PRESS DIGEST-Australian Business News - July 7
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 Rio Tinto (RIO.AX) is selling off its Alcan Packaging unit and says it will push ahead with further asset sales. Rio announced yesterday that Bemis Company Incorporated would pay US$1.2 billion (A$1.5 billion) in cash and stock for the Alcan Packaging Food America's unit, which Rio acquired two years ago as part of its ill-fated acquisition of aluminium producer Alcan. Rio said "the divestment program continues for other assets identified for sale, including the remainder of Alcan Packaging and Alcan Engineered Products.' Page 20.
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Australian packaging group Amcor (AMC.AX) is to undertake a A$1.2 billion capital raising to help fund its planned acquisition of Alcan packaging assets in Europe. Amcor and mining company Rio Tinto are said to be close to a settlement after months of negotiations on a A$2.8 billion deal for Alcan's flexible food packaging operations in Europe and its tobacco packaging unit. Analysts say the deal looks closer to being announced following yesterday's agreement by Rio to sell its Alcan Packaging Food America's unit to Bemis Company Incorporated. Page 20.
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Banking sources have denied a report that Seven Media Group may be in danger of breaching its banking convenants following the media advertising downturn. Debtwire, which reports on debt markets, says an April statement to bankers by Seven Media, a joint venture between Kerry Stokes's Seven Network and United States equity firm Kohlberg Kravis Roberts, suggests that its year-to-date earnings are just below an interest cover ratio requirement. A source close to the syndicate of more than 30 banks has dismissed the report as ill-informed. Page 45.
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Australian airports have rejected calls from airlines to lower their aeronautical charges in the current struggling air travel market. The appeal followed a decision yesterday by Auckland Airport, New Zealand's busiest airport, to cut its fees for international flights because of a severe slump in passenger traffic. Qantas Airways has asked airports around Australia to lower a range of fees by about A$700 million. A spokesman for Brisbane Airport, Jim Carden, rejected the idea, saying "we've got a business to run.' Page 47.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
Shareholders are demanding an explanation for the surprise departure of chief executive Dick Morris from Westpac Banking Corporation-backed fund manager BT Investment Management. Mr Morris announced last week, shortly after delivering a three to five-year strategic plan, that he would quit the firm in October. However, BT said yesterday that Mr Morris "had agreed' to leave next Monday. Wilson Asset Management, BT's second-largest independent shareholder, said "BT has to explain to the market what is going on.' Page 17
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Almost a third of Australian firms expect to lay off staff this quarter, according to a new survey. Dun & Bradstreet (D&B) says a nationwide survey over the past three months of 1200 firms in all industries has found that 31 percent expect to cut staff in the September quarter because of tough trading conditions. D&B chief executive Christine Christian says business executives remain concerned about the outlook. "This is a clear indication that we may not experience the V-shaped recovery that some have anticipated,' said Ms Christian. Page 17.
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The Muslim Community Co-operative (Australia) (MCCA) is hoping to become Australia's first Islamic bank in three years. MCCA managing director Chaaban Omran has told an Islamic banking conference that the co-operative will ask the Australian Prudential Regulation Authority to change its superannuation entity licence into a banking licence. Mr Omran says 500,000 Australian Muslims form a market worth an estimated A$1.3 billion. "If we get enough momentum from the industry it may be less than three years,' said Mr Omran. Page 18.
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Australia's leading healthcare stocks have been downgraded by analysts because of the appreciating Australian dollar. Deutsche Bank says the strength of the dollar against major currencies has led to downward revisions to the earnings outlook of companies including Cochlear, Sonic Healthcare, CSL, ResMed and Ansell. Deutsche research analyst David Low said "for most of the larger listed healthcare companies, the majority of their earnings are offshore, predominantly in the US and Europe.' Page 19.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
The receiver of failed Allco Finance has proposed a new plan to speed up the sale of its aviation leasing business, which has been delayed by the use of special-purpose companies whose permission is required before the 68 planes involved can be sold. Ferrier Hodgson has suggested to creditors that the proposed buyer should acquire the SPCs as well as the aircraft. Chinese aviation company HNA signed an agreement earlier this year to buy the leases of the aircraft but the deal has been delayed because the SPCs own the planes. Page 17.
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Some of Australia's largest superannuation funds have switched billions of dollars into index funds to avoid higher fees charged by investment managers. A report released yesterday found that, on average, superannuation investors would be better off if their money was invested in low-fee index funds rather than actively managed funds. The Australian Institute of Superannuation Trustees says "some funds have moved significantly away from active managers and are going down the passive route.' Page 17.
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A former director of failed health care operator ABC Learning and his wife say they're not liable to pay a A$1.75 million bill to lender Lift Capital because they didn't know they'd signed a personal guarantee on a A$7.7 million loan. Lift, which is in liquidation, is suing Martin Kemp, 51, and his wife Josephine, 51, in the Supreme Court. Mr Kemp and his wife say they "unwittingly provided a guarantee' for a loan by Mr Kemp's corporate trustee Sheramere when they signed a loan application form in 2005. Page 18.
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Capital raisings by listed companies reached record levels in the 2008-09 financial year, according to the Australian Securities Exchange (ASX) (ASX.AX). ASX trading statistics show shareholders invested almost A$90 billion into share offerings over the last financial year, easily surpassing the previous record of A$77.9 billion posted in 2007. Analysts say most of the money was directed into secondary raisings used to pay off debt and restore balance sheets hit by the effects of the global financial crisis. Page 19.
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THE AGE (www.theage.com.au)
It has been revealed that mining company Rio Tinto (RIO.AX) diverted NZ$677.2 million (A$535.5 million) from its New Zealand unit last year to help pay shareholders a higher dividend as Rio fought off a takeover bid by rival BHP Billiton. The move came to light last week as accounts were filed with the New Zealand Companies Office for the year to December 31. A spokesman for Rio Tinto said yesterday that the money had been allowed to accumulate in the New Zealand accounts for years to avoid possible higher taxes if it was moved. Page 1.
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The Federal Government plans to step-up stalled efforts to reform company directors' liability laws ahead of a scheduled December 2010 deadline. A government report on progress towards national consistency laws has found that reforms in 25 of 27 policy areas are completed or on schedule, but progress has slowed in two areas – directors' liability laws and the regulation of chemicals. Analysts say state governments are resisting the Federal Government's desire for a nationally agreed criteria for liability law. Page 2.
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Global financial services company Credit Suisse has cut its earnings forecast for James Packer's Macau casino joint venture. Gaming analyst Gabriel Chan has told clients that he now believes gamblers will be spending 15 percent less at the newly opened City of Dreams casino, after it disappointed the market in its first month. Mr Chan says most of 41,000 people who visited the City of Dreams every day since its opening in June were not there to gamble. Page 3.
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Sydney and Melbourne have become more affordable for executives and professionals, according to a survey released today by consultants Mercer. The survey of the living expenses of expatriates found that Sydney had slid from 15 to 66 on the list of the world's most expensive cities, while Melbourne fell from 36 to 92. Tokyo was the most expensive city, followed by Osaka and Moscow. Mercer said Australian cities had become less expensive mostly because of a fall in the Australian dollar against the US dollar. Page 3.
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