Stokes could end up with 56.2pc of Seven

THE Seven Network has admitted that its major shareholder, Kerry Stokes, could increase his stake to as much as 56.2 per cent under the terms of a company share buyback.

THE Seven Network has admitted that its major shareholder, Kerry Stokes, could increase his stake to as much as 56.2 per cent under the terms of a company share buyback.

Seven confirmed in fresh documents yesterday that an extraordinary general meeting to vote on its proposed buyback of up to 40 million shares -- or 19.4 per cent of the group -- would be held on September 10. Companies associated with Mr Stokes will not vote at the meeting.

The documents state that if Mr Stokes doesn't participate in the buyback and "the maximum number of shares are bought back ... Mr Stokes' voting power in the company will increase by approximately 11.2 per cent to 56.3 per cent".

Under this circumstance, Seven would in two years have bought back a total of 27 per cent of the shares the company had on issue in August 2007.

The new buyback will apply for 12 months from the September 10 meeting.

Mr Stokes, Seven's executive chairman and 45 per cent shareholder, was giving nothing away this week at the company's results briefing about whether his personal interests would be participating in the buyback.

"We certainly wouldn't be selling any shares at these prices, but then again, I don't think the company would be buying back any shares at these prices," he said.

However, the company's non-participation in recent Seven buybacks has led most to conclude he will not participate in the current buyback.

The buyback will be entirely funded from "cash or other liquid investments", the company said.

Seven has noted the buyback could result in "a reduction in the liquidity of the shares and may result in reduction of the company's index weighting, or the company being removed from an index".

Seven said an advantage of the deal is that the current market price of the company's shares "represents a significant discount to net assets".

However, the company will also "reserve the right not to buy back any shares at all".

Yesterday's closing price of $7.94 -- down 32c on the day -- represents a discount to prices paid by Seven under the terms of its existing buyback of "between $8.30 to $11.81" per share.