Businessman Denis O'Brien is increasing his stake in Independent News & Media (IN&M) by accumulating New Zealand securities which will be convertible into IN&M shares later this year.
Market sources pointed to his interest in the securities as IN&M indicated that it will continue to buy back its own shares. A forecast of 3 per cent revenue growth in a first-half trading update from the group led by Sir Anthony O'Reilly was unchanged from previous guidance.
Already the owner of an 8.35 per cent stake in IN&M, Mr O'Brien is said to have entered the market in recent weeks for New Zealand cumulative exchangeable preference shares in the group. Such shares are convertible into IN&M ordinary shares on a one-for-one basis on November 30th at the share price that day.
Some 56 million preference share units are in issue, representing about 7.37 per cent of IN&M's issued stock. There is no legal requirement on holders of these securities to disclose their interest, so Mr O'Brien will not have to declare his hand until the conversion date.
However, certain market sources believe that his Isle of Man vehicle, Baycliffe, may already have acquired up to five million of the preference shares. Mr O'Brien's spokesman said he was unable to contact his client in relation to the matter.
Trading in the stock has increased significantly in recent weeks, with some 12.9 million units changing hands on June 6th.
This exchange of 23 per cent of the asset class marked a huge increase over the daily average trade of 228,000 units. The preference shares have traded at around NZ$6.40 (€3.65), against IN&M's closing price yesterday of €3.75.
Mr O'Brien has never made public his plans for his investment in IN&M. Having questioned Sir Anthony's expenses and IN&M's corporate governance and increased his stake three times this year, he is presumed to be preparing to make a bid for the group at some future point.
IN&M, which has accused Mr O'Brien of trying to destabilise the group in advance of a bid, has tightened its internal rules on the disclosure of beneficial interests and has bought back 1.78 per cent of its entire issued capital.
The buybacks were interpreted as an attempt to thwart Mr O'Brien from increasing his stake, but IN&M has characterised them differently. "This ongoing strategy will enable the group proactively to manage the dilutive impact on all INM shareholders, which will arise on the maturity of the New Zealand . . . shares if, as expected, they convert into INM shares," the trading update said.
IN&M expects advertising revenues in the six months to June to rise 5 per cent and circulation revenues to rise 2 per cent. Operating costs were "well-managed" and recent acquisitions such as Propertynews.com were performing to or ahead of plan.
