Fairfax shares slump after Rinehart sale fails

Fairfax shares slump after Rinehart sale fails

Fairfax shares slump after Rinehart sale fails

Updated 24 August 2012, 15:26 AEST

Fairfax shares have plumbed new depths after its biggest shareholder, Gina Rinehart, tried to dump a third of her stake last night.

Fairfax shares have traded as low as 44.5 cents so far today, and were down nearly 12 per cent at 45 cents by 2:00pm (AEST).

Ms Rinehart asked investment bank Morgan Stanley to sell around 117 million of her Fairfax shares after the market close yesterday - that is around 5 per cent of the total number of Fairfax shares on issue - for 50 cents each.

However, investors were not keen to buy a large block of shares off-market for a price only 1 cent below yesterday's close.

At least one investment house, Maple Brown Abbott, offered 45 cents a share, but Ms Rinehart would not accept that price and pulled the sale due to the lack of demand.

Business editor Peter Ryan says Ms Rinehart's failed share firesale may have spooked investors:

Stockbroker Marcus Padley says off-market transactions tend to occur through a process of negotiation.

"It's a process of negotiation and by all accounts last night they got around to saying to Gina, if you were bid 45 cents for the whole lot would you sell it? And she said no," he said.

"Presumably that was the message coming back from institutions that they wanted a bigger discount than the 1 cent discount, and a 10 per cent discount she might have got it away, but she obviously wasn't prepared to take that price."