PRESS DIGEST-Australian Business News - May 1
THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)
An independent expert's report on investment fund Macquarie Communications Infrastructure Group (MCG) MCG.AX is believed to contain warnings that the company may struggle to refinance debt and be forced to undertake a large equity raising. The report has been conducted by consultants Deloittes for the Canadian government pension fund CPP Investment Board, in preparation for CPP's A$1.4 billion takeover bid for MCG. Page 41.
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Telecommunications company Telstra (TLS.AX) has called on the Federal Government to set firm dates for the renewal or auction of licences for radio frequency spectrum used for mobile telephony and broadband. Telstra yesterday supported claims by the Australian Mobile Telecommunications Association that the industry has a pressing need for more spectrum, and warned that further uncertainty would harm the economy. Telstra said three-quarters of internet access will be performed via mobile devices within 10 years. Page 41.
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Mining company BHP Billiton (BHP.AX) will today release an environmental impact statement (EIS) for the proposed expansion of its metals and uranium project at South Australia's Olympic Dam. The EIS for the A$15 billion project is more than 1000 pages long and comes with an accompanying DVD to help explain the complex mining development. Despite the release of the EIS, the project is unlikely to start in the immediate future, with BHP having laid off around 200 workers from the project this year. Page 42.
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Mining company Lihir Gold (LGL.AX) yesterday released its March-quarter production report, including record production of 318,000 ounces of gold. The result was above previous guidance, and the company reaffirmed its full-year guidance of producing between 1.04 million and 1.2 million ounces. Despite the strong overall performance, there are concerns about the company's Ballarat gold mine in Victoria, with analysts raising the possibility that the mine's value will suffer a write-down in first half results. Page 42.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
West Australian-based BankWest yesterday posted a A$139 million loss for the 2008 calendar year. BankWest, which was recently acquired by Commonwealth Bank of Australia (CBA) (CBA.AX) from the Halifax Bank of Scotland (HBOS), was forced to increase its provisions from A$87.8 million to A$825.3 million as part of the sale. However, CBA will be able to claim back around A$400 million from HBOS as part of the original sale agreement. CBA chief executive Ralph Norris maintained that BankWest would still "create significant value for the CBA group." Page 17.
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Melbourne-based bauxite producer Alumina (AWC.AX) yesterday announced its intention to raise up to A$1.02 billion in a discounted rights issue. Alumina chief executive John Bevan said that it would issue a seven-for-10 non-renounceable entitlement offer at A$1-a-share in an effort to refinance around US$520 million of debt due in 2010. Mr Bevan said the "uncertain times" had forced the company "to address our 2010 risk of not being able to renew our debt facility." Page 17.
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Coal mining company Gloucester Coal's (GCL.AX) major shareholder, the Hong Kong-based Noble Group, is to continue with its push to purchase the company despite a ruling by the takeover regulator which prevents Gloucester's shareholders from voting on a merger. Gloucester's board yesterday said it still favours a merger with mining company Whitehaven Coal (WHC.AX), despite Noble offering a higher cash bid of A$396 million. Noble director Will Randall says the ruling "puts the control back into the same people who created the lockdown." Page 18.
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Health and beauty company Australian Pharmaceutical Industries (API) (API.AX) yesterday reported an 8.7 percent lift in net profit for the first half ending February 28 to A$6.7 million. Chief executive Stephen Roche said that the company, which operates the Priceline retail stores, was able to increase sales for the first half by 8.1 percent despite "a volatile and fluctuating market." UBS analyst Dan Hurren said that API's A$11.5 million in corporate expenses had "affected its profitability." Page 19.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
The West Australian Supreme Court yesterday ordered a syndicate of 20 banks to pay creditors of businessman Alan Bond's failed Bell Group a combined amount of almost A$1.6 billion. The decision follows a ruling which favoured the liquidator over the banks, which the court said had secured priority for debt repayment in return for a refinancing deal with the troubled company before it collapsed in 1992. The banks, which include National Australia Bank (NAB.AX) and Commonwealth Bank of Australia (CBA.AX), have said they will appeal the decision. Page 17.
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The Surfers Paradise-based finance company that banned company director Jim Byrnes put up to become the manager of the A$4.8 billion BrisConnections (BCSCB.AX) toll road project has withdrawn its interest in the role. Armstrong Corporate Capital says the decision was prompted by "the recent media speculation about the uncertain future nature of the BrisConnections project." The withdrawal leaves Jim Byrnes unable to mount an investor revolt at the troubled toll road operator. Page 18.
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The Western Australian Environmental Protection Authority (EPA) has given approval to a controversial liquefied natural gas (LNG) project at Barrow Island. The project is part of the A$50 billion Gorgon LNG joint venture, involving Chevron Australia, Shell and ExxonMobil. The island is home to the endangered flat-backed turtle, and EPA chairman Paul Vogel said that although it believed industry should not be located on Barrow Island, the project would be allowed to go ahead "provided stringent conditions are imposed." Page 18.
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Unitholders in troubled financial group City Pacific's First Mortgage Fund will meet today to vote on a proposal to cut the fee paid to the fund's managers. The Gold Coast-based group has already agreed to cut the fees taken from the fund from a maximum of 5 percent to 2.5 percent of total assets. However, today's proposal, if passed, will cut the fee to 1.5 percent of assets. City Pacific this week announced an impairment loss of A$339 million, 35 percent of its total assets. Page 19.
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THE AGE (www.theage.com.au)
An expert witness appearing for Fortescue Metals Group (FMG.AX) has admitted that the methods he used to determine the significance of share price movements following the release of statements by Fortescue are not supported by published literature. Lawyers for the Australian Securities and Investments Commission, which has taken Fortescue to court over the statements, accused economist Gregory Houston of "deliberately distorting" evidence. Page B2.
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The world's largest shopping centre owner, Westfield Group (WDC.AX), yesterday reported that sales rose 0.3 percent during the March-quarter across its global portfolio. Joint managing directors Steven and Peter Lowy said the United States market is "very challenging," with a rising number of store closures. However, in Australia, eight out of nine retail categories showed "solid growth," which the company said had been influenced by the Federal Government's stimulus packages. Page B3.
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A formal takeover bid for agribusiness ABB Grain ABB.AX has become more likely after expected bidder, Canadian agribusiness Viterra, yesterday moved to raise C$450 million. Viterra chief executive Mayo Schmidt said the funds would allow the company to "act quickly should due diligence and negotiations result in a strategic transaction." Viterra has made a conditional, non-binding offer which values ABB at between A$1.5 billion and A$1.64 billion through a mixture of cash, shares and franked dividends. Page B3.
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Mobile telecommunications providers Hutchison and Vodafone are waiting on a decision from the Australian Competition and Consumer Commission on whether a proposed merger of the two companies will be approved. Vodafone yesterday said that it is unclear whether existing Hutchison customers would be able to access Vodafone's 3G network if the merger is allowed. The confusion is due to previous partnerships between the two companies and rivals Telstra and Optus, which may lead to such access being defined as "collusion." Page B3.
