PRESS DIGEST-Australian Business News - April 18 06:50, Monday, 18 April 2005
(Compiled for Reuters by Media Monitors) THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)
Private equity investors, Catalyst Investment Management and Advent Management Group, are reported to be preparing a 'dual track' sale process for their Taverner Hotel Group, which has a portfolio of 30 hotels generating more than A$250 million in annual sales. The process is expected to lead to an initial public offering if it does not flush out a strategic buyer such as the Coles Myer retail group. Page 13. -- Prime Infrastructure will dilute its exposure to the contentious Dalrymple Bay coal terminal in Queensland to less than 20 per cent of its earnings if it succeeds with a A$600 million takeover, announced on Friday, for British gas distributor, International Energy Group . Page 13. -- Leighton Holdings chief executive, Wal King, has watered down his company's potential interest in the A$1.85 billion Pilbara iron-ore development promoted by Fortescue Metals Group . We have no intention of bogging ourselves down in a project that is controversial, and where we do not have certainty about payment and a more than reasonable expectation that we are going to earn profit for our shareholders,' Mr King said. Page 13.
-- Research by Macquarie Securities shows that St George and Westpac are the banks most exposed by the Australian Tax Office (ATO) clampdown on the way hybrid securities issued by banks are taxed. The Macquarie research report said it appeared that St George Bank had potential liabilities amounting to eight per cent of adjusted common equity, while Westpac's liabilities amounted to seven per cent. Page 52.
-- Federal Assistant Treasurer, Mal Brough, is refusing to back down on his decision to allow retirement savings accounts (RSAs) to be used as default funds when employees become free to choose their superannuation fund from July 1. Unlike other default funds, RSAs - mostly run by banks - are not required to offer minimum insurance cover to members. 'I think it's just terrible public policy. It just doesn't make any sense,' Australian Industry Group chief executive, Heather Ridout, said yesterday. Page 52.
-- THE AUSTRALIAN (www.theaustralian.news.com.au)
Most analysts are expecting a nervous market on the Australian Stock Exchange (ASX) today in the wake of last week's performance on Wall Street, which experienced the biggest weekly fall in two years. The All Ordinaries Index on the ASX fell 70 points to 3993.2 on Friday but analysts said yesterday that, with company profits and commodity exports still strong, the local market should be spared the worst of the fall-out from Wall Street. Page 25.
-- Federal Finance Minister, Nick Minchin, and senior Finance Department officials will travel to the United States (US) today to begin an assessment of international interest in the sale of the Government's remaining 51.8 per cent shareholding in Telstra. Senator Minchin will be briefed in New York on the possibility of using a Google-style auction for the sale to reduce broking and banking costs. Page 25.
-- Economists warned yesterday that Australian consumers had yet to feel the full effects of higher oil prices, especially with products requiring plastic packaging. Investment bank, CSFB, warned last week that failure to recover higher costs of resin used to make plastic bottles was likely to result in margin pressure. Allison Watkins, chief executive of fruit juice maker, Berri, said packaging costs could have 'a multi-million dollar' effect on the business but it could be six to 12 months before the impact was clear. Page 25.
-- Prime Infrastructure says it can finance its acquisition of London-listed International Energy Group (IEG) without calling on shareholders for funds. Prime announced on Friday night that it had been successful in a competitive bid for IEG, agreeing to pay A$498 million. Prime managing director, Chris Chapman, said yesterday the deal would be funded initially by debt from Bank of Scotland and Dresdner Kleinwort Wasserstein, with bridging finance from Babcock & Brown . Page 27.
-- Breakfast cereal producer, Sanitarium, has threatened legal action against six companies, five in Australia and one in the United States, over use of the word 'granola' to describe a particular type of toasted muesli. Sanitarium, with strong links to the Seventh Day Adventist Church, says it has been producing granola since 1898 and has owned the granola trademark since 1921. Companies warned-off include the David Jones department store group. Page 27.
