PRESS DIGEST-Australian Business News - June 30

Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.

THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)

Timber company Gunns has narrowed its search for a partner for its pulp mill project in Tasmania's Bell Bay. "Gunns has now made a decision to proceed with one company to develop a joint-venture agreement for the project, and is moving forward positively with the preferred partner on that basis,' the company said yesterday in a statement to the Australian Securities Exchange. Gunns has not yet identified the partner but analysts believe it is likely to be Swedish pulp and paper group Sodra. Page 15.

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West Australian conglomerate Wesfarmers (WES.AX) has sold 6 percent of its Coles supermarkets as part of a strategic review of its supermarket network. Coles said yesterday that 45 of its smaller supermarkets and eight Liquorland stores, with total sales revenues of A$450 million, would be transferred to independent retail group FoodWorks. Coles managing director Ian McLeod said "our focus is on the larger stores as we develop a turnaround of the business, because that is where we get the most effective return.' Page 15.

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Paper merchant PaperlinX PPX.A has appealed for federal help in its bid to save two struggling pulp mills in north-western Tasmania. The plants at Burnie and Wesley Vale were left out of a Japanese buy-out of the company's Australian Paper operation in February and are suffering "unacceptable financial loss in the current environment,' according to PaperlinX chief executive Tom Park. However, analysts say the government will want to ensure that the money "goes towards making the mills competitive and profitable.' Page 15.

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Transport company Toll Holdings (TOL.AX) is looking for opportunities to extend into the resources sector. Toll yesterday signed a A$180 million deal with United States oil and gas giant Chevron's Australian operation to manage logistics and a supply base for the A$50 billion dollar Gordon project on Barrow Island. Toll managing director Paul Little said takeovers would continue in the A$200 million to A$300 million range. "The resources sector is in very strong shape at the moment,' Mr Little said yesterday. Page 16.

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THE AUSTRALIAN (www.theaustralian.news.com.au)

The Australian Prudential Regulation Authority (APRA) has called on banks to adopt the same methods to manage their "resilience reserves' as used by the life insurance industry. According to APRA general manager David Lewis, "a more forward-looking approach to reserve offers considerably more hope of better positioning bank balance sheets to cope with inevitable expansions and contractions in economic activity.' The recommendation by APRA is in direct opposition to international financial reporting standards adopted by Australia four years ago. Page 17.

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Managed investment scheme Timbercorp TPF.AX and its subsidiary Timbercorp Securities will be wound up following creditor meetings in Melbourne yesterday. Administrator KordaMentha experienced no difficulty in persuading creditors to wind up Timbercorp. However, the later meeting of Timbercorp Securities lasted nearly three hours, with many investors complaining of being left in ignorance about the status of their investments. "We're not going to please everybody. We know that,' said KordaMentha principal Mark Korda. Page 17.

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The Australian Competition and Consumer Commission has given approval for Japan's Kirin Holdings to acquire the remaining 53.87 percent of shares in Australian brewer Lion Nathan which it does not already own. "Lion Nathan notes that the satisfaction of the remaining conditions precedent to the implementation of the scheme is in progress,' Lion Nathan yesterday said. However, the takeover deal requires at least 75 percent support from shareholders in Lion Nathan who have no interest in Kirin. Page 19.

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Toy wholesaler Funtastic (FUN.AX) has been given approval by its shareholders to engage in a A$22 million capital raising and to acquire Hong Kong-based children's furniture manufacturer NSR (HK) Ltd. A successful non-renounceable, one-for-one rights issue is key to an extension of Funtastic's banking facilities to 2011. In turn, the rights issue is dependent on the NSR acquisition which is expected to boost Funtastic's earnings following the issue last Friday of a profit and revenue warning. Page 19.

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THE SYDNEY MORNING HERALD (www.smh.com.au)

Hotel operator National Gaming and Leisure is believed to have paid A$1.5 million to major creditor Tom Hedley to buy-out a A$15 million mezzanine debt facility. The deal effectively gives National Australia Bank's New Zealand arm control over National Leisure. Chief executive Andrew Jolliffe has declined to reveal the cost to settle the facility, but said yesterday that the deal would strengthen the capital structure of the company and allow it "to move forward.' Page 18.

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Virgin Blue's VBA.AX long-haul carrier, V Australia, has reported a more than doubling of passenger numbers during May over the previous corresponding period. However, revenue load factor fell 8 percentage points to 61 percent, indicating nearly two-fifths of planes were not carrying full-paying passengers. In comparison, Virgin's domestic operations reported a load factor of nearly 78 percent, up 5 percentage points, while passenger numbers remained unchanged. Page 18.

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Creditors in Allco HIT have agreed to delay a decision to liquidate the Allco Finance Group satellite specialising in high-risk loans until October 31. The company's administrator, Neil Singleton of PPB, has recommended an investigation of alternative proposals in an effort to create more value than would be gained by liquidation and asset sales. According to Mr Singleton, several confidential proposals were being considered by the administrators. Page 18.

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Bernie Ripoll, the head of a parliamentary inquiry into the collapse of advisory firm Storm Financial, has called on the Bank of Queensland (BoQ) to offer genuine support for the 319 customers affected by the collapse. Mr Ripoll also said the BoQ should follow the lead of the Commonwealth Bank of Australia, which has promised to resolve all issues through a mediation process and to offer compensation where required. "That really ought to be the lead for other banks involved to do the right thing by their own customers,' Mr Ripoll said yesterday. Page 19.

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THE AGE (www.theage.com.au)

The Bank of Queensland, Suncorp-Metway and Bendigo and Adelaide Bank are preparing submissions to a Senate inquiry into the Federal Government's wholesale guarantee. The regional banks are calling for the abolition of the three-tiered pricing system which they contend unfavourably aids the major banks. Although the banking industry has welcomed the funding support, critics argue the differing levels make it more expensive for smaller banks. The Senate inquiry will report in September. Page B1.

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Consolidated Media Holdings (CMJ.AX) is disputing its 2001-02 taxation bill after the media investment company was given a revised tax assessment by the Australian Taxation Office. Although the details of the bill are unknown, Consolidated Media is attempting to convince the Federal Court that it is excessive. Consolidated Media is arguing that proceeds from an off-market buyback of shares in Publishing & Broadcasting Ltd should not be considered as capital gain under the Income Tax Assessment Act and, therefore, should not be part of assessable income. Page B3.

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Melbourne-based Orchard Industrial Property Fund has proposed a placement to South African property company Growthpoint worth A$55.6 million. Additionally, a A$144.4 million Growthpoint-underwritten renounceable rights issue has also been proposed, while a top-up provision will allow Growthpoint between 50.1 and 78.3 percent of securities depending on the take-up of the issue. The restructured fund will be renamed to Growthpoint Properties Australia, while parent company Orchard Property Limited will be replaced by internal management. Page B4.

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Shares in Environmental Clean Technologies (ECT) have risen over 600 percent this month following an increase in the Melbourne-based coal drying company's contracted sales. The company is now set to complete a A$3.5 million Coldry technology feasibility study which claims to change brown coal's composition to a similar version of black coal but with a reduction in greenhouse gas emissions by 50 percent. Elsewhere, ECT has completed the acquisition of shares in Maddingley Coldry and all units in Coldry Trust for A$1 million in cash, 110 million options and 55 million shares. Page B4. --