PRESS DIGEST-Australian Business News - Feb 21 06:51, Monday, 21 February 2005
(Compiled for Reuters by Media Monitors)
THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)
The Australian Securities and Investments Commission (ASIC) is believed to be examining unusual trading patterns and a price spike in Southcorp shares in late December, ahead of a takeover offer from beverages company, Foster's Group . The 21 per cent price spike from December 22 to December 30 occurred as secret talks were being held by Foster's and Southcorp's major shareholder, the Oatley family, who ultimately sold their 18.8 per cent holding to Foster's. Page 15.
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Paul O'Sullivan, chief executive of second-ranking telecommunications company, Optus , said yesterday he was 'very optimistic' about reaching an early agreement on digital content sharing with pay-television (TV) operator, Foxtel. Optus' current agreement with Foxtel covers analog content, which will be switched off in about 18 months. A proposal covering digital programs will be considered by the Foxtel board this week. Page 15.
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Coles Myer is reported to be undertaking a major cull of its supermarket product range in preparation for a major expansion of its private-label strategy. Suppliers say they have been told that Coles supermarkets will stock only the top two branded products in most categories. One major supplier said Coles Myer planned to clear up to 15 per cent of its dry-grocery shelf space to remove low-turnover goods and improve profitability. Page 15.
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Investment banks, UBS and Citigroup, have clinched the A$1 billion-plus float of national hospitals operator, Affinity Health, and are expected to announce details of the capital raising this week. Affinity's owners, CVC Asia Pacific, Ironbridge Capital and the Singapore Government's GIC, selected the two from a field that included all the major merchant banks. Affinity's 2003-04 pre-tax earnings were A$74.1 million on revenue of A$728.8 million. Page 15.
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Coca-Cola Amatil plans to significantly increase capital expenditure at fruit and vegetable processor, SPC Ardmona, CCA chief executive, Terry Davis, has told The Australian Financial Review. Mr Davis said he expected CCA to spend up to A$50 million on SPC manufacturing and distribution infrastructure over three years, starting with A$20 million this year. CCA is paying A$500 million to acquire SPC. Page 16.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
Data compiled by investment bank, UBS, indicate that investment funds totalling more than A$11 billion became available in the last quarter of 2004, taking the total cash surplus to more than A$29 billion. The huge cash reservoir has already underpinned a string of major capital raisings and UBS said it had increased pressure on investors to identify new opportunities. UBS said much of the year-end surplus would 'find homes outside the domestic equities market.' Page 27.
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Swiss mining group, Xstrata , plans to return up to A$1.27 billion to investors through a share buyback or special dividend if it fails with its A$18.7 billion takeover offer for WMC Resources , The Sunday Times in London reported yesterday. The report said Xstrata's current group debt of some A$1.4 billion would be paid off within 18 months thanks to strong cashflow from its global mining interests. A planned share buyback was abandoned when the WMC bid was made, the report said. Page 27.
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This week could be decisive in the takeover contest for National Foods between New Zealand dairy co-operative, Fonterra, and Philippines brewer, San Miguel Corp . Almost two weeks after completing its examination of National Foods' books, Fonterra must decide whether to increase its offer of A$5.45 a share to something better than the A$6 offered by San Miguel. After three extensions, Fonterra's current offer expires on March 1. Page 28.
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Listed investment company (LIC) managers say that proposed changes to the way they are taxed on the profits of asset sales could cost investors millions of dollars and possibly wipe out the managed investment sector. A draft ruling from the Australian Taxation Office suggests that the proceeds of asset sales be taxed as income rather than capital gains. This would effectively double the tax on LIC distributions. Page 29.
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Westpac Banking Corp is likely to be alone in raising its business transaction fees from April 1. Westpac announced last week that, despite intense competition, its would raise its monthly service fees on business cheque and cash management accounts by up to 18 per cent and transaction fees by up to 25 per cent. It said the last increase had been five years ago and the decision reflected the cost of providing the service. Westpac's main rivals said yesterday they had no plans to follow suit. Page 29.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
BlueScope Steel and scrap metal merchant, Sims Group , are expected to report boom results this week, though analysts believe reports by Australia's other two steel makers, Smorgon and OneSteel , will be more muted. Analysts are expecting BlueScope's interim profit to surge more than 50 per cent thanks to world steel prices above US$600 a tonne for hot rolled steel. Smorgon and, to a lesser extent, OneSteel, have tended to suffer as they struggle to pass on increased costs. Page 34.
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Thoroughbred racing regulator, Racing New South Wales (NSW), is expected to decide today whether to move against plans for a rival broadcaster to gambling giant Tabcorp's Sky Channel. It is believed Racing NSW is brokering a deal that would award non-exclusive rights to both Sky Channel and the racing clubs' rival broadcaster, ThoroughVisioN (TVN). This could affect the viability of TVN, which was counting on getting exclusive rights to the lucrative Melbourne and Sydney races. Page 35.
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Telstra's chief information officer, Jeff Smith, has resigned and will leave the telecommunications company in March. Mr Smith has not given a reason for his resignation, but Telstra's group managing director for technology, innovation and product, Ted Pretty, said the move marked the completion of Mr Smith's assignment to bring together Telstra's IT groups, transform its IT delivery and develop new partnerships. Page 35.
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Goldman Sachs JB Were chief economist, Tim Toohey, says the Reserve Bank of Australia (RBA) is clearly setting the scene for higher interest rates and warned that slower economic growth is to be expected, following recent comments of RBA Governor, Ian Macfarlane. Mr Toohey said he expected interest rates to rise by a total of 50 basis points in March and April. Concerns over interest rates are expected to put pressure on the Australian sharemarket this week despite expectations that companies will report strong profits. Page 35.
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THE AGE (www.theage.com.au)
Property developer and hotels manager, Thakral Holdings , says it is on track to report another 10 per cent increase in earnings this year. Thakral on Friday announced a 15 per cent increase in underlying net profit, to A$18.5 million, for the six months to December, helped by a better result than expected in Melbourne, where there was an over-supply of hotel rooms with completion of the Crown Promenade Hotel. Page B10.
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Energy industry ratings agency, Fitch, says conditions in the retail energy business will get tougher as margins come under pressure, prices spike and capricious customers change suppliers. Fitch utilities director, Carolyn Martin, said yesterday that retailers would be caught between government statutory price caps and rising demand for peak power. She said power prices would become more volatile as peak demand grew and margins were squeezed. Page B10.
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Australian Trade Commission chief economist, Tim Harcourt, says that Australian investment and technology is playing a key role in the development of Pacific Russia through the oilfield and liquefied natural gas projects on Sakhalin island. Mr Harcourt told an export seminar on Friday that Australia 'is getting a major slice of the Sakhalin action, with opportunities in infrastructure development, construction and engineering, catering, business and language training, transport, logistics and telecommunications.' Page B10.
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