Gina Rinehart lifts stake in Fairfax to 15% as pressure for board seats builds

Increased her hold … Gina Rinehart now owns more than 15 per cent of Fairfax Media.THE mining magnate Gina Rinehart has increased her hold over Fairfax Media in a sharemarket raid that has taken her stake in the publishing house to more than 15 per cent.

After months of ratcheting up the pressure for the board to deliver her two seats, market sources believe Mrs Rinehart, already the company’s largest shareholder, has lifted her share in the company by about 2 percentage points to 15 to 16 per cent.

The world’s wealthiest woman is believed to have bought at least half of the 78.7 million shares traded yesterday, quadruple the normal trading volumes, including a single line of 42 million shares sold at lunchtime for 60¢ a share.

A spokesman for Mrs Rinehart declined to comment, but all major investors are required to advise the stock exchange if they buy or sell more than 1 per cent of the company within two days. Mrs Rinehart is believed to have appointed the brokers Bell Potter to buy more shares in Fairfax (the owner of The Sydney Morning Herald) in her bid to lift her stake to 19.99 per cent – the maximum allowed before a shareholder needs to make a takeover offer.

The more Mrs Rinehart buys, the harder it becomes for the board to resist her push for board seats, particularly if she wins approval from other institutional investors.

A fellow major shareholder, the funds management group Allan Gray, which also recently lifted its shareholding to more than 9 per cent, has previously expressed qualified support for Mrs Rinehart. The managing director, Dr Simon Marais, had earlier called for a strategic overhaul of the company and said the board needed a tough outsider to shake things up and Mrs Rinehart may be the right person.

Mrs Rinehart has been an outspoken critic of the management of the company, along with her adviser Jack Cowin, who has been tipped as her choice for the second board position.

The radio owner John Singleton, a friend of Mrs Rinehart’s, yesterday described the board’s refusal to give her a seat as ”the worst corporate insult I’ve ever seen”.

Late last month, Mrs Rinehart refused to speculate on whether she would lift her stake as the company’s share price slumped to record lows, saying: ”It is too early to say if [Hancock Prospecting, the company through which Mrs Rinehart owns her stake] will hold its more than 13 per cent shares in Fairfax or sell them or find some other satisfactory resolution.”

It also follows remarks from the Hancock Prospecting’s chief development officer, John Klepec, that the board should demonstrate its commitment to the company by buying more shares.

”If the chairman and board are true believers in the strategy to assist the company, surely they would have a reasonable percentage of their net worth in Fairfax … We understand, for instance, that the chairman only has 99,206 shares and has not added to his shareholding,” he said.

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