courier mail article

Very interesting read....



May 26, 2009 12:00am

"THE Government should package the state's ports into one company and float the entity, says former Port of Brisbane chief Graham Mulligan.

Mr Mulligan said while offshore groups such as the Port of Singapore, Dubai Ports and Hutchinson Whampoa would be interested in several of the state's ports if they became available, the Queensland Government would do far better from a float of the assets on the Australian Stock Exchange to reduce debt.

"I believe listing on the ASX would be more beneficial and government could then retain a semblance of control."

Mr Mulligan, a former chief executive of the Port of Wellington is a company director and adviser. He said during his stint at the helm of Port of Brisbane, he and other executives had prepared the company and the Port of Gladstone to float in case the Borbidge government had decided to proceed with the move.

"We prepared the ports in terms of quality of management and profitability so that if the government said we could go and list, it was ready but they never proceeded along those lines," he said.

The Port of Brisbane would be a prized asset in any government privatisation drive, likely to fetch anywhere between $1.5billion and $2 billion on projections of a valuation of eight to 15 times EBITDA, although observers said the price could be substantially higher.

The Queensland Resources Council yesterday lent its support to a careful and managed asset sales program to maintain the momentum of the State Government's capital works program.

QRC chief executive Michael Roche warned there was no need for a fire-sale approach that would reduce the value to taxpayers from asset sales.

Moving down the Government's list of assets, the electricity generators would be the next most attractive, with a raft of onshore and overseas investors likely to be interested.

Among the most likely disposals would be Stanwell Power Station along with Swanbank and Tarong. The sale of all the generator capacity could yield as much as $5 billion.

Former premier Peter Beattie cleared the way for the further sale of electricity assets in 2007 when he shut down the gas generation group Enertrade, under a proposal by the Boston Consulting Group, relocating their interests to other generators such as Stanwell and CS Energy. The hardest asset to offload would be Queensland Rail, a government-owned corporation one transport analyst called the "gorilla in the room that is used to pulling the arms of everyone else".

"This Government does not have the guts to sell rail," the analyst said yesterday.

Should the Government capitulate and decide to flog QR, buyers could come from overseas, including US rail companies such as Union Pacific in partnership with an Australian group or possibly Deutsche Bahn (German Railways) or SNCF (the French railway company), rail analysts said.

Any eventual buyer of rival rail group Asciano, which is on the market, could also be interested for some of QR's assets.

It is unlikely local resource companies, already struggling under their own financial constraints, would be interested in acquiring part of the rail network except perhaps BHP or Anglo-American."



This would have implications for AIO if it goes ahead and further demonstrates how protracted the bidding process may become for all of the company and/or the break-up of it's rail and port divisions.

Conservative estimate for the prized asset of Port of Brisbane alone is between $1.5B and $2B with some observers stating the price could be "substantially higher".

Not to mention AIO's rail network in competion with Q'land Rail.

Just maybe we've been underestimating the worth of AIO despite it's debt burden and the recently projected increase of profitability for the NSW rail division.


Any comments most welcome.


All the best,
beast