PRESS DIGEST-Australian Business News - Dec 23

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)

--Arrow Energy's A$673 million acquisition yesterday of Queensland coal-seam gas (CSG) player Pure Energy Resources (PES.AX) marks the end of major consolidation in the state's CSG sector for now, according to observers. "There isn't a huge amount of coal seam gas [projects] in Queensland left to pick over," said Arrow (AOE.AX) managing director Shaun Scott. The corporate activity is now expected to shift to the CSG sector in neighbouring New South Wales, where AGL Energy this month secured a A$370 million lease on a major CSG ground. Page 9.

--Port and rail company Asciano Group (AIO.AX) and energy investment fund Babcock & Brown Power (BBP.AX) are among embattled infrastructure players planning asset sales next year despite the global credit crisis and falling valuations. Asciano said on Monday that it had received "significant interest" in its Pacific National coal-haulage arm, in which observers say it may sell a half-stake to pay down debt. Meanwhile, Babcock & Brown Power has confirmed that it has received several non-binding submissions for its power and gas assets. Page 9.

--Maintenance and project services group Transfield Services (TSE.AX) is expecting a boost in its United States (US) business from the incoming Obama administration. "Barack Obama's National Infrastructure Reinvestment Bank is a significant step in repairing, rebuilding and maintaining [US] infrastructure," says Transfield chief executive Peter Watson. Transfield has already won US$56 million (A$82 million) worth of infrastructure maintenance contracts in North America. Page 10.

--The Commonwealth Property Office Fund (CPA.AX) has revalued several of its office towers amid softening demand from investors and clients. The fund has revalued 22 of its towers, with Perth accounting for the biggest share, cutting the size of its portfolio by A$190.7 million to A$3.6 billion. According to the fund's manager, Charles Moore, Perth towers have been particularly affected because rents are falling "at a rapid rate" and the market in the West Australian capital is shallow. Pg.15.

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

--Fortescue Metals Group (FMG.AX)'s share price fell by 21 percent yesterday after it revealed its decision to issue shares in order to pay a contractor. The Pilbara-based iron ore miner was the worst performer on the Australian market, which lost 1.6 percent. Analysts regard the drop in Fortescue's shareprice, down A44 cents to A$1.71, as caused by negative speculation after a spokesman for Andrew Forrest's company said that it had made a share issue to raise A$3.65 million to pay contractor bills. Pg 15

--Citi (C.N) and Deutsche (DBKGn.DE) banks have been taken off the Australian trading pool of eight banks that sets daily interbank financing rates. Standard & Poor's (S&P) decision to reduce the global ratings of both banks led to their being dumped from the pool --Australian Financial Markets Association guidelines specify that the eight banks have to be rated at least AA minus to be part of the pool. On Friday in New York, S&P downgraded 12 United States and European banks including Deutsche and Citi. Page 15.

--Challenger Infrastructure Fund (CIF) (CIF.AX) has revealed its plans to make a A$55 million share buyback in order to bolster its falling share price. The share price fall came following the announcement of a 17 percent reduction in its interim distribution. CIF cut its distribution from A14.5 cents to A12 cents a share. The fund has also sold a third of its holdings (an 8 percent stake) in British utility Southern Water for 100 million pounds (A$221.4 million). Page 17.

--Santos (STO.AX) has chosen United States company Bechtel to make initial engineering studies for its A$7.7 billion Gladstone liquefied natural gas project, pushing on with the project despite global economic downturn. The oil and gas producer plans to construct a 3.5 million tonnes a year LNG train. Bechtel won the front-end engineering and design (FEED) contract over rival Foster Wheeler after each was contracted to perform a 6 month pre-FEED study in April. Page 17.

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

--The founder of collapsed childcare operator ABC Learning Centres (ABS.AX), Eddie Groves, is expected to lodge his defence with the Queensland Supreme Court this week against allegations from his estranged wife that he and two margin lenders defrauded her of A$64.2 million. Le Neve Groves says that Mr Groves sold her shares in ABC Learning from beneath her, following a margin call against Mr Groves' loans. She maintains the loans Mr Groves made with lenders Citigroup Global Markets and BT Securities were never guaranteed by her. Page 23.

--The Australian Agricultural Company (AAC.AX) (AAco) has announced plans to sell five of its properties to joint venture Primary Holdings for A$250 million. The proceeds of the deal are expected to be used by AACo to pay-down debt and buy back shares. AAco chief executive Stephen Toms said there was "a big disconnect" between the company's market capitalisation of A$500 million and its net assets of around A$800 million. AAco shares closed A14.5 cents higher yesterday, to finish at A$1.825. Page 24.

--The increasing expectation of bad debts has not yet been factored into the share prices of major Australian banks, according to analysts. Wilson HTM analyst Brett le Mesurier has forecast that a second wave of bad banking debts will flow on from the real economy, increasing "credit-rationing" on the part of the banks which have already set aside over A$4 billion in additional provisions for fiscal 2008. Commonwealth Bank of Australia has recently warned of higher provisions following its recent botched A$2 billion capital raising. Page 25.

--Progen Pharmaceuticals (PGL.AX) and Avexa (AVX.AX) are set to become one of Australia's largest biotechnology groups following their agreed merger. Progen will conduct a A$20 million share buyback for its shareholders under the scrip deal, and then issue shares to Avexa's investors. Progen is developing a treatment for cancer using small molecule pharmaceuticals, while Avexa is developing similar technology for the treatment of infectious diseases. Page 25.