PRESS DIGEST-Australian Business News - May 15

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) -- Mining company Rio Tinto (RIO.AX) (RIO.L) is believed to have sent representatives to China last week to discuss a number of issues with Chinalco officials. Analysts say the move follows increasing opposition to Chinalco's proposed US$19.5 billion investment in Rio. Investors are calling for Rio to instead undertake a rights issue, or to allow the deal's US$7.2 billion convertible note issue to be open to all shareholders. The deal between the two companies is yet to be approved by the Federal Government or Rio shareholders. Page 47. --Telecommunications company Optus has voiced its support for the Federal Government's national broadband network proposal, and may be willing to provide some of its own network assets to the project in return for a stake in the venture. Optus chief executive Paul O'Sullivan yesterday rejected analyst concerns that the project would not provide affordable broadband, saying, 'when we look into the economics and take into account the [small business] and corporate markets, it does look viable.' Page 48. --The owner of building materials supplier Hanson Australia, troubled German company HeidelbergCement (HEIG.DE), yesterday said it had secured a two-month bridging loan that will allow it to undertake asset sales. Hanson, which includes 229 concrete plants and over 60 quarries, is valued at around A$2 billion, an is one of the assets Heidelberg is considering offloading. Page 48. --Ratings agency Standard & Poor's (S&P) yesterday downgraded newspaper group Fairfax Media's (FXJ.AX) long-term corporate credit and debt ratings from BBB minus to BB plus. S&P said the downgrade was due to 'the ongoing deterioration of Fairfax's advertising earnings.' The downgrade will increase Fairfax's interest expenses in 2009-10 by around A$10 million to A$125 million. Fairfax chief executive Brian McCarthy said the decision was disappointing, but the company remains 'comfortably within its various financial covenants.' Page 49. THE AUSTRALIAN (www.theaustralian.news.com.au) -- Construction contractor Leighton Holdings (LEI.AX) yesterday downgraded its full-year net profit guidance to around A$430 million, A$50 million below the company's expectations in February. The downgrade was announced as the company revealed a net profit for the nine months to the end of March of A$220 million, a 41 percent reduction compared to the same period last year. Analysts say the fall is due to the weak Australian property sector as well as a slump in the Middle East's construction industry. Page 17. --A list of Australia's 40 wealthiest people for 2009 has seen James Packer regain his previous position as Australia's richest man. Forbes Magazine estimated Mr Packer's wealth at US$3.1 billion, despite last year falling US$2.2 billion. Last year's wealthiest man, Fortescue Metals Group (FMG.AX) chief executive Andrew Forrest, saw his valuation decline by 75 percent to US$1.65 billion. The magazine found that the number of US dollar billionaires in Australia had fallen from 16 to nine this year. Page 18. --John Hartigan, chief executive of media company News Limited, said in a message to staff yesterday that although the company's Australian operations had been hit by the slump in advertising, there are grounds for 'cautious optimism.' Mr Hartigan said 'the rate at which ad revenue has been declining month to month has started to level off and the efforts to reduce costs are working.' Mr Hartigan's comments come a week after those of News Corporation (NWSA.O) chairman Rupert Murdoch, who spoke of 'bright spots' on the sector's horizon. Page 18. --Queensland toll-road operator BrisConnections BCSCA.AX has warned that investors who failed to make the second instalment payment of A$1 on their partly-paid securities will not have the right to vote at a unitholder meeting scheduled for June 22. Jim Byrnes, an adviser to investment group Brisbane Toll Road Link, said a revised class action contesting the removal of voting rights would be lodged in court today. Mr Byrnes said the action will claim that there was no obligation to pay the instalment. Page 19. THE SYDNEY MORNING HERALD (www.smh.com.au) --The board of cattle station owner Australian Agricultural Company (AAC.AX) is facing major upheaval at the company's annual meeting Brisbane on May 27. AACo's largest stakeholder, IFFCO Poultry, has written to shareholders to say it will vote against the current chairman, Brett Heading, and two other directors. Corporate governance advisers RiskMetrics will today release a report which is believed to also recommend that shareholders vote against Mr Heading. Page 17. --Supermarket chain Woolworths (WOW.AX) says it has limited its search for overseas acquisition targets to the supermarket category, with chief executive Michael Luscombe saying 'it is what we are good at.' The retailer has an in-house team examining possible acquisition targets, and analysts say there is growing market speculation that a target has been selected. Mr Luscombe says that despite the current economic climate 'healthy businesses need to keep momentum.' Page 18. --The Federal Government's announcement that its health insurance fund, Medibank Private, will be converted into a for-profit, state-owned business, is seen as a way of generating cash for the Government, according to analysts. The move will see the fund pay tax on any profits and return dividends to the Government. The Government also says the move means the fund will remain publicly owned, however, it will also make any future privatisation much easier. Page 18. --Bookseller REDgroup Retail is to spend between A$3 million and A$5 million developing online presences for its Angus & Robertson and Borders chains, allowing customers to purchase books directly online. A&R's website has recently been relaunched, and Borders' site will be launched later this year. The move is part of efforts by the company to improve the business before a possible float. A&R Whitcoulls managing director Dave Fenlon said a date for the proposed pubic listing is yet to be determined. Page 18. THE AGE (www.theage.com.au) --Fund manager Perpetual has launched an international court bid to recover A$125 million or more on behalf of around 1000 investors, including an unnamed Sydney charity and several local councils. The funds have been frozen since the collapse of investment bank Lehman Brothers last September. Perpetual says it is suing the corporate trustee of notes issued by Sydney-based investment house Mahogany Capital and sold through brokers Grange Securities, which became part of Lehman Brothers. Page B1. --A revised proposal by Australian property developer Lend Lease LLC.AX to build London's 2012 Olympic Village has been rejected by the British Government as uncompetitive. The Government will now fund the entire 1.1 billion pound development. Lend Lease's proposal was 175 million pounds lower than the original agreement the developer had with the Olympic Delivery Authority, as the company struggled to raise funds following the financial crisis. Page B4. --Surfwear company Billabong International (BBG.AX) went into a trading halt yesterday, and is to provide an update on the company's financial position today. Analysts say Billabong is expected to either announce a capital raising or a profit downgrade. However, analysts are unsure as to why the company may choose to undertake a capital raising, as it has no need to refinance debt within the next 12 months Chief executive Derek O'Neill has also said the company is focusing on organic growth. Page B5. --Financial services company AMP (AMP.AX) yesterday held its annual meeting, with chairman Peter Mason leaving the possibility of further dividend cuts open as the fund manager seeks to protect its balance sheet. Analysts say investors were critical of AMP's board, with former directors Meredith Hellicar and David Clarke both facing criticism for their roles at building materials supplier James Hardie and Allco Finance Group respectively. Mr Mason defended the contributions of both former directors, who recently withdrew their nominations for re-election. Page B6.