More investors flame Grange's diversification plan
More angry shareholders have come forward with concerns about iron ore miner Grange Resources' plan to diversify into Melbourne's luxury real estate development sector.
Grange, which operates the Savage River iron ore mine in Tasmania, stunned investors in February when it revealed it had struck a joint venture with former AFL footballer Will Slade to develop apartments for downsizing Baby Boomers in the Melbourne council of Stonnington; home to some of Australia's richest suburbs, including Toorak and Kooyong.
Netherlands resident Eric Stubbe has been a Grange shareholder for close to a decade, and he told The Australian Financial Review that he was "totally against' the miner's diversification into property development.
"It is a ridiculous idea to do this, it is totally ridiculous and I don't get it, I don't know who is bringing in this strange idea," he said.
http://www.copyright link/content/dam/images/h/0/x/c/n/l/image.imgtype.afrArticleInline.620x0.png/1520822401034.jpg
14 Irving Road, Toorak Urban Angles
While other concerned shareholders have this week expressed a desire for the money to be spent on shareholder returns instead, Mr Stubbe said he would like to see Grange use its $168 million cash war chest to develop its long-stalled Southdown iron ore project in Western Australia. Related Quotes
May14GMT+1000 (AUS Eastern Standard Time)Mar13Mar180.10.150.20.250.0880.268
Last updated: Wed Mar 14 2018 - 08:06:01 View full quote
ASX AnnouncementsExpand
Column 1
Column 2
Column 3
0
1
2
3
4
Mr Stubbe said that message was communicated to Grange chairperson Michelle Li during her recent visit to Amsterdam.
"I am quite negative about it because they should focus on the Southdown project," he said.
"We explained to her 'even if you don't pay dividends, if you can develop the Southdown project, keep the money in the company so that you can have the biggest possible stake and develop it. Use your money to develop the Southdown project'.
"We have waited quite long on the development of the Southdown project, it has a lot of potential, show it, don't discuss it."
http://www.copyright link/content/dam/images/h/0/x/e/x/r/image.imgtype.afrArticleInline.620x0.png/1520918559189.jpg
Executives from Grange Resources and ROC Built enjoy a drink earlier this year. Instagram
Grange has a bloc of shareholders in the Netherlands as a legacy of the days when Dutch-based investment banker Anthony Bohnenn was the company's chairman.
Mr Stubbe said he believed the Netherlands bloc was not impressed by Grange's property scheme.
"The shareholders in the Netherlands, I think they are around 20 per cent [of the company] and most of them have the same idea," he said.
"I am totally against it and so are most of the shareholders in the Netherlands, I don't know one who was positive about this idea.
"When Mr Bohnenn had his stake in the company, the company was more focused on where they are good in, I believe they should do that which they have experience in and knowledge about and don't go to other markets."
Grange is dominated by its 46.76 per cent shareholder, Chinese steel mill Shagang, and two other companies that have legally been deemed associates of Shagang; RGL Holdings and Pacific International.
The three companies combined own more than 58 per cent of Grange, and the miner has no plans to give shareholders a vote on the property plans. The Australian Financial Review is aware of one minority shareholder in favour of the property scheme; Jaap Velleman, who said he believed it could be a good way to make money.
"I am not worried or angry at all, I think the new management is doing fine," he said in recent days.
Grange said mining at Savage River and potentially at Southdown remained its priority, and the property scheme was a way to generate some extra cash.
"The board are looking at the optimal way to utilise the cash and earn a high return which down the road would enable us to sustain and reinvest in the Tasmanian mines or possibly the Southdown mine," a spokesman for the Grange board said earlier this week.
(20min delay)
