PRESS DIGEST-Australian Business News - Mar 27
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)
Melbourne-based group Acacia (ACTG.O), which has bid for the Federal Government's national broadband network tender, has assembled a group of advisers for the project including Australia and New Zealand Banking Group (ANZ.AX) and Deutsche Bank. Analysts say Acacia is increasingly seen as a likely winner of the tender for the A$10 billion project. Communications Minister Stephen Conroy is expected to make an announcement on the project next month. Page 43.
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Peter Goode was yesterday appointed chief executive of engineering services provider Transfield Services, replacing Peter Watson, who resigned last November. Mr Goode acknowledged the company's recent problems, saying 'we need to admit there has been a bit of a loss of investor confidence recently.' Mr Good said he would concentrate on the company's future and 'try to use the strong balance sheet to move the company ahead.' Page 43.
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Mining company BHP Billiton (BLT.L) yesterday raised a further A$4.36 billion on the bond market, increasing the amount the company has raised during the past week to A$9 billion. The moves have increased speculation that the miner is preparing to make an acquisition, despite the company saying the funds are for general corporate purposes. Analysts had expected BHP to buy assets from its rivals hit by the economic downturn, however, the company may have to alter its plans following the emergence of Chinese investors interested in the sector. Page 44.
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Warwick Syphers, the chief executive of regional television and radio network Prime Media Group (PRT.AX), says the company's current cost management program will not lead to job losses. Mr Syphers said cost-cutting via such measures is 'not our style,' but admitted that the issue may be re-examined if the advertising market remains weak. The comments were made as Prime revealed plans to raise A$110 million through a capital raising and a share placement with metropolitan television broadcaster Seven Network. Page 45.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
The Australian Securities and Investments Commission has succeeded in its bid to have collapsed financial planning firm Storm Financial liquidated. The Federal Court yesterday ruled that placing Storm into liquidation would provide creditors a better outcome than the deed of company arrangement proposed by Storm's founders, Emmanuel and Julie Cassimatis. The firm's creditors are collectively owed A$78 million, and around 1300 former clients are pursuing legal action against the firm. Page 17.
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Diversified funds management group AMP (AMP.AX) has put in place a pay freeze for its senior staff and directors. Chairman Peter Mason announced the pay freeze in the company's annual report, saying 'we believe this action is prudent in the current environment.' Meanwhile, AMP director David Clarke will face a challenge to his re-election this year, with shareholder groups preparing to vote against him. Mr Clarke is a former chief executive of Allco Finance Group, and has been blamed for transactions which led to Allco's collapse. Page 17.
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Guy Elliot, the chief financial officer of mining company Rio Tinto, (RIO.AX) yesterday acknowledged that the miner has been working on an alternative plan for addressing its debt burden, should the proposed US$19.5 billion investment deal from China's Chinalco fail to eventuate. Mr Elliott said the deal with Chinalco was the preferred option, but the proposal is yet to be approved by both the Foreign Investment Review Board and Rio's shareholders. Page 17.
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Brickworks (BKW.AX) , Australia's largest brick maker, yesterday announced cost-cutting measures as the company prepares for the housing sector downturn. Managing director Lindsay Partridge said the company had asked employees to take an extra five days of holidays, and had put a salary freeze in place for its 600 workers. The brick maker has already cut between 50 and 60 jobs in the past six months. The company said it expects the first home owners grant to help sales, but said medium density developments remain 'in the doldrums.' Page 18.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
Mineral sands mining company Iluka Resources (ILU.AX) yesterday announced that it is to close one of its four synthetic rutile kilns three months earlier than planned. The closure of the West Australian kiln will reduce rutile production by 5 percent and also cause the loss of 23 jobs. Analysts say the closure will not have a major effect on the company's profits, the majority of which comes from the sale of zircon. Iluka's shareprice fell 5.4 percent following the announcement, to close at A$4.02. Page 22.
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John Stanhope, the chief financial officer at telecommunications group Telstra (TLS.AX), yesterday told investors they should ignore 'analyst and media scaremongering' on the impact the Federal Government's national broadband network (NBN) would have on the company. Telstra was excluded from the tender process for the NBN late last year, but Mr Stanhope downplayed the decision, saying 'people are jumping at shadows trying to value the impact on Telstra of a third-party [network] build.' Page 22.
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Analysts say travel agency Flight Centre (FLT.AX) is one of a number of Australian companies which investors have embraced as they seek to take on more risk, with the stock yesterday rising by 12 percent in its fourth day of gains. Flight Centre shares have risen 72 percent since reaching a 10-year low on March 10, while the wider market has also rallied, increasing in value by 15 percent over the past two weeks. Last month Flight Centre released results showing net profit had fallen 57 percent to A$26 million for the six months to December. Page 22.
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Investment fund Babcock & Brown Infrastructure BBI.AX (BBI) yesterday indicated it was willing to sell its flagship asset the Dalrymple Bay Coal Terminal, one of the world's largest coal export facilities. BBI yesterday appointed its one-time rival investment bank, Macquarie Group's (MQG.AX) Macquarie Capital, to advise on the sale. Analysts say that although the asset may be worth around A$1 billion, potential buyers will also have to take on A$1.7 billion of debt associated with the facility. Page 23.
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THE AGE (www.theage.com.au)
Figures from the Australian Prudential Regulation Authority show that Australia's superannuation assets fell by 7.6 percent during the final three months of last year, to A$1.05 trillion dollars. The assets fell by 14.8 percent in value over the entire year. The release of the figures coincides with research by professional services firm Deloitte, which has forecast that superannuation assets will be worth A$3 trillion in 2018, and nearly $7 trillion in 2028, while warning that many 'baby boomers' may not have enough superannuation. Page B1.
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Gail Kelly, the chief executive of Westpac Banking Corporation (WBC.AX), yesterday said Australia would be 'unable to avoid a recession in 2009,' and forecast a reduction in gross domestic product of 1 percent. Ms Kelly's comments are the first in which she has admitted the country would slip into recession. Despite expectations of a contracting economy, Ms Kelly said the recession was 'expected to be shallow,' with the economy starting to recover from a low point this year, and growth restarting next year. Page B3.
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Listed retail property company Westfield Group (WDC.AX) yesterday released its 2008 annual report, which showed that executive chairman Frank Lowy and his executives all took substantial pay cuts. Mr Lowy's base salary was unchanged from the previous year, and the company's policy of capping 2008 bonuses at 2007 levels was also applied to the chairman. Westfield reported a loss of around A$2 billion for the year, in line with many groups in the real estate investment trust sector. Page B3.
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Property maintenance provider Programmed Maintenance Services (PRG.AX) yesterday said it cut an unspecified number of jobs due to falling demand for services, particularly from the resources sector. The company expects to incur A$3.4 million in redundancy costs, but said that 'lowering the cost base of the business is a prudent measure.' The company also cut its earnings forecast to between A$70 million and A$71 million for the year to the end of March, down from previous expectations of A$74 million. Page B4.
