press digest: australian business news aug 1

PRESS DIGEST: Australian Business News Aug 1
06:56, Wednesday, August 01, 2007

(Compiled for Reuters by Media Monitors)

THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)

Travel agency franchise, Flight Centre , abandoned a
A$1.65 billion buyout proposal following independent advice from
Ernst & Young, which valued Flight Centre at nearly A$2 billion.
The plan would have seen the operational assets spun into a
leveraged joint venture with Pacific Equity Partners, which would
have taken a 30 percent stake. Flight Centre chairman, Bruce
Brown, said the disparity in valuations meant a 'highly complex
and costly transaction' would have crimped shareholder returns.
Page 53.

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Insiders reveal that the controlling shareholders in Dow
Jones & Co will support News Corp's US$5 billion
takeover of the publishing group. Members of the Bancroft family
and their various trusts control 64 percent of Dow Jones'
shareholder vote, and most have swung behind Rupert Murdoch's
proposal. The dissenters want Dow Jones to create a US$30
million fund for legal and advisory fees incurred by the family,
and News Corp to assume these liabilities. Dow Jones' prized
asset is the Wall Street Journal publication. Page 53.

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Macquarie Bank-AMP fund, DUET Group, could thwart the A$8
billion takeover of Alinta by exercising its pre-emptive
right to buy one of Alinta's key assets, Melbourne-based United
Energy Distribution. DUET, which holds controlling stakes in
United Energy and Alinta's Dampier-to-Bunbury gas pipeline, does
not intend to hand over these assets. Alinta shareholders will
vote on the Babc*ck & Brown-Singapore Power takeover in a
fortnight. Page 54.

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Singapore's CitySpring Infrastructure Management has made its
maiden investment in Australia, buying the Basslink electricity
cable from British group, National Grid, in a A$1.2 billion deal.
The Basslink cable, built for A$780 million, delivers power from
the mainland to Tasmania and allows the state to export surplus
hydro and wind power. Hydro Tasmania, Australia's biggest
hydropower producer with a 25-year contract to use the Basslink
cable, yesterday welcomed the sale, as did the Tasmanian
Government. Page 55.

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THE AUSTRALIAN (www.theaustralian.news.com.au)

Two Macquarie Bank funds could lose a quarter of
their value due to 'price volatility' in the United States senior
loans market, the bank warned yesterday. Macquarie Fortress
Investments director, Peter Lucas, said the fallout from the
sub-prime mortgage crisis had created 'supply demand unbalances'
in the broader loans market. While the listed Macquarie Fortress
Notes and the unlisted Macquarie Fortress Fund do not have any
direct exposure to US sub-prime mortgages, both are highly
leveraged. Page 31.

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Publishing & Broadcasting Ltd. aims to raise A$290
million from a bond issue to fund a share buyback for Melco PBL
Entertainment, its Nasdaq-listed gaming joint-venture. Melco
PBL's shareprice has fallen from US$19 in December to US$12.90
following cost overruns on two Macau casinos and the delayed
purchase of a third site. A crackdown by Chinese authorities on
visitor visas to Macau has also caused concern. On the
Australian Stock Exchange, PBL shares closed yesterday at
A$18.52, down from A$22 in March. Page 31.

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New South Wales miner, Coal & Allied , has recorded a
A$24 million fall in annual profit despite higher coal prices.
Export bottlenecks, recent floods and the higher Australian
dollar were blamed for the result, although managing director,
Doug Ritchie, was mostly concerned about the shipping delays. He
warned that Asian coal buyers were increasingly looking to South
Africa, Indonesia and Canada in the face of infrastructure
bottlenecks in NSW. Mr Ritchie called on the State Government to
lighten regulation at ports. Page 31.

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Federal Resources Minister, Ian Macfarlane, has awarded China
National Offshore Oil Corp (CNOOC) an exploration permit for the
Bonaparte Basin off Darwin. CNOOC, China's biggest offshore oil
producer, already has a stake in the North West Shelf gas
project, which has a A$25 billion, 25-year contract to supply
Guangdong province with natural gas. Hess of the United States,
India's Reliance Industries and France's Total were also awarded
offshore licences. Page 32.

