UPDATE 2-Australia Asciano to raise $1.6 bln, rejects offers

* To raise $1.6 billion in new equity

* Rejects proposals, business still tough

* Strong demand seen for offer

(Adds fund manager comment, details)

By Denny Thomas

SYDNEY, June 15 (Reuters) - Australian rail and ports operator Asciano Ltd (AIO.AX) plans to raise at least A$2 billion ($1.6 billion) in a deeply discount rights issue, rejecting offers for the whole company as it seeks to cut a pile of debt.

The issue would bring an end to the company's drawn out efforts to find ways to refinance its A$4.9 billion debt. It had attempted to sell parts of its business, including its coal transport business, last year to raise A$1 billion but depressed markets made it hard for it to realise value.

Asciano then decided to sell the whole company and last week received four formal bids, including proposals from private equity consortiums.

It had been aiming to announce an outcome by the end of this month. But a recent rebound in its shares encouraged it to opt for a share sale instead.

"This is a very positive outcome. There is no doubt that what Asciano has is quality assets. Shareholders will be able to enjoy the upside rather than give away the upside at depressed levels to opportunistic bidders," said Paul Xiradis, CEO of fund manager Ausbil Dexia, which owns Asciano shares.

"There have been a few players who had looked at the company's assets. But they have been quite opportunistic in their bidding. They had regarded Asciano as a distressed seller, and hence have been only willing to pay multiples to distressed sellers," he said.

Asciano said on Monday the one-for-one rights offer is being sold at A$1.10 a share. That would be a 40 percent discount to its last traded price.

Trading in its shares was halted to undertake the placement. On Friday Asciano shares rose to A$1.845, their highest level in seven months.

Asciano does not plan to sell assets after the rights offer, CEO Mark Rowsthorn told a media briefing.

TAPPING EQUITY MARKETS

Asciano joins a rush of Australian firms to tap equity capital to address debt issues, with more than $20 billion raised through sale of new shares so far this year.

Of Asciano's total debt, about A$2.7 billion matures during fiscal 2009/10.

"The decision to raise new equity was made only after considering the full range of factors. The board of Asciano believes that this transaction represents the best overall outcome for security holders," Chairman Tim Poole said in a statement.

Asciano had received offers from a consortium of private equity funds, including TPG [TPG.UL], Carlyle Group [CYL.UL], and Global Infrastructure Partners, after the deadline for submitting the bids ended last week, sources had told Reuters.

The choice of a share issue over a takeover comes less than a year after it rejected a A$2.9 billion bid at A$4.40 a share from private equity groups TPG and Global Infrastructure Partners [ID:nSYD152321].

Asciano, which was spun out of transport group Toll Holdings Ltd (TOL.AX) in 2007, said it has continued to experience a sharp fall in volumes across non-bulk volumes, reflecting a slowdown in the Australian economy.

The group also said it sees full-year EBITDA at about A$655 million, but would pay no final dividend. 2009/10 EBIDTA was seen at about A$675-700 million.

The company will not pay a final dividend for the 2009 fiscal year due to its debt burden. ($1=1.228 Australian Dollar) (Editing by Jonathan Standing and Dhara Ranasinghe)