John Singleton and Gina Rinehart have filed the required paperwork with the Stock Exchange indicating they will work together as substantial shareholders in Fairfax Media.

According to the 21 page document filed with the Exchange, the pair have agreed to work together with the objective of “enhancing shareholder value” in Fairfax Media.

Singleton and his financial partner Mark Carnegie have enhanced their less than one percent stake in the company into a significant shareholding by teaming up with Rinehart. Their agreement says they will work together to improve shareholder value and the market has responded accordingly by pushing the ailing Fairfax share price back up through the 50 cents per share barrier in trading today.

There are various regulatory hoops that the partnership will have to jump through as a result of John Singleton’s presence in the group. Because Singleton has a controlling interest in 2GB and 2CH, if he is seen to also have a controlling interest in 2UE through this agreement, then ownership limit rules will come into play and ACMA will instruct him to divest some of his interests.

In addition, Rinehart’s notorious distrust of the media and its anti-mining stance, has led to strict agreements between the partners on how they will relate to the media.

The Singleton strategy is clear, he plans to pressure Fairfax to sell its radio assets. This would allow him to grow his talk radio interests in Melbourne after his failed 3MTR venture and would also serve the interest of the partnership to increase shareholder value.

With Singleton’s advertising and media experience in the Rinehart camp, the group now has substantial media expertise to offer to Fairfax in one way or another. Whether that expertise will result in running and improving Fairfax Media in its current state, or in selling off the company’s assets to reduce debt and concentrate on what could be considered the ‘core business’ of newspapers, remains to be seen.

The agreement will terminate if either partner increases their stake beyond 15%, whcih would trigger a compulsory takeover bid, or if either party comes to a position where they can ‘exercise control’ of Fairfax Radio assets.

The full agreement can be read here.