The Smage made a big call on the weekend that the PBL and Seven Network private equity deals contain various secret clauses that could have major bearing on what the companies do and where they end up.

So that should mean no buying or selling of Seven or PBL stock by the respective directors and executives of those companies who are privy to such inside information. No more creeping by Kerry Stokes, a freeze on PBL board holdings, no more nothing in the house stock.

Of course if deals have already been done that materially affect the companies’ outlook, it would be nice for the rest of the market to know. It’s called keeping the market “informed”. According to the SMH:

Central among the secret clauses is what is known as a “tag and drag” clause, which states that if certain return hurdles are met, one of the partners can oblige the other to sell the business.

There are also pre-emptive rights for either partner to buy out the other – at some specified price – if there is a sale.

Given the suspicion that private equiteers don’t stick around long anyway, it would be kinda useful to know such details before investing in either of the big two local media companies.

Until the market does know, all the insiders will just have to sit absolutely pat, neither a seller nor a buying being, because the ASX is bound to be watching.

As if.

Peter Fray

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