A rare sighting of the lesser-spotted Kerry Stokes
Like a teenage son with busted car or a call centre operator who rings at dinner time, you only hear from Kerry Stokes when he wants something.
Billionaires - real ones, not the fly-by-nighters who appear suddenly on the BRW rich list and disappear just as quickly one year later - are notoriously private people. But years can pass without a significant public performance from Stokes.
Sure, he pops up every six months to deliver another set of opaque accounts from the Seven Network. But you know he only does that much because he has to. (Seven, being a listed company, has a few shareholders other than Stokes himself.)
Even when he is doing good, such as indulging in his philanthropic penchant for buying Victoria Crosses and donating them to the Australian War Memorial, he has to been dragged very reluctantly into the spotlight.
It’s been hard enough getting a handle on the public part of Stokes’ operations - the Seven Network. Since selling half of the TV business to American private equity firm KKR in 2006, the accounts that Seven files to the ASX have been, to be kind, baffling. They offer only the faintest hints about the true performance of the Seven Media Group - which owns the stations and is, in turn, 47 per cent owned by the listed Seven Network - and even less if you want to know what Seven has been doing with the billions in cash it raised from KKR (or how much Seven chief executive David Leckie is paid).
As for getting anything out of the private side of the Stokes empire, particularly his WesTrac business, forget about it. A decade of requests for information about the operation - which owns the lucrative Caterpillar truck franchises for Western Australia, NSW, the ACT and northeast China - and for interviews with the key people have fallen on fallow ground. To borrow Stokes consigliere Simon Francis’s favoured response, such requests have been met with ``polite silence’‘.
Now, however, Stokes wants something. He wants Seven shareholders to support a merger of Seven and WesTrac.
It’s complicated but, basically, it involves the creation of a new company, Seven Group Holdings, that will own 47 per cent of the Seven television business and 100 per cent of WesTrac. It will also own, among other things, about 22 per cent of James Packer’s Consolidated Media (which owns 25 per cent of Foxtel) and 23 per cent of West Australian Newspapers (which publishes the newspaper of the same name in his home town of Perth).
The last time Stokes encouraged anything resembling a public profile was in 2008, when he campaigning to get a couple of seats on the WAN board. He needed to win over shareholders. He issued press releases, tolerated interviews and even gave speeches. He won _ and promptly slipped back into the shadows.
There was only one shareholder Stokes had to win over when he launched his stockmarket raid on ConsMedia last year - Packer - so the rest of the investing public didn’t hear from him.
This deal, however, is different.
On many levels, the Seven-WesTrac alliance makes sense, once you get past the odd logic of merging a media company with a bulldozing business. It will create a $3 billion-plus empire with the financial firepower to expand in any number of directions.
But Stokes knows there are hurdles to overcome - including the perception that he is using $1 billion of cash in the public company to extinguish $1 billion of debt in his private one.
This is an extremely ``related party’’ transaction; Stokes owns 49 per cent of Seven, 100 per cent of WesTrac and will end up with 68 per cent of the combined business. Thankfully, he can’t vote on the deal, which leaves its future in the hands of Seven’s other shareholders.
That shouldn’t really be a problem; If you’re a shareholder in Seven you’re there because you believe in Stokes.
But the billionaire isn’t taking any chances. He knows he has to sell the merits of the deal. He has launched a shock-and-awe charm offensive, talking up the ``independence’’ of the Seven directors and advisers working on the deal, and offering open access to his accounts (including those of WesTrac) and to the gang of executives he has, largely, kept alongside him in the shadows.
For long-time Stokes-watchers, like myself, it’s frankly unnerving. From knowing precisely nothing about WesTrac last week, we now know ``Kerry Stokes’ crown jewels’’ will turn over $2.7 billion next year and that chief executive Jim Walker has a passion for hotting up 1950s tractors - and driving them from Perth to Brisbane.
Expect to hear a lot more from Stokes and his coterie in coming weeks - more, perhaps, that we’ve heard in a lifetime.
Chances are that Stokes is going to emerge victorious. And when the dealing’s done, we won’t hear from him again. At least until he needs us next time.
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