Rinehart raises Lakes Oil stake
Mrs Rinehart moved on Friday to convert a note that one of her subsidiaries - Timeview Enterprises - purchased in January, into $3.5 million of shares in ASX-listed Lakes Oil.
The transaction delivers to Mrs Rinehart a 19.53 per cent stake in the small company, whose shares were fetching 0.5¢ on Friday morning and closed at 0.6¢.
Lakes' shares were fetching about 0.4¢ when Mrs Rinehart's company purchased the convertible notes in January.
The stock had traded as high as 0.7¢ earlier this month, as investors speculated that the Victorian government would relax its ban on unconventional oil and gas.
Those hopes were partly fuelled by a bullish speech delivered by Victorian resources minister Nick Kotsiras on October 30.
But Lakes shares have drifted lower in recent days, and the decision to convert may be prompted by a desire to cash in before the share price drifts lower on the back of the ban extension.
The notes did not need to be converted into shares until November 30, 2014, but could be converted earlier at the discretion of the holder.
Lakes Oil boss Robert Annells welcomed Mrs Rinehart's transaction.
"We are absolutely delighted she has converted to equity, it demonstrates her faith in what we are doing," he said.
Extension of the gas ban does not prevent Lakes Oil from going ahead with some operations, given the company also conducts some conventional oil and gas work in Victoria.
Mrs Rinehart still holds convertible notes in the company, with Friday's transaction converting about 80 per cent of her holdings.
ASX-listed Armour Energy also holds convertible notes for Lakes Oil, and when all notes are converted into shares Mrs Rinehart's stake will stand at under 20 per cent.
Mrs Rinehart's main company Hancock Prospecting is a substantial shareholder in Fairfax Media, owner of this publication.
Frequently Asked Questions about this Article…
Gina Rinehart is a mining billionaire who has become the largest shareholder in Lakes Oil, a small Victorian oil and gas company. She increased her stake by converting a note into $3.5 million worth of shares.
Gina Rinehart converted a note purchased by her subsidiary, Timeview Enterprises, into shares, increasing her stake in Lakes Oil to 19.53%.
The Victorian government's decision to extend a ban on unconventional oil and gas has led to fluctuations in Lakes Oil's share price, which had risen on speculation of a ban lift but later drifted lower.
Lakes Oil's share price movement is significant as it reflects investor sentiment and speculation regarding government policy on unconventional oil and gas, impacting investment decisions like Gina Rinehart's.
Lakes Oil's management, represented by boss Robert Annells, welcomed Gina Rinehart's increased stake, viewing it as a demonstration of faith in the company's operations.
No, the gas ban does not affect all of Lakes Oil's operations, as the company also engages in conventional oil and gas work in Victoria, which can continue.
Convertible notes are financial instruments that can be converted into shares. Gina Rinehart and ASX-listed Armour Energy hold convertible notes in Lakes Oil, which can increase their equity stakes when converted.
After all convertible notes are converted into shares, Gina Rinehart's stake in Lakes Oil is expected to be just under 20%.
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