As global markets tumble on more Greek debt tremors, Kerry Stokes was last night finally able to have a decent celebration knowing that more than $1 billion of his private debt was now safely housed in his new 68% owned listed conglomerate called Seven Group Holdings.

After a sometimes bruising 64-day campaign, Justice Peter Jacobson formally approved the $2 billion Seven-WesTrac scheme of arrangement in the Federal Court yesterday.

This was originally expected to happen last Friday, but was delayed by the judge when two of us Seven shareholders lobbed complaints with the court.

My affidavit queried the enforceability of the Stokes profit guarantee for WesTrac, pointed out apparently inconsistencies on the question of promised board renewal and requested the judge sanction the behaviour of pugnacious Seven commercial director Bruce McWilliam at the shareholder meetings held on April 20 in Sydney.

Rather than rely on my “bootleg transcript” from the meetings that weren’t webcast and where shareholders were told recording devices were banned, the judge requested Seven supply him with a full transcript for consideration over the weekend.

The full judgement is not online yet but today’s press reports suggest McWilliam was described by the judge as “somewhat partisan” and “strongly dismissive” but then given a green light for such behaviour in his conclusion that: “Mr McWilliam is not required to be altruistic, nor was he.”

All of which make the arguments Seven put up about Kerry Stokes not attending the meetings for fear of upsetting the judge by intimidating shareholder discussion seem rather obsolete.

At the end of the day this transaction will go down in history as one of those long-remembered transformative deals such as Coles Myer’s $1.2 billion buyback of Kmart 21.4% stake in 1994, News Corp’s $3 billion Queensland Press acquisition and reincorporation to America in 2004 and Westfield’s three-way internalisation merger in 2003.

Kerry Stokes is best known for controlling Channel Seven but the 47% stake in the free-to-air business now represents less than 10% of the value in Seven Group Holdings.

Similarly, the biggest pile of net cash sitting inside an Australian listed company is no more, with $600 million being used next month to pay down the WesTrac bank debt.

Stokes’ ability to step up and buy back absolute control of Seven Media Group from private equity firm KKR is now significantly diminished with the firepower having been diverted into spending $2 billion acquiring those three Caterpillar franchises in NSW, WA and Northern China.

After the Pratt family’s packaging empire, WesTrac was the largest privately owned operating business in Australia controlled by a single rich lister, although Lindsay Fox’s trucking empire isn’t far behind.

WesTrac will now be fully visible in the new public conglomerate and Stokes will be one of just three Australian rich listers with a controlling majority interest worth more than $1 billion in a public company.

The others are Melbourne’s Wilson family with their 70% stake in Reece Australia and Kerr Neilson with 57% of Platinum Asset Management.

The only issues left to resolve now are whether Stokes will indeed force the retirement of some of his long-serving non-executive directors and exactly who will be the two new independent directors that the billionaire has promised not to vote on at this year’s AGM.

Seven shares dipped 24c to $7.53 in morning trade and have to almost double to fulfil the prediction made by lead independent director Peter Ritchie when he told shareholders last week that WesTrac’s fabulous business would propel Seven shares higher than they’ve ever been before.

OK Pete, we’re talking about a record high of $14.68 reached in October 2007. Two days after court approval, you’re still a long way short of the mark.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey