PRESS DIGEST-Australian Business News - July 2
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)
-- Infrastructure asset manager Hastings Diversified Utilities Fund (HDF.AX) plans to raise A$250 million through a capital raising to repay debt and help fund expansion of its Epic gas pipeline. The move cancels the sale process for the gas pipeline business, which has attracted proposals from 16 groups since it was started at the beginning of last month. The decision by Hastings has won approval from investors, with one analyst saying, "they're on the right path." Page 17.
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Department store retailers David Jones (DJS.AX) and Myer have seen better than expected demand from consumers, leaving them searching for stock to sell during the current year-end clearance sales. Retailers are sourcing merchandise from Asian manufacturers left with excess stock due to poor demand from the United States, and are taking advantage of lower freight rates. Myer managing director Bernie Brookes says that until now retailers have been reducing inventory due to poor sales expectations. Page 17.
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Consumer electronics retailer Clive Peeters (CPR.AX) yesterday issued a profit warning, saying it expects a pretax loss of between A$4.5 million and A$5 million for the 2009 financial year. However, the company also forecast a return to profitability this year, with managing director Greg Smith saying "the worst is over because we've re-engineered the model and our assumption for 2010 is based on no improvement in retail conditions." Mr Smith said the retailer would continue to seek new capital, but added that it is not "a major focus." Page 17.
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The former chief executive of Fairfax Media (FXJ.AX), David Kirk, has been appointed executive chairman of cinema group Hoyts. Mr Kirk yesterday said that "there are good opportunities to grow this company," which currently has a 21 percent share of the sector, behind market leader Village Roadshow-Greater Union, which has 45 percent. The company is owned by private equity firm Pacific Equity Partners, and Mr Kirk is believed to have taken a small stake in the cinema group. Page 18.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
-- Iron ore mining companies BHP Billiton (BHP.AX) and Rio Tinto (RIO.AX) yesterday said talks with the China Iron & Steel Association (CISA) on benchmark price for iron ore fines have resumed, as China seeks to avoid the collapse of the benchmark system. Until now the CISA has been demanding cuts to the price of between 40 percent and 45 percent, greater than the 33 percent cut which has been agreed to by Japanese and South Korean steelmakers. Despite the cuts, the price of around US$61 a tonne is still the second-highest on record. Page 17.
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A proposed liquefied natural gas plant in Western Australia's Kimberley region is becoming less likely following speculation that the forecast cost of the project has increased to A$50 billion. Adding to the uncertainty, partners to the project's leader, Woodside Petroleum (WPL.AX), are believed to be questioning the necessity of the plant, and are considering the option of processing gas at an existing facility at Karratha. Woodside, which has a 50 percent stake in the project, has previously said it hopes to start construction in 2013. Page 17.
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Taxi payment services company Cabcharge (CAB.AX) has been questioned over claims a courier-delivered envelope to the company, containing official notice of a multi-million dollar lawsuit by the Australian Competition and Consumer Commission, went unnoticed for more than three hours. The Australian Securities Exchange has asked the company to explain why it claimed it was unaware of the legal proceedings shortly after 3 pm last Friday, when the documents were served at midday. Page 17.
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Patrick Snowball has been appointed as the new chief executive of Brisbane-based banking and insurance group Suncorp (SUN.AX). Mr Patrick has 20 years experience in the sector at a number of European groups, but has said that his previous experience in the British army has shaped his outlook on management. "My style of leadership is based on 19 years of military training," Mr Snowball has been quoted as saying. Mr Snowball will take up the role in September when his family move from London. Page 17.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
-- Receivers have been appointed to eight companies owned by Queensland hotel and property developer Tom Hedley. Australia and New Zealand Banking Group (ANZ) and banking and insurance group Suncorp yesterday called receivers in for Mr Hedley's construction business, while ANZ also moved on his pub companies. Mr Hedley, who at one point was worth A$715 million, is thought to have amassed considerable debt through purchasing pubs at the top of the market during 2006 and 2007. Page 21.
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Mining industry services company Boart Longyear (BLY.AX) yesterday announced it has sold parts of its manufacturing operations in Africa to a South African investment company. Boart did not say how much the sale would earn the company, however, analysts say asset sales are unlikely to generate enough cash to significantly help with its refinancing troubles. Boart, which saw its shareprice fall by almost 89 percent last year, is due to repay US$585 million of debt in April. Page 22.
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Managed investment scheme provider Forest Enterprises Australia (FEA) (FEA.AX) has seen sales plummet during the three months to June, with the company blaming the decrease on fall-out from the collapses of rivals Great Southern and Timbercorp. FEA yesterday said it expects revenue for the 2009 financial year to reach A$23 million, less than half the A$60 million recorded in 2006 and 2007. The company said the "challenging environment" has led it to secure an agreement from its bankers to waive covenants for the current reporting period. Page 23..
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Northern Territory Airports yesterday announced it has shelved plans for a A$60 million terminal expansion at Darwin Airport due to the downturn in the travel industry. The airport operator said it had been unable to secure an agreement with airline Jetstar and its parent, Qantas Airways (QAN.AX), to help fund the expansion. The two airlines represent 80 percent of the airport's business. Jetstar responded by criticising the airport operators for being unable to create a "realistic pricing agreement" during the past two years. Page 23.
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THE AGE (www.theage.com.au)
-- Plans to create a Brand Australia Council have been attacked by former Victorian premier Jeff Kennett, who yesterday said "we have more bodies than we know what to do with." The proposed body would consist of representatives from the business community who would advise government on how Australian business should market itself overseas. Mr Kennett said previous failures to create a consistent approach to marketing Australian tourism give little hope that the new proposal will succeed. Page B2.
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The Federal Government yesterday announced details of the first stage of its national broadband network, the A$250 million broadband black-spot program. The program is designed to create competition in rural and regional areas where telecommunications company Telstra (TLS.AX) is the only provider of backbone infrastructure, allowing competing retail broadband providers access to those areas. Communications Minister Stephen Conroy also announced a tender process for the program, which is due to start its roll-out in September. Page B3.
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Oil and gas company Lakes Oil has announced initial results for its Wombat 2 well in the Gippsland Basin in Victoria, saying that the results put the project closer to achieving commercialised gas flow rates. The well had produced a stabilised gas flow of 1.35 million cubic feet a day following its refracture. Although the sustainable flow rate will not be known for several weeks, the current rate would make the well one of the largest onshore projects in the state. Page B3.
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Yesterday's announcement of a 1 percent increase in retail sales during May, as well as the profit upgrade from department store David Jones earlier this week, rules out a further cut to official interest rates by the Reserve Bank of Australia next week, according to analysts. However, analysts also warn that the recent positive signs cannot be seen as a sure sign of recovery. A more definite outlook is expected to only emerge once the Federal Government's stimulus measures and the latest tax cuts have been absorbed. Page B8. - -
