PRESS DIGEST-Australian Business News - Nov 19
THE SYDNEY MORNING HERALD (www.smh.com.au)
Ratings agency Fitch Ratings has warned that cashflow and leverage ratios in Australia's business sector have deteriorated to levels not seen in years. "The Australian corporate sector is heading for the weakest credit metrics since the early 1990s," Fitch analysts Maurice O'Connell and Andrew Smith said yesterday. The analysts said the combination of a worsening global economic climate and persistent credit problems "does not bode well for 2009." Page 29.
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Investor concern about whether the bankers of Centro Properties Group (CNP.AX) would continue to roll over the debt of the troubled shopping centre owner yesterday pushed down its share price to a new low of A5.8 cents. One of Centro's United States-based lenders, Wachovia Bank, this week called in an outstanding loan to a European property joint venture between GPT Group (GPT.AX) and Babcock & Brown BNB.AX. Centro faces a December 15 deadline to roll over its A$4.5 billion debt, failing which it would be placed into administration. Page 29.
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Chemical and pigment producer Acquos has declined to comment on speculation that it is set to launch a A$50 million takeover bid for distressed paint maker Wattyl (WYL.AX). Acquos director Frank De Fazio, who took a 0.47 percent stake in Wattyl this year, said any comment would be "probably inappropriate." Wattyl shares last week dropped to A59 cents - their lowest in 26 years. Wattyl's share price has been under pressure since the competition regulator in 2006 rejected a A$321 million takeover bid by South African group Barloworld. Page 29.
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Major storms that lashed Brisbane and neighbouring areas this week could hit profits at insurers Suncorp (SUN.AX) and Insurance Australia Group (IAG) (IAG.AX), observers said yesterday. Following the wild weather - the worst to hit Brisbane in a quarter of a century - Suncorp had by yesterday afternoon received 4500 claims, while IAG had received 2000 claims. IAG shares fell 3 percent yesterday to A$3.77, while Suncorp shares finished the day down 4 percent at A$6.32. Page 30.
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THE AGE (www.theage.com.au)
The Australian Securities and Investments Commission will today lift a ban on short selling it first put in place almost two months ago. The Alternative Investment Management Association said the ban had been "a huge burden," and lifting the ban should create a large improvement in liquidity in the market. The lifting of the ban will also see the introduction of a new disclosure system under which stockbrokers will have to report short sales by their clients, with a report on the amount of short selling released daily. Page B2.
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Wine and beer company Lion Nathan LNN.AX has asked shareholders of Coca-Cola Amatil (CCA) to examine its A$8 billion takeover offer, despite a rejection by major shareholder, the United States-based Coca-Cola Company. Lion's chief executive, Rob Murray, yesterday said the offer of A$10.80 per share should be given "serious consideration." Ross Barker, head of CCA shareholder Australian Foundation Investment Company, described the shareholder response as "lukewarm." Page B3.
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Melbourne-based stockbroker Tolhurst Group TNL.AX held its annual meeting yesterday, where possible deals were discussed, although observers said there is apparently nothing concrete in the offing. A year ago, Macquarie Group became a 19 percent shareholder in Tolhurst, which raised A$8 million from the placement issue. Tolhurst's profit has declined in the past year, and shares have also fallen from A45 cents to close at A10 cents yesterday. Page B5.
Superannuation funds have welcomed the Australian Securities and Investments Commission's (ASIC) concession that allows them to provide advice despite the volatile state of financial markets. Health Super chief operations officer Carol McKelson-Timmins said she would apply to the regulator for a "no action" letter that would then permit her company to provide counsel to members regarding their investment choices. ASIC has so far received over 10 queries about the application process although no formal applications have yet been received. Page B5.
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