PRESS DIGEST-Australian Business News - June 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)

Copper and zinc mining company Kagara (KZL.AX) is set to introduce a Chinese group as a cornerstone investor with a 19.9 percent holding estimated to be worth around A$200 million. Kagara will keep the identity of its strategic investor secret until the deal has been approved by the Foreign Investment Review Board. The Chinese investment is expected to enable the miner to retire half of its A$150 million of debt that requires refinancing in October of this year. Page 16.

--

Mining company BHP Billiton (BHP.AX) has added further pressure to the ongoing viability of the traditional annual benchmark pricing system for iron ore by entering into index-pricing talks with a major Chinese steel producer. The traditional system is favoured by BHP rival Rio Tinto, but BHP has been agitating to change the system for several years. Analysts believe the most likely outcome to emerge from the situation is a mix of a benchmark plus spot and index pricing. Page 16.

--

The chief executive of supermarket chain Woolworths (WOW.AX) has given an optimistic outlook for the retail sector based on stronger than expected consumer spending and economic growth. According to Michael Luscombe, consumers were generally in a better financial position now than a year ago as a consequence of lower mortgage rates and fuel prices and government stimulus payments. "Between now and December on a relative basis households are in a much better cash position," Mr Luscombe said yesterday. Page 17.

--

Furniture retailer Fantastic Holdings (FAN.AX) has successfully raised more than A$12 million of new equity from institutional investors and new shares to directors. The company also intends to launch a share purchase plan to eligible shareholders that could raise a further A$2 million. The retailer intends to use the funds to take advantage of the tough economic conditions and acquire distressed rivals according to managing director Julian Tertini. Page 18.

--

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

Australian and New Zealand Banking Group (ANZ.AX) chief executive Mike Smith has urged the Federal Government to lobby global forums such as the G20 for the withdrawal of the wholesale funding guarantee. Mr Smith believes the guarantee has served its purpose and there is now a case to argue that it is in fact disrupting the market. The guarantee, which came into effect in October last year, has provided the Government with a revenue stream of around A$1 billion, according to analysts. Page 20.

--

The revenue plans of troubled infrastructure owners Asciano (AIO.AX) may come under added pressure after a key customer, Toll Holdings (TOL.AX), has shown interest in buying rail assets from the Queensland Government. Toll is Asciano's largest user of intermodal rail services, and any asset acquisition by Toll would significantly reduce its use Asciano's services. Toll has shown interest in Queensland Rail's freight forwarding business, QR National, and has indicated if it can negotiate a reasonable price, the company will make an offer. Page 21.

--

The tax treatment of employee share schemes is unlikely to see any major changes as a result of an options paper produced by Assistant Treasurer Chris Bowen. In the recent budget the Federal Government controversially changed taxation laws requiring employees to pay tax up-front on their shares. The major issue for the government is non-qualifying schemes, which have been subjected to a generous capital gains tax regime since 1999 that encouraged rorting. Page 21.