Rich pickings: Fortune in tatters
Property developer Kevin Seymour's net worth has been decimated by the share-price tumble of Victoria's two gaming giants.
At the start of the week, those shares were worth $142 million.
On Thursday, the Victorian Government announced that it will restructure the Victorian gaming machine industry when the operating licences held by Tattersall’s and fellow gaming giant Tabcorp expire in 2012, effectively ending the two companies' duopoly over the Victorian pokies sector. To add insult to injury, the Government says it will not pay compensation of $1.2 billion that it had promised to the companies in the event their licences were not renewed.
On Friday, Tatts shares slumped 26.8 per cent. At the end of the week, Seymour’s stake was worth $102 million.
To make matters worse, Seymour also owns about a one million shares in Tabcorp. The value of that stake fell 21.3 per cent on Friday to $12 million.
Seymour bought into TAB Queensland (which later became UNiTAB and merged with Tattersall’s in September 2005) when it was floated by the Queensland Government in 1999. He considered selling his UNiTAB stake a number of times as the stock soared from its $2 issue price to around $10 in 2004, then $12 in 2005 and over $14 in 2006, but decided to retain his holding. When Tabcorp and Tattersall’s launched a bidding war for UNiTAB, Seymour became something of a kingmaker.
Last May, Seymour increased his stake in Tattersall’s, buying just over four million shares for $21 million. Back then, his stake was worth more than $200 million. His paper loss in the past year is $98 million.
The disasters at Tatts and Tabcorp continue a horror few months for Seymour. His stakes in Queensland property companies FKP and Watpac plunged about 55 per cent in the first quarter of 2008. The value of Seymour’s stake in FKP has fallen $11 million to just over $9 million, while the value of his Watpac investment has dropped a whopping $66 million to $53 million.
In February 2007, Seymour established a funds management business (the creatively named Seymour Funds Management) to advise high-net worth individuals and to cash in further on his stock-picking ability. While it’s not clear if Seymour’s business has launched yet, let’s hope Kevin’s recent bad luck hasn’t been transferred to his clients.
While Seymour will be devastated, Melbourne-based pub baron Bruce Mathieson will be thrilled with the restructuring of the Victorian industry. Under the new gaming sector structure, pub operators will be allowed to own and operate own gaming machines directly. Mathieson’s joint venture company with retail giant Woolworths, called Australia Leisure & Hospitality (ALH), is the biggest owner of hotels in Victoria, which puts him in the box seat to dominate the restructured industry.
While no individual hotel owner will be able to own more than 35 per cent of the state’s machines, the quality of ALH’s pub portfolio – it owns many of the state’s best-located and most popular pubs – means that ALH’s share of the revenue generated by pokies in Victoria could end up being much greater than 35 per cent.
Mathieson and Woolworths will need to wait for the fine print on the Victorian restructure, but they are clearly well placed to replace Tatts and Tabcorp as Australia’s biggest pokie player.