PRESS DIGEST-Australian Business News - Jan 9
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)
Telstra (TLS.AX) chief executive Sol Trujillo yesterday told a media and telecommunications conference in the United States that the company risks losing up to A$2 billion in revenue if the tender for the Federal Government's national broadband network goes to another group. However, Mr Trujillo said such losses would be over an extended period of time, and assured investors that there would be no change to Telstra's financial guidance due to its exclusion from the tender process. Page 37.
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The Tasmanian Government yesterday announced it intends to sell its wagering business TOTE Tasmania by the end of June this year, with an expected price of A$300 million or more. Tatts Group and Tabcorp are considered the most likely bidders, but observers said the business could also attract interest from Betfair and a number of overseas companies. Australia's wagering industry is currently dominated by Tatts and Tabcorp, and the sale of TOTE Tasmania is likely to put further pressure on the three remaining state-owned totes. Page 37.
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Falling global demand for steelmaking material, which has already led to a downturn in Western Australia's iron ore sector, is now affecting Queensland's coking coal industry. Rio Tinto (RIO.AX) yesterday told staff at its Kestrel mine in Queensland that production would be cut by 15 percent from this month, with the reduction to remain in place until coal sales from the mine improve. Peabody Energy (BTU.AX) also plans to cut production from its Queensland mines, while Xstrata is expected to soon close its Oaky No. 1 coalmine. Page 38.
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GrainCorp <GNC.AX. says it has received about 7.4 million tonnes of grain since the start of October, putting the grain handler on track to achieve its target of between 7.5 million and 10 million tonnes of grain for the 2009 financial year. Last year, total deliveries to the company were only 6.5 million tonnes. The figures are seen by analysts as a positive sign that GrainCorp will be able to become profitable this year, after the company made a loss of almost A$20 million in 2007-08. Page 39.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
The board of financial services company Babcock & Brown BNB.AX (B&B) was last night considering an initial response from its banking syndicate to the business plan proposed by the troubled group as it seeks to avoid collapse. B&B is believed to have proposed a debt-for-equity swap with its lenders that would give the company access to cash and reduce its debt. The banking syndicate's full response, as well as B&B's business plan, is expected to be publicly released on Monday. Page 15.
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Litigation funder IMF has warned the liquidator of Opes Prime that it does not have the right to reach a settlement with the collapsed firm's financiers, Australia and New Zealand Banking Group (ANZ) and Merrill Lynch, on behalf of IMF's clients. IMF, which is acting on behalf of around 85 Opes creditors, has questioned how such a settlement could be reached when 'no investors or their representatives have a seat at the mediation table.' ANZ is also facing a class action from investors in the United States over the collapse of Opes Prime. Page 15.
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Shareholders in zinc miner Perilya (PEM.AX) are to be asked to decide whether to agree to a proposal from Chinese steelmaker Shenzen Zhongjin to inject A$45.5 million in cash in return for a 50.1 percent stake on February 5. If approved, the proposal would end a rival takeover bid from CBH Resources (CBH.AX). However, CBH says the February 5 meeting should be delayed until both Perilya and CBH have reported their results for the December half-year, claiming that shareholders require the information to make an informed decision. Page 16.
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OZ Minerals (OZL.AX) will be told today whether its banks have agreed to provide the mining company with a bridging loan to allow it to continue operating as it seeks to resolve refinancing issues. OZ is currently attempting to sell assets to pay off US$560 million of debt which it must repay or refinance by February 27. OZ's cash reserves fell from A$279.4 million on December 8 to A$169.2 million two weeks later, and the company requires the bridging loan to continue operating its mines. Page 17.
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THE SYDNEY MORNING HERALD (www.thesmh.com.au)
Private equity firm CVC Asia Pacific, which owns the heavily indebted PBL Media (CMJ.AX) , is facing problems with another investment in travel retailer Stella Group. CVC (CVC.AX) owns a 65 percent stake in Stella, which is currently requesting a repayment extension on A$860 million of loans. The accounts of the travel company, which runs Peppers Resorts, Travelscene and Harvey World Travel, show that CVC agreed to defer an A$4.5 million interest payment and capitalise an A$19.3 million interest payment due last month into equity. Page 22.
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James Packer's casino company Crown (CWN.AX) has gained approval from the Nevada Gaming Control Board in the United States for its US$1750 million (A$2.4 billion) acquisition of the three Cannery casinos in Las Vegas. The backing of the Nevada board comes over a year after Crown and Cannery signed an agreement, and brings Crown closer to finalisation of the deal. The matter will now be passed to the Nevada Gaming Commission, which will act on the recommendation of the Nevada board. The commission's approval is due on January 22. Page 22.
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The receivers of collapsed childcare provider CFK Childcare Centres CFK.AX say they are considering a shortlist of 40 potential buyers of its centres. Last month the Federal Government refused an appeal for funding by the receivers. Max Donnelly, a partner at restructuring company Ferrier Hodgson, has refused to say how many centres will close. The failed ABC Learning Centres' childcare centres will also be coming up for sale soon, providing competition to CFK's sales. Page 22.
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The Australian wine industry suffered an 18 percent fall in the value of wine exports to A$2.47 billion last year, according to data from the Australian Wine and Brandy Corporation. As wine sales plummet, Constellation Brands (STZ.AX), the world's largest winemaker after its acquisition of BRL Hardy NBWNF.PK in 2003, warned that it was 'recalibrating sales expectations' because of the economic slowdown. The company's chief executive, Robert Sands, said that consolidated net sales in the third quarter fell short of expectations. Page 22.
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THE AGE (www.theage.com.au)
Two Melbourne companies, China Cattle CAC.AX and Jervois Mining (JRV.AX), have experienced significant changes to their boards in recent days. At China Cattle, executive chairman John Gunthorpe and his board colleagues were removed from the board in the holiday period. Nickel mining hopeful Jervois revealed on Christmas Eve that a board meeting had been requested to consider a call from shareholders to remove managing director Duncan Pursell and Malcolm Jansen. Page 18.
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Australian gold company Goldstar Resources GDR.AX appointed voluntary administrators on Thursday. The Perth-based company's major shareholder called in the administrators after refusing to fund the explorer with A$1.6 million despite a prior agreement. Goldstar chairman Gordon Hill revealed that the shareholder, Silja Investments, had used 'get-out' clauses related to Goldstar's low share price to avoid advancing the money, which was the second portion of a A$3 million convertible note.
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Bendigo and Adelaide Bank has become a major player in the A$27 billion margin-lending market after purchasing Macquarie Group's A$52 million margin-lending book. Bendigo's head of advisory banking, Jamie McPhee, said the deal would complement existing margin-lending operations, and expressed confidence in the medium-term outlook for the business. Bendigo will make an issue of around A$52 million of convertible preference shares to Macquarie as part of the agreement. Page 20.
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Australia's third largest oil and gas producer, Santos (STO.AX), will defer the A$275 million Henry gas project off the south-east coast of Australia as the company is yet to procure a vessel to install a pipeline. Santos owns 50 percent of the Henry project, which will be delayed until later in 2009. Stock in the Adelaide-based company fell A58 cents, or 3.8 percent, to A$14.63 in trading on the Australian Securities Exchange yesterday.
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