.

GRD also confirmed today that Mr Fogarty has resigned as a non-executive director of the company, after completing the sale of most of his shareholding.

Mr Fogarty held about 30 per cent of GRD's shares until last November. He has sold nearly all of his shares, for gross proceeds of about $120 million.



A GRD statement is pasted below:



GRD Limited shares purchased by a subsidiary of Seven Network Limited



GRD Limited today announced it had been notified that 20 million shares held by former GRD Executive Chairman Brettney Fogarty have been purchased by a subsidiary of Seven Network Limited.

Mr Fogarty, who stood down as Executive Chairman in May 2006, has resigned his position as a non-executive director on the GRD Board and retains approximately 500,000 shares in the company.

A spokesman for Seven advised that while this is a relatively small investment for Seven, it sees GRD as a well-managed company with strong prospects and strong intellectual property in the key environmental sector both in Australia and export markets. Seven is focused on seeking investments which add value and have good growth prospects - and these investments may not always be in media or related sectors.

GRD has core competencies in technology through GRD Minproc's development and delivery of mineral processing solutions and Global Renewables innovative treatment of municipal solid waste.

GRD Limited Chief Executive Cliff Lawrenson described the introduction of Seven Network Limited to GRD's share registry as a clear vote of confidence in the future of the company

"The increasing diversity of our investors reflects the transition of our company through a clearer focus on our core strengths. We are well positioned with the internationally respected engineering expertise of GRD Minproc and the sustainable waste management solutions offered by our waste-to-resources business, Global Renewables and its UR-3R Process®," Mr Lawrenson said. "Owning and operating UR-3R Facilities will deliver long term annuity style returns which will prove to be extremely valuable to our shareholders."