Rinehart threatens to sell Fairfax stake

By By Alexandra Roach | 26 June 2012
 

Fairfax Media's largest shareholder and self-declared 'white knight', mining magnate Gina Rinehart, may sell her stake in the company if she's not offered a directorial board position on her terms.

In a written statement to the ABC's Four Corners program aired last night, Rinehart said she was interested in “a sustainable Fairfax” but would consider selling her stake unless director positions “are offered without unsuitable conditions.”

The multi-billionaire, who owns 18.7% of Fairfax, is seeking a deputy chairmanship and three seats on the Fairfax board, one of which is likely to go to her fellow Ten Network Holdings director, Hungry Jack's founder Jack Cowin.

If not offered board representation, Rinehart's company Hancock Prospecting told the ABC on her behalf she “is unable to assist Fairfax at this time.” The company “had hoped” Rinehart would be seen as “a necessary 'white knight' with a mutual interest in a sustainable Fairfax.”

Without the director positions, Rinehart's company “may hence sell its interest” in Fairfax, although it “may consider repurchasing at some other time.”

According to reports last week, the Fairfax board is insisting Rinehart agree to certain conditions before being granted board representation, including an understanding she will not launch legal action against fellow directors.

Reportedly the board's demands are a result of concerns around Rinehart's recent courtroom battle with three of her four adult children, who want access to their 23.4% stake in the multi-billion dollar Hancock Prospecting.

The board is worried about the current directors' insurance terms because coverage doesn't apply if a director which holds more than 15% of the company sues another company director. The board wants a waiver of these terms from Rinehart or an agreement she will not launch legal action before she is allowed seats.

Another cause of concern is Rinehart's reluctance to sign Fairfax's Charter of Editorial Independence, introduced by former chairman Zelman Cowen two decades ago. Rinehart is allegedly demanding influence over editorial content in Fairfax's mastheads, which include The Sydney Morning Herald, The Australian Financial Review and The Age. Rinehart has also reportedly stated an interest in playing a part in the hiring and firing of senior editorial staff.

Federal Communications Minister Stephen Conroy, Treasurer Wayne Swan, industry bodies including the Media, Entertainment and Arts Alliance, and journalists have called for Rinehart to sign the Charter to ensure future journalistic independence.

The Greens announced yesterday the party will introduce a private member's bill to the Senate this week with the aim of implementing a public interest test when changes in control of major media companies occurs.

But Rinehart's long-time friend, advertising heavyweight and former Fairfax board member John Singleton, has declared fears over her not signing the Charter to be unfounded.

“[The charter] was written by Sir Zelman Cowen when I was on the board,” Singleton told ABC Radio last week. “It was just one of the those oil on troubled water things that no one understood. Sir Zelman was very proud of it and the journalists didn't know how to say no to Sir Zelman, even though they don't know what he's talking about.

“If you read it carefully, it's double-Dutch.”

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