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Thursday 4 December 2008

Under starter’s orders

Christopher Fildes on the business dealings at Newbury

Its biggest shareholder, though, must have other ideas. Led by that wily New Zealand investor Sir Ron Brierley, GPG has been sitting patiently for years and is represented on Newbury’s board, but last year its patience ran out. It began to buy more shares and then launched a bid for the company. Offering £11 a share, and then topping this up, GPG found that only 5 per cent of the other shareholders accepted. The meeting on Wednesday is its next gambit. One of its resolutions would, in effect, block the Wilson deal.

So the whips will be out. Eric Penser and Lady Lloyd-Webber — Newbury directors and racing enthusiasts — between them have 22 per cent of the shares, but the others are widely scattered. Some will have come down by descent from the course’s original backers. All over the Berkshire downs this weekend, sporting families will be conducting frantic searches: ‘So where could Uncle Tom have put his share certificates? Have you looked in the chest in the gun-room?’

They will need to turn up and vote. If they did not choose to take GPG’s bid, they will certainly want to defeat GPG’s resolutions. They can see that control is the prize, and if that is what GPG wants, it must come back with a offer they cannot refuse. If GPG’s resolutions are carried, it will in effect take control of Newbury Racecourse without the trouble and expense of paying for it.

This week the board held out the prospect of a rosy future, free from the trouble and expense of fighting GPG off. Money would flow in — from broadcasting rights, from the Wilson deal — and perhaps, one of these days, there might be a dividend. No one can expect GPG to buy into this story. Perhaps its sights are set on some distant prospect of houses on the greenfield site. Or perhaps it hopes that a late entry will come under starter’s orders.

This could run in Andy Stewart’s colours. A keen enough racing man to have named his stockbroking firm, Cenkos Securities, after his horse, he has let it be known that he would be ready to talk about buying GPG’s Newbury shares. Further down the track might be the Jockey Club itself. Owning racecourses is what it now does, and it already has 14 of them (including Cheltenham and Aintree) so Newbury could make a 15th. The price is the snag, for it would be something like £40 million — quite a lot of money to raise, even by a whip-round in the Jockey Club rooms.

Whatever happens at Wednesday’s meeting, it should be a classic. Dig your uncle’s certificate out of the gun-room, come along to the course, vote against GPG’s resolutions and wait and see what happens next. This could all be more fun than a day at the races. You might even come out ahead.

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