PRESS DIGEST-Australian Business News - Aug 4

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)

Woolworths (WOW.AX) has executed a long-term deal with Optus to become the first Australian supermarket chain to provide a mobile-phone service. The agreement will increase Woolworths' non-grocery merchandise, which already includes a credit card service and their link with Qantas Airways (QAN.AX). Woolworths advised that it would "target the many customers that it claims are intimidated and confused by the plethora of price plans on the market and are not interested in downloading data.' Page 19.

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Graincorp (GNC.AX) is forecasting an increased net profit of A$63 million for the 12 months to September 30 after grain receivals and export tonnages were higher for the year. This was an improvement on the previous two years when the company reported net losses of almost A$20 million. Graincorp managing director Mark Irwin said that the deregulated bulk wheat export market was responsible for the increased earnings. Graincorp's shares finished A50 cents higher at A$8 yesterday following the positive news. Page 19.

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The suspension of Kyle Sandilands and Jacki O'Neill's high rating breakfast program on Sydney radio station 2Day FM could decrease Austereo's advertising revenue by A$5 million. The controversy created by an on-air lie detector test where a 14 year old girl revealed that two years earlier she had been raped, has compelled Austereo to place the breakfast program "in recess' while it evaluated the protocols of its interaction with its listeners. Austereo denied that the program has been taken off the air. Page 19.

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Printing and distribution company PMP (PMP.AX) has settled its case against former chief executive Brian Evans out of court. Analysts report that a settlement was achieved at mediation last Friday which included Mr Evans, PMP chairman Graham Reaney and two PMP directors. PMP released a statement advising that "both sides have agreed to a confidentiality clause as a consequence of which no further statements will be made.' Mr Evans sued PMP for A$1.56 million in mid-March, following his unexpected departure in January this year. Page 45.

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

The Australian dollar has appreciated to a 10 month high, as the domestic economy starts to recover. The dollar hit a high of US83.79 cents, trading at its highest since September last year, while its lowest point was recorded in February when it fell to US62.72 cents. The highs of the local currency may move the Reserve Bank of Australia (RBA) to consider an interest rate rise soon. "We think the RBA will stay on hold but there's a strong likelihood that they will remove their easing bias,' said Australian and New Zealand Banking economist Katie Dean. Page 17.

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Economist Nouriel Roubini predicts that Australia will be in a better position than most countries to ride the economic crisis, but any global recovery will not commence until next year. The New York University professor believes that any recovery might be shortlived as bullish consensus may create the prospect of a "double-dip global recession.' Mr Roubini, speaking at the Diggers and Dealers mining conference, said that gold prices and overstocked Chinese commodities will weigh on prices in the second half of the year. Page 17.

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Raytheon Australia will lose its most successful chief executive at the end of the month when Ron Fisher steps down. Mr Fisher has been in charge of Raytheon since 1999 and one of his biggest acquisition has been winning rights to be one of three partners on the A$8 billion air warfare destroyer contract. There are rumours that Mr Fisher, after a break, will take on the position of chief executive at submarine builder ASC, from Greg Tunny. Raytheon Australia is own by Raytheon US. Page 18.

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The West Australian government has approved the construction of a power line in the Mid West iron region. State Premier Colin Barnett has agreed to commence stage one of the project which will give the region a much needed boost to its infrastructure. The power line will help companies such as Gindalbie Metals and its Chinese partner Anshan Iron & Steel who are developing the A$1.8 billion Karara iron ore project. Garret Dixon, chief executive of Gindalbie said the new infrastructure will "underpin' future plans for expansion. Page 18.

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

Private equity group CVC Asia Pacific, the major shareholder of Stella Travel Services, has announced a demerger and recapitalisation of the business. The announcement has derailed Stella's hopes of relisting on the sharemarket. Now with the demerger in plan, Stella Hospitality will recapitalise A$245 million worth of debt, while Stella Travel Services will assume A$40 million. UBS, the group's main creditor, will convert around A$800 million debt owed into equity which it could list or sell. UBS and CVC would not comment today. Page 17.

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Australian banks will lose as much as A$800 million a year after responding to political and consumer pressure to reduce penalty fees. Westpac Banking Group (WBC.AX) and its subsidiary St George Bank will forego around A$210 million after reducing its fees from A$40 to A$9 for overdraft and late payment of credit card charges. National Australia Bank (NAB.AX) announced last week that it would cut overdraft fees to zero from October 1. Both the Commonwealth Bank of Australia (CBA.AX) and Australian and New Zealand Banking Group (ANZ.AX) are expected to match the current trend. Page 17.

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Bankers for property developer City Pacific CIY.AX have called in the receivers bringing the company into voluntary administration. The Commonwealth Bank of Australia has acted in order to protect the A$100 million it's owed and appointed PPB as receivers. Ferrier Hodgson has been appointed as administrators. Both PPB and Ferrier will have the job to untangle who is owed what, now that more than 90 percent of the City Pacific's First Mortgage Fund loan book is in default. Page 17.

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Paint maker Wattyl Limited WYL.AX has appointed Tony Dragicevich as its managing director in order to revive the company. Mr Dragicevich will replace John Nolan who declined to renew his contract in October last year. A company statement to the Australian Securities Exchange said Mr Dragicevich "brings to Wattyl both significant restructuring experience and an understanding of marketing and retail channels.' Wattyl has been suffering since Japanese paint maker Nippon Paints entered the market. Page 18.

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THE AGE (www.theage.com.au)

Dutch based lender ING is preparing to broaden its banking business in Australia in order to compete in the transaction account sector. The move by ING will see it compete directly with Australia's big four banks. The lender's new Australian chief executive Don Koch said Eftpos and ATMs were key areas that attracted customers. ING will move to cut monthly account fees, ATM charges and many overseas transaction fees, the move should help ING parent recover some of the lost ground due to the credit crisis. B 3.

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Fund manager Macquarie Airport (Map) MAP.AX will try to entice unit holders to back a A$345 million payout to exit as external manager Macquarie Group. Independent directors for Map had considered asking unit holders to vote Macquarie out and not pay a cent. Unit holders can legally vote Macquarie out but there is a risk that the group could assemble its own coalition and achieve majority and retain management over the fund. Fund managers have questioned the move to pay an exit fee after Map has already paid around A$546 million to Macquarie (MQG.AX). B 3.

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Liquidator for Timbercorp Group TIM.AX, KordaMentha has been given an extension by the Federal Court to sell or recapitalise bluegum plantation projects before it has to give up land leases. Despite the extension the liquidator still faces issues as some leases may be terminated without notice. KordaMentha was until September 30 to decide whether it will give up the leases. Landlords including WA Chip, Pulp Co and WACAP Treefarms have given the liquidator 28 days to decide if it wanted to keep the leases. B 3.

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Adelaide based Argo Investments reported a A$163.4 million operating profit for the last 12 months. Argos has investments of A$3.4 billion in equities and will pay out A$157 million in dividends. Despite the gains Argo has found itself force to declare A$205 million in unrealised losses due to accounting standards which move the company to book a loss for investments that were valued lower than the purchase price. Robert Patterson, managing director of Argo believes the company's real value is not reflected since the last audit. B 3. --