PRESS DIGEST-Australian Business News - June 24
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)
-- Mining company Anglo American (AAL.L) has rejected a merger proposal from Swiss-based mining company Xstrata (XTA.L). The board of Anglo yesterday released a statement saying that such a deal was strategically unattractive, and that the terms were "totally unacceptable." Analysts said Anglo shareholders believed Xstrata should offer a premium for control of the company, rather than the proposed "merger of equals." Xstrata said it was disappointed and surprised by the response. Page 48.
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Coal to liquids group Linc Energy (LNC.AX) has appointed investment bank UBS to help with the sale of a number of the company's coal assets in Queensland. The move comes after exclusive talks with China's Yanzhou Coal, aimed at the sale of Linc's Emerald coal tenements in Queensland, failed to result in a deal. An announcement on the sale of the Emerald tenements could occur as soon as today, while the sale of tenements in the Galilee Basin is expected to be completed by the end of the year. Page 49.
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Mining company Fortescue Metals Group (FMG.AX), miner Aquila Resources (AQA.AX) and private equity firm AMCI are to start talks on the possible joint development of a deep-water iron ore export port at Western Australia's Anketell Point. Aquila and AMCI are partners in Australian Premium Iron (API), which plans to export 30 million tonnes a year from the state's West Pilbara region, while Fortescue has plans for a 2.2 billion tonne project in the area. API plans to start production in 2013. Page 49.
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Oil and gas company Otto Energy (OEL.AX) has appointed Paul Moore as chief executive, replacing Alex Parks. Mr Moore has formerly been an executive manager at oil and gas companies Woodside Petroleum (WPL.AX) and Santos (STO.AX), with Otto chairman Rick Crabb describing him as "very experienced and highly regarded." Mr Crabb said yesterday that the company was open to exploring opportunities in areas such as Australia or Africa, but is currently about to start exploratory drilling in Argentina. Page 49.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
-- Australia and New Zealand Banking Group (ANZ) (ANZ.AX) will today announce the sale of its infrastructure business, ANZ Infrastructure Services (ANZIS), which includes assets such as Sydney's ANZ Stadium. ANZIS is being purchased by a consortium including Australian Football League chairman Mike Fitzpatrick, ANZIS managing director John Clarke and corporate adviser Les Fallick in a deal believed to be worth more than A$30 million. Page 19.
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Ratings agency Moody's Investor Services yesterday downgraded its outlook on the Australian banking sector from stable to negative. The report stated that although the four major banks are currently profitable and better-positioned than their global rivals, increasing bad debts and falling consumer demand could negatively affect them in the future. The report from Moody's came as Macquarie Group forecast that revenue growth for the major banks will only reach 4 percent this year, compared to 15 percent last year. Page 21.
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A report on small to medium (SME) businesses in Australia has found that most are currently focused on survival rather than expansion. The JPMorgan-Fujitsu Consulting Australian SME market report found that businesses are relying more on loans as debtors take longer to pay, while interest rates on that debt remains high. The report also said that increased funding costs for banks mean that "it is unlikely that lending rates to SMEs will fall lower than they are currently." Page 21.
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Premier Investments (PMV.AX), the investment vehicle of Solomon Lew, has closed the last two Peter Alexander stores in the United States (US), where the brand was launched shortly before the start of the economic downturn. Premier says the sleepwear brand, part of the Just Group which was purchased by Premier last September, remains "very profitable" in Australia and New Zealand. Premier also said it would seek to maintain the Peter Alexander brand in the U.S. in some way. Page 21.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
-- Shareholder activists and corporate governance experts have warned that investors should reserve judgement on companies claims of executive pay freezes until further details are revealed later this year. Analysts yesterday said that recent pay freezes generally only apply to the fixed component of executive remuneration, which make up only a third of their pay. Investors are likely to receive the full details on executive pay packages when annual reports are published later this year between August and October. Page 17.
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Wine company Australian Vintage (AVG.AX) has recorded strong sales growth to overseas markets, and now expects full-year sales volumes to grow by 10 percent, with 7 percent growth in dollar terms. Chief executive Dane Hudson yesterday said that Australian Vintage, which was forced to book a A$120 million impairment this year, expects to make a small operating profit this year, adding that "I think in the current conditions that is not a bad outcome." The company will release full-year results in August. Page 18.
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The general manager of the Foreign Investment Review Board, Patrick Colmer, has told a Senate inquiry into foreign investment that the board has "taken great efforts to explain our preference," for investments and partnerships with Australian companies, rather than takeovers. Mr Colmer also told the inquiry yesterday that he did not believe that the Chinese Government was attempting to influence Australian commodity prices, saying that investments from China were on a commercial basis. Page 18.
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Real estate group Indigo Pacific (IPA.AX) yesterday said it "must be doubtful" that the company will be able to recover a A$27.5 million loan made to two private property development companies linked to two of its former directors, which have now been placed in voluntary administration. Indigo has already written down the value of the loan by $21.4 million. In the company's half-year accounts, Indigo said the loan represents 92.8 percent of the groups total assets. Page 19.
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THE AGE (www.theage.com.au)
-- Collapsed investment bank Babcock & Brown BNB.AX is believed to have lost A$5.4 billion during its final year of operation, second in Australian history only to financial services company AMP (AMP.AX), which recorded a A$5.5 billion loss in 2003. Although the accounts are thought to have been completed, they have yet to be lodged with the Australian Securities and Investments Commission, as receivers to the group continue to examine the complex entity. Page B1.
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The Australian sharemarket had its worst day in more than a month yesterday, with the S&P/ASX 200 Index falling 110 points during the first hour of trading. The fall came as listed fund manager Perpetual (PPT.AX) warned that shareholders should expect the market to remain flat for as long as two years. Perpetual said that the recent strong recovery was due to investors realising that "the end of the world, the death of equities, whatever, has passed," however, it would still take time for markets to return to normal. Page B1.
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Construction company Bovis Lend Lease (LLC.AX) has been prevented from bidding for a US$72.7 million project in New York after failing to reveal that the company is currently under investigation for payroll and billing irregularities at five other projects in New York. Sources say the company was set to win the contract to build a 1200-student school in Brooklyn before the criminal investogation was revealed. Bovis Lend Lease's head of New York operations, James Abadie, resigned last week. Page B2.
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Gas and electricity retailer AGL Energy (AGK.AX) should write down the value of its Powerdirect, Southern Hydro and Loy Yang A assets, according to analysts at Merrill Lynch. Analysts Matthew Spence and Simon Chan said yesterday that "we think a combined write-down of A$1.3 billion out of a total balance sheet asset base of A$10.5 billion would provide a more accurate reflection of the outlook for the businesses." AGL has not ruled out a write-down, and will release full-year results in August. Page B5.
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