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THE SYDNEY MORNING HERALD (www.smh.com.au)

The corporate regulator says it would be 'prejudicial' to
name the targets of its high-risk investments probe. The
Australian Securities and Investments Commission has identified
83 debenture-note issuers with about A$8 billion of investors'
funds that it believes to be vulnerable. It is considering a
number of measures to protect investors, including rating
existing issues and placing warnings on advertisements.
Investors have lost about A$800 million with the recent demise
of Westpoint, Fincorp and two other property financiers. Page
21.

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Insiders say Telstra's ongoing criticism of federal
regulation and its push to win a Government high-speed broadband
contract have distracted observers from its real motive -to
upgrade its cable network. Yesterday, chief executive, Sol
Trujillo, indicated Telstra was working on alternatives to a
fibre-to-the-node network, such as improving broadband speeds for
its Foxtel cable. The cable could eventually provide speeds of
between 50 and 100 megabits per second to 2.7 million
metropolitan homes. Page 21.

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Macquarie Bank's leisure trust has made its first foray into
the health and fitness market, outlaying A$60 million for
Queensland chain, Goodlife Health Club. Macquarie Leisure Trust
Group said the acquisition would allow it to offer gym
memberships to its existing customers at Gold Coast fun park,
Dreamworld, and AMF Bowling clubs. 'Gyms are relatively fixed
cost but can have healthy margins through membership offers,'
said the trust's chief executive, Greg Shaw. Goodlife comes with
18 fitness centres. Page 22.

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THE AGE (www.theage.com.au)

PricewaterhouseCoopers (PwC) expects pay-television (pay-TV)
to become a household 'necessity' over the next five years. In
its Australian Entertainment & Media Outlook, PwC forecasts
annual growth of 11.4 percent for the pay-TV sector, more than
double the expected overall industry rate. 'Subscription
television will become an increasingly powerful force...by
personalising its services,' the report says. Discounted prices
for entry-level plans and the popularity of digital video
recorders were important growth factors. Page B2.

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Analysts say Wesfarmers' A$22 billion takeover bid
for Coles Group remains in doubt, despite both stocks
reversing a slump on the sharemarket yesterday. Shares in Coles
rose 2.2 percent to A$14.51 after a 10-day decline, while
Wesfarmers put on 1.1 percent to A$38.99. However, the value of
Wesfarmers' cash and scrip offer has fallen by A$2.5 billion
since July 2, when the Coles board recommended the deal to
shareholders. 'A number of shareholders want either a higher
share or cash component,' Shaw Stockbroking advised. Page B3.

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Ratings agency, Cannex, has warned the popularity of
low-documentation loans could inflate house prices. A 'plethora
of low-doc offers' had made it easier for borrowers unable to get
a loan 'traditionally' to buy a home 'sooner rather than later,'
Cannex said. Furthermore, there was 'a price to pay for being
discreet,' and 'non-bank' borrowers who overestimated their
earnings could 'bear the risk of foreclosure.' The Australian
Prudential Regulation Authority recently said it was
'comfortable' with the higher charges accompanying
low-documentary loans. Page B3.

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HSBC Australia intends to take advantage of its global
network to build up its domestic banking business, after posting
A$59 million for the six months to June 30. 'The success of a
foreign bank in Australia depends upon focusing on your areas of
competitive advantage,' said chief executive, Stuart Davis. He
rejected the idea of opening more branches, a strategy adopted by
HBOS subsidiary, BankWest. 'For us to do a similar
strategy...would simply be playing into the sweet spot of the
local majors,' he said. Page B3.
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Looking for more information from local sources? Factiva.com
has 112 Australian sources including the Australian Financial
Review.

((Reuters Sydney Newsroom, 61-2 9373 1800,
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Keywords: DIGEST AUSTRALIA BUSINESS