INL shareholders approve sale of newspapers to Fairfax

11.45am

Independent Newspapers Ltd shareholders today approved the $1.2 billion sale of its New Zealand publishing operations to John Fairfax Holdings Ltd.

The vote was by 94.2 per cent to 5.7 per cent. However, most small shareholders voted against the deal.

Chairman Ken Cowley held proxies of over 325 million votes including major shareholders News Corp (45 per cent) whom he represents, Todd Communications (14 per cent) and Telecom Corp (10 per cent).

The final vote was 326 million shares for and 20 million against.

Mr Cowley told the meeting INL was still mulling over what to do with the $754 million net proceeds from the sale but warned INL would not be paying too much for the other one third of Sky Network TV which it does not already own.

"We are considering the options around Sky (TV) but I can assure you we will not be paying any excessive price or premium.

"What we do with the Sky interest must be to maximise value to you, the shareholders and this cannot be achieved if we over-pay."

Mr Cowley said the board had not fully considered the best use of the residual cash from the Fairfax purchase.

He said the board's focus had been "to get the cash in the bank" before turning its attention to subsequent issues.

"These are important but they will keep," he said.

Mr Cowley said future options for INL presented a range of complex and sophisticated issues both strategic and financial.

Ritchie Webster, an INL employee who was taking redundancy as a result of the ownership change and retiring today, questioned some of the arithmetic in the valuation conducted by independent valuer Grant Samuel & Associates.

"I don't think it's a full price and in view of the mistakes you have to wonder if it is a fair price," he said.

Mr Webster, who formally worked on INL's accounts, said in view of mistakes in the report it would be quite possible to value INL's publishing business outside the $1.14 billion to $1.27 billion range quoted as fair value in the Grant Samuel report.

No one from Grant Samuel was available to dispute whether the arithmetic was incorrect.

"The major shareholders seem hellbent on selling these wonderful assets," Mr Webster said.

New Zealand was indirectly selling some of its sovereignty, he added.

Another shareholder, Hugo Rusbridge, said INL was selling off the "golden goose" which had consistently laid good dividends.

He questioned whether the "goose" should be sold simply because another party valued it higher. It was illogical to sell the assets without first getting assurance that any alternative investment would produce a superior return.

"The issue of reinvestment relative to the return of the newspaper business has to be considered as a package," he said.

When asked how soon INL would make a decision on Sky, Mr Cowley said it would be taken as expeditiously as possible. He expected that would be before Christmas.

INL were down 3 cents at $4.20 today while Sky were down 4 cents to $4.35 against a firm market today.

- NZPA