PRESS DIGEST-Australian Business News - Dec 16

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)

--Telstra's (TLS.AX) share price fell to a two-year low yesterday, after it was revealed that the Federal Government had excluded the telecommunications giant from the bidding process for the national broadband network tender. Telstra said it had other options if it could not gain the contract to build the A$10 billion-plus broadband infrastructure but investors were nervous and the stock fell A48 cents to close at A$3.65. JPMorgan analyst Laurent Horrut said "this is going to determine the company's return for the next 20 years." Page 16.

--Rio Tinto (RIO.AX) has become the latest major miner to approach Chinese steel mills offering special deals for iron ore. Rio Tinto is offering small and medium-sized mills long-term contracts in return for taking cargoes at benchmark prices. A Chinese steel mill source said Rio Tinto was also selling at heavy discounts to two major Chinese traders in order to increase sales. This move comes as BHP Billiton pushes for an overhaul of the pricing system, with the aim of switching contracts to indexed instead of benchmark prices. Page 41.

--Qantas Airways (QAN.AX) is facing new legal charges from its involvement in an international freight cartel after the New Zealand Commerce Commission took legal action against the airline. The commission initiated proceedings in the country's High Court against 13 airlines including Qantas and its prospective merger partner, British Airways (BA). Last week, Qantas was ordered to pay A$20 million and BA A$5 million in penalties by the Federal Court in Australia for breach of the Trade Practices Act. Page 42.

--Biopharmaceutical company CSL (CSL.AX) has increased its search for products in late stages of research, hoping to take advantage of opportunities arising due to tough economic times. CSL has appointed a specialist team to look into buying opportunities as other companies are "better priced and more available than they had been in the past," says CSL chief scientific officer and director of research, Andrew Cuthbertson. CSL stock has outperformed the benchmark index for over a quarter, making it one of this year's better stocks. Page 42.

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

--Australia's liquefied natural gas exporters will be eligible for free carbon permits, the Federal Government's white paper on the emissions trading scheme (ETS) has proposed. According to provisions in the ETS green paper released in July, petroleum companies like Woodside Petroleum (WPL.AX) and Santos (STO.AX) would not have received assistance. Changes revealed yesterday in the white paper allow for 60 percent of emissions permits for LNG exporters to be provided free of charge. Pg. 15.

--British gas company BG Group (BG.L) has suspended its managing director of Africa, Middle East and Asia, Stuart Fysh, while he is under investigation for his role in Australian share trades made prior to a key deal with Queensland Gas. The New South Wales Supreme Court has frozen funds in an account alleged to contain proceeds from Dr Fysh's share trading while the Australian Securities and Investments Commission probes the legitimacy of his actions just before the alliance with Queensland Gas was made. Page 15.

--Pipeline operator APA Group (APA.AX) has launched a new fund, Energy Infrastructure Investments, with Japan's Marubeni Corp (8002.T) and Osaka Gas (9532.T) both purchasing significant stakes in the fund at book value. Marubeni has taken a 49.9 percent stake, Osaka Gas a 30.2 percent stake and APA has kept 19.9 percent and will operate the assets. APA has offloaded its regulated-income gas and power assets, including power stations and gas pipelines, in order to reduce the group's gearing from 75 percent to around 69 percent. Page 16.

--Macquarie Group (MQG.AX) is involved in talks with international securities broker Hengtai Securities and plans to acquire a one-third stake in the specialist equity and bond broker. The negotiations are in the early stages and, if the plan goes ahead, Macquarie will extend its exposure to Chinese financial markets. Macquarie already has some exposure to the growing Asian region, owning commercial property in the region and holdings in some Chinese shopping centres. Page 17.

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

--China's industrial production grew by only 5.4 percent in the year to November, revealing a slump from mid-year, when the annual rate was 17 percent. The slump in China's industrial output indicates the possible shrinking of the country's economy, despite a partial recovery in steel output, analysts have said. Macquarie Bank's China economist, Paul Cavey, said he was also concerned regarding the sharp contraction in China's real estate construction, and estimates that by early next year the contraction will reach 30 percent. Page 17.

--New South Wales Manchester Unity's (MU) 90,000 policyholders voted overwhelmingly in support of the tie-up with HCF yesterday. The A$256 million merger was approved by 78 percent of MU's policyholders. The combined group will be third in the market behind Medibank Private and BUPA-MBF. Page 19.

--Former James Hardie director Michael Gillfillan told the New South Wales Supreme Court yesterday that he was not "suspicious" of the company's executives or of actuarial company Trowbridge Consulting. The Australian Securities and Investments Commission has taken legal action against 10 former executives and directors of James Hardie, alleging they had made misleading statements in 2001 regarding the adequacy of funding in an asbestos compensation trust. Mr Gillfillan said he had trusted Trowbridge's "best estimate" on future claims. Page 19.

--Two of James Packer's Crown Ltd's United States (US) acquisitions made last year are now "worthless," according to a Citi analyst. Crown (CWN.AX) bought a 2.5 percent stake in Harrah's Entertainment for A$172 million in January and paid A$242 million for a 4.9 percent stake in Station Casinos Group in August of last year. Citi's Jenny Owen said the holdings in the two debt-laden US companies were now worth nothing "due to the highly leveraged nature of the private-equity-owned casino operators and the downturn in industry revenue." Page 19.

THE AGE (www.theage.com.au)

--Australia's major banks, including National Australia Bank (NAB.AX) and Westpac Banking Corp (WBC.AX), have said that they had no direct exposures to the alleged pyramid investment "Ponzi" scheme in the United States. Investment banks and houses in Europe and Asia, including Spain's Grupo Santander (SAN.MC) and Britain's HSBC (HSBA.L), have potentially lost billions because of their exposure to Bernard Madoff's investment scheme. Australian banks and investment funds have emphasised that Australian exposure to the risk was "minimal". Page B2.

--Stock in appliance retailer Clive Peeters (CPR.AX) has slumped, yesterday falling by 26 percent. After a gain of 144 percent last week, the Australian Securities Exchange wrote a letter to Clive Peeters enquiring as to whether any market-sensitive information required disclosure. However, the stock dropped after a response by company secretary Steven Rowarth did not discuss any attempt by Clive Peeters to secure a buyer for the company, which was the subject of rumours a fortnight ago. Speculation on a sale occurred after last month's strategic review. Page B2.

--Victorian Premier John Brumby has warned that general sales tax (GST) or income tax will need to be increased if the Federal Government acquiesces to demands for the abolishment of key state taxes. Last week a consultation paper on the Henry review of the tax system was released, outlining submissions including some calling for the end of certain taxes. Page B3.

--Melbourne developer Salta Properties has bought a harbour-front block northwest of Telstra Stadium in the city's Docklands precinct for an undisclosed amount. Local developer Glenn Corke's company Pacific Harbour Developments acquired the site in 2004 for around A$4 million but did not carry out its development plans on the site. Page B3. --