PRESS DIGEST-Australian Business News - June 18
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)
Department store Myer yesterday forecast that sales for the six months to the end of June would be 1 percent lower than for the same period last year. The company has cut the inventory it carries by 4 percent, with chief executive Bernie Brookes saying that consumer confidence may take another 18 months to fully recover. Despite the cautious outlook, Myer increased its profit forecast and now expects high single digit profit growth for the year. Page 19.
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The head of iron ore operations for mining company Rio Tinto (RIO.AX), Sam Walsh, will today meet with West Australian Premier Colin Barnett to discuss the proposed iron ore joint venture between Rio and rival BHP Billiton (BHP.AX). Mr Barnett yesterday met with BHP chief executive Marius Kloppers. Although the State Government is unlikely to block the deal, Mr Barnett has said he will demand significant concessions from the companies, such as higher royalties and granting infrastructure access to third parties. Page 19.
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Cinema operators, including Village Roadshow (VRL.AX), Amalgamated Holdings and Hoyts, say they are close to reaching a deal with movie distributors which will digital technology installed in Australian cinemas. The deal will see operators and distributors share the more than A$150 million cost of installing the technology. Distributors will gain most from the move, by no longer needing to send out and replace the perishable 35 millimetre movie prints currently used. Page 22.
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Oil and gas exploration company Drillsearch Energy (DLS.AX) has rejected a A$53 million takeover offer from Beach Petroleum (BPT.AX). The company's description of the offer as inadequate and opportunistic is believed to have angered Beach. However, Beach managing director Reg Nelson yesterday would only say that the company will respond in due course in a dignified and professional manner. Beach, which has a market capitalisation of A$891 million, already holds a 5.2 percent stake in Drillsearch. Page 22.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
The Investment and Financial Services Association, which represents the superannuation and funds management sectors, yesterday anounced moves to phase out commissions on investment products in favour of upfront fees. Analysts say the move should lead to investors receiving higher quality advice, but say upfront fees may also deter small investors from seeking financial advice. Industry sources say the changes should also allow for more accurate comparisons between industry and retail superannuation funds. Page 17.
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Stockbroking firm Berndale Securities has been put up for sale by its owner, United States-based investment bank Merrill Lynch. Berndale is the largest provider of clearing services to the Australian stockbroking industry, and its sale could have a major effect on smaller brokers who use Berndale to clear trades. The Securities and Derivatives Industry Association says that without Berndale, the number of clearers would be reduced by a significant amount. Page 17.
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The board of conglomerate CSR (CSR.AX) yesterday outlined plans to spin off its A$1 billion-plus sugar business. The demerger, which will create the sixth largest sugar business in the world, is expected to be completed by March next year, and may involve an equity raising to support the balance sheets of the two separate companies. Analysts estimate the new company will be worth between A$900 million and A$1.5 billion, and should generate earnings of around A$107 million next year. Page 17.
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Port and rail infrastructure company Asciano Group (AIO.AX) has increased its conditional institutional placement by A$350 million to A$1.35 billion as part of its equity raising, now worth a total of $2.35 billion. The conditional placement, along with a proposed A$194 million placement to Asciano chief executive Mark Rowsthorn, will be presented for shareholder approval at an extraordinary general meeting on July 22. Asciano yesterday said that the funds will be mainly used to reduce the group's A$4.7 billion of debt. Page 19.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
The ING Real Estate Entertainment Fund (IEF.AX) yesterday said it will not pay investors their June distribution payment as the fund needs to keep cash levels high enough to avoid breaching debt covenants. The debt-laden fund owns 25 pubs in Australia after selling two hotels last month for around A$20 million. The fund lowered its distributions last December, and in February reported that operating profit for the year had fallen 8 percent to A$6.9 million. Page 24.
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Mining company Macarthur Coal (MCC.AX) yesterday said there were early indications that coal exports to China rose from less than 500,000 tonnes in April to around 4.1 million tonnes in May. Coal producers have seen prices slump since the collapse of the global steel market. However, Macarthur's chief development officer, Shane Stephan, says Chinese steel prices have been steadily recovering since April and were now quite encouraging for coal producers. Page 24.
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Investment bank Macquarie Group (MQG.AX) yesterday said it had abandoned plans of putting a new bonus scheme for senior executives to its annual general meeting this year. A new bonus scheme which was designed to more closely link performance and share price was shelved after the Federal Government proposed changes to the taxation of employee share schemes. Macquarie says it will now wait until the Government has confirmed the new arrangements, and may retain the current bonus scheme until next year. Page 25.
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The Australian Bureau of Agricultural and Resource Economics has released a report predicting that beef farmers' cash incomes will rise by up to 60 percent in 2008-09 in some areas. However, the report also says that beef farms have tripled their debt levels since 2000-01 as they have purchased more land, with the average debt of beef farmers in Australia's north now A$820,000. In 2007-08, beef farms in the country's south were paying an average 13 percent of farm cash receipts to pay interest. Page 26.
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THE AGE (www.theage.com.au)
The use of aerial cabling for the proposed national broadband network (NBN), is emerging as a major issue for the Federal Government. Nick Minchin, the Opposition spokesman for communications, this week criticsed the Government, saying it had decided to use overhead cabling whether residents and councils want them or not. Communications Minister Stephen Conroy has conceded that there will be some overhead cabling, but says it will be as unobtrusive as possible. Page B1.
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Tony D'Aloisio, chairman of the Australian Securities and Investments Commission, yesterday said that the regulator is examining a number of issues surrounding the collapses of managed investment scheme operators Timbercorp and Great Southern. Mr D'Aloisio said the issues include possible misuse of fees, the adequacy of disclosure by the companies, and further governance issues. Timbercorp's administrator, KordaMentha, is expected to soon apply to wind-up the company's olive and almond schemes. Page B2.
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Diversified property company Stockland (SGP.AX) yesterday announced that it will create a separate division within the company focused on the retirement sector. The new division will be separated from the existing residential division following the exit of current residential chief executive Denis Hickey. Stockland chief executive Matthew Quinn said the new division, which will be headed by group strategy manager David Pitman, could double in size within the next few years. Page B3. --