-- THE SYDNEY MORNING HERALD (www.smh.com.au)
Australian Securities and Investments Commission chairman, Jeffrey Lucy, said yesterday the Commission was preparing more briefs for criminal prosecutions as a result of the royal commission into the A$5.3 billion collapse of HIH Insurance in 2001. Mr Lucy's statement follows the jailing last week of former HIH directors, Ray Williams and Rodney Adler. Page 32.
-- The shareprice of wine producer, Southcorp , closed A5 cents lower at A$4.18 on Friday, the lowest level since Foster's Group , the global beverages company, launched a hostile takeover bid in mid-January at A$4.14 a share. Two broker reports during the week forecast difficult years ahead for the wine industry in Australia and said Southcorp's sales projections were too optimistic. Southcorp said its business remained 'on track.' Page 32.
-- Ramsay Health Care chief executive, Pat Grier, said yesterday that Ramsay may have to sell 'one or two more hospitals' to secure approval from the Australian Competition and Consumer Commission (ACCC) for its A$1.4 billion buy-out of Affinity Health. Ramsay has already agreed to sell back to Affinity's owners 14 of the 53 hospitals involved in the buy-out. Page 33.
-- Food and beverage companies, Coca-Cola Amatil (CCA) and San Miguel , are reported to have withdrawn from the trade sale process for New Zealand (NZ) Dairy Foods, owned by NZ entrepreneur, Graeme Hart. CCA recently took over fruit processor, SPC Ardmona, for A$560 million and San Miguel paid A$1.9 billion to win a takeover battle for Australian dairy group, National Foods . Mr Hart is expected to keep NZ Dairy Foods unless he can generate an offer of A$650 million.
Page 33.
-- Online job-listing company, Seek , sold 77 million shares at A$2.10 each in an institutional book-build that closed on Friday. The sales represented 28 per cent of the Melbourne-based company, which lists on the Australian Stock Exchange today. The shares had been offered at a range between A$1.80 and A$2.20 and much of the float proceeds will be used to buy shares from existing shareholders. Page 34.
-- THE AGE (www.theage.com.au)
A damages suit claiming A$400 million from United States investment company, Berkshire Hathaway Inc has been foreshadowed in documents lodged with a New York court by the liquidator of HIH Insurance, Tony McGrath. The claim relates to reinsurance contracts revealed during the royal commission into the A$5.3 billion collapse of HIH in 2001. Berkshire Hathaway is run by billionaire investor, Warren Buffett. Page 10.
-- Studies by British market research group, Wine Intelligence, indicate a substantial gender gap among British drinkers of Australian wine. The firm said an online survey of 1184 British consumers in November found that 59 per cent of respondents were women but only 53 per cent of Australian wine consumers were female. The research also indicated that Australian wine failed to attract interest in consumers under the age of 25. Page 11.
-- The steep rise in the cost base of the resources industry is forcing more and more gold development projects to be placed on hold. The latest, announced last week, is Tanami Gold's Coyote project in the far north of Western Australia. Industry sources say that costs for gold developments have been forced up by the levels of activity in other minerals but there has been no comparable increase in the price of gold. Page 11.
-- The Australian Securities and Investments Commission is today expected to approve the public disclosure document for the A$487 million float of JF US Industrial Trust, due to list on the Australian Stock Exchange on May 19. Following approval, copies of the document will be sent to institutions and retail clients of Ord Minnett, Grange Securities, Commonwealth Securities and the 48,000 unit holders of the combined Mirvac and James Fielding groups. Page 11.
-- Melbourne real estate agents reported a 70 per cent clearance rate at weekend auctions and forecast a movement of investment funds into property with the slump in the sharemarket. Greg Hocking, of Hocking Stuart Real Estate, said many investors had been 'sitting on the fence wondering where to go' and now their choices 'will be a bit clearer.' Mr Hocking said a more serious downturn in share prices would see a 'flight to quality real estate.' Page 12. --
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