Asciano attracts interest, but deal may be tough

By Denny Thomas

SYDNEY (Reuters) - Debt-heavy Australian ports operator Asciano Group Ltd (AIO.AX), which put itself up for sale last week, is attracting interest from private equity funds, but faces a tough job convincing its lenders after missing a previous target to sell assets.

More than half a dozen parties, including buyout funds and trade buyers, have signed up with Asciano for due diligence, with a first round of indicative bids due on April 13, a source briefed on the sale process told Reuters on Monday.

The source declined to be identified due to the confidentiality of the process.

Asciano, which has A$4.6 billion ($3.2 billion) in bank debt and a market capitalization that has slumped to just A$517 million, expanded the list of assets it plans to sell after a seven-month sale process generated only a lukewarm response.

To start with, Asciano decided to sell part of its Pacific National coal transport business, then other businesses, aiming to fetch more than A$1 billion to help cut its debt. Now Asciano is open to a full takeover of the company.

To achieve its desired result, Asciano has brought in Lazard Carnegie Wylie to assist ABN AMRO, which was previously the sole adviser to Asciano on the asset sale process.

Despite interest from a range of potential buyers, bankers and investors are skeptical Asciano will be able to fetch the right price.

"The company's ability to do a deal for its equity holders is slim," said Tom Elliott, managing director of MM&E Capital.

Bankers say a consortium of TPG Capital TPG.UL and Global Infrastructure Partners, owned by Credit Suisse (CSGN.VX) and General Electric (GE.N), are still interested in buying Asciano after it rejected a A$2.9 billion bid last year, at A$4.40 a share.

Asciano declined comment and did not name any of the interested parties.

Analysts said the company may be lucky to get even A$1.50 a share now, valuing it at around A$1 billion.

Like many other debt-laden companies, Asciano's share price has collapsed on concerns about its ability to refinance maturing loans, making it hard to raise fresh equity. The stock closed on Monday at A$0.76, down from A$5.39 last August.

A full takeover would have to be backed by Asciano Chief Executive Mark Rowsthorn, who owns 10.9 percent of the company, part of which he acquired at close to A$11 a share.

As an alternative way to recapitalize the company, some private equity funds are keen to become cornerstone investors, said the source briefed on the process.

The source said Morgan Stanley Infrastructure Partners, China's Shenhua Group, private equity fund The Carlyle Group CYL.UL and Future Fund, Australia's sovereign fund, are the other parties to have registered interested in the sale.