PRESS DIGEST: Australian Business News : June 2 07:15, Friday, 2 June 2006
(Compiled for Reuters by Media Monitors) THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)
Perth-based utility, Alinta , has agreed to pay Australian Gas Light A$45 million if a deal to merge their infrastructure assets falls through. The break fee, designed to reduce the chance of a counterbid for Alinta from another party, is understood to be among the details of a merger implementation agreement signed by the two companies yesterday. It comes after Babc ock & Brown managing director, Phil Green, reported last Friday that the investment bank had bought two per cent of Alinta's shares. Page 67.
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Chinese steel mills have sidelined Brazil's Companhia Vale do Rio Doce (CVRD) in iron ore negotiations, turning to Australian producers, BHP Billiton and Rio Tinto , in a bid to escape a 19 per cent price rise agreed to by Japanese and European steel mills. China Industry Daily News said on Wednesday: 'Given that CVRD will continue to exert pressure on China, China is expected to suspend its long-term contract with CVRD...Australian suppliers will gradually replace CVRD in the Chinese market.' CVRD yesterday denied it had been excluded from price talks. Page 67. - - - -
Logistics group, Brambles Industries , has appointed two executives from leading British alcohol companies to its board, which is chaired by Don Argus. The Australian- and United Kingdom-listed company has hired Diageo senior executive, David Gosnell, and Scottish & Newcastle chief executive, Tony Froggatt, as non-executive directors. Mr Argus, who also chairs BHP Billiton, said identifying and appointing people whose experience could benefit Brambles' global operations was important. Page 67.
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United States railway company, Genesee & Wyoming (G&W), will target resources projects for growth after finalising the A$1.3 billion sale of Australian Railroad Group (ARG) to Queensland Rail and Babc ock & Brown yesterday. The sale does not include the South Australian operations of ARG, which will revert to G&W ownership. The manager of newly created G&W Australia, Bert Easthope, said the company may seek an interest in the proposed A$6 billion expansion of BHP Billiton's Olympic Dam copper-uranium-gold mine. Page 68.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
Tabcorp yesterday launched a A$1.9 billion takeover bid for Unitab, trumping an offer from Victorian gaming rival, Tattersall's Group . The move highlights Tabcorp's aim to consolidate Australia's three betting pools into one super pool. The shares or cash-and-shares offer values Queensland-based Unitab, the nation's second-largest wagering company, at A$14.25 a share. This exceeds Tattersall's scrip bid of A$12.51 a share or A$12.93 a share under its cash alternative offer, based on yesterday's closing prices. Page 19.
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Higher costs for materials and labour as a result of the commodities boom have forced BHP Billiton to delay its planned A$900 million expansion of the Worsley alumina refinery south of Perth. Company spokesman, Mick Wheeler, last night confirmed that BHP would continue to study the feasibility of the project by investigating how to cut costs. 'We have not scr apped the project,' Mr Wheeler said. Construction work on the Worsley expansion had been expected to begin before the end of the year. Page 19.
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Telecom New Zealand (TNZ) may be looming as a takeover target for local billionaire, Graeme Hart, after losing one-third of its market value in the past six months. Mr Hart's Australian foods business, Burns Philp , has cash reserves of A$2.5 billion, and press reports say he is examining TNZ's accounts. TNZ this week appointed lawyer and investment banker, Wayne Boyd, to replace retiring chairman, Roderick Deane. Mr Boyd immediately gave support to TNZ chief executive, Theresa Guttung, and her 'very able management team.' Page 21.
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Macquarie Bank is finalising a funding package to rescue Eurotunnel , the operator of the Channel Tunnel linking Britain and France. The plan would allow Eurotunnel to slash its debt from £6.2 billion (A$15.4 billion) to £2.9 billion, with a group of investors led by Goldman Sachs and two Macquarie funds investing in A$1 billion hybrid notes. At least two of Eurotunnel's creditors, Oaktree Capital Management and Franklin Mutual Advisors, have said they would also invest in the hybrids. Page 21.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
Australian business investment is growing at a faster pace than in China, according to the Australian Bureau of Statistics. Figures released yesterday show a 29 per cent rise in capital spending in Australia over the past year, compared with 28 per cent in China. However, the Chinese economy continues to expand more than three times the rate of Australia's. 'The strength of our business investment is offset by the weakness of our growth in export volumes and the downturn in housing construction,' explained HSBC chief economist, John Edwards. Page 21.
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The Australian dollar fell US1.5 cents yesterday as United States (US) currency surged on expectations of another interest rate rise. Amid a sharp fall in the price of gold, the Australian dollar closed at US74.83 cents in local trading, down on Wednesday's close of US76.39 cents. Westpac chief currency strategist, Robert Rennie, cited minutes from the US Federal Open Market Committee's May 10 meeting signalling another rise in rates. 'We've had to address that, so the US dollar has done better,' he said. Page 22.
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Multiplex Group has delayed by a fortnight the date by which it expects to finish its Wembley Stadium reconstruction in London. Multiplex said yesterday the new A$1 billion sporting arena would be 'substantially complete' by July 13, instead of the end of June. In February, Multiplex reported a first-half loss of A$120 million, caused by extensive delays to the project. These included a dispute with the former steel contractor on Wembley, Cleveland Bridge, which abandoned work on the stadium's feature arch in August 2004. Page 23.
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Online wagering and gaming company, Centrebet, seeks to raise A$70 million through a public offering before listing on the Australian Stock Exchange in mid-July. The company, owned by Sydney's Kafataris family, is offering investors 35.11 million shares at A$2 each. The family bought the Alice Springs-based Centrebet from Jupiters Casino in 2003 for A$46.5 million.
Centrebet, which generates 70 per cent of its revenue from sports betting, expects to have a market capitalisation of A$174 million on listing. Page 23.
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THE AGE (www.theage.com.au)
The Australian Securities and Investments Commission (ASIC) is investigating claims that local companies are using hedging schemes to boost their executive options. The schemes allegedly allow executives to sell or hedge their options during the vesting period without informing shareholders. ASIC deputy chairman, Jeremy Cooper, revealed yesterday he had discussed the issue with the Australian Council of Superannuation Investors, which had already written to the top 200-listed companies asking whether they were engaging in the practice. Page B1.
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Accountancy firm, KPMG, has denied any responsibility for the collapse of property financier, Westpoint Group, as the Australian Securities and Investments Commission investigates an audit by the firm endorsing Westpoint's finances just before its demise in January. KPMG Australian chief executive, Lindsay Maxsted, said yesterday various groups were keen to apportion blame for A$300 million in losses resulting from the collapse. 'Many of the claimants are in no position to form a view on the quality of KPMG's audit,' he said. Page B1.
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The Australian stockmarket received a lift yesterday on the back of the resources sector and a positive lead from Wall Street. The benchmark S&P/ASX200 Index closed 58.9 points higher at 5060.6, helped by a A42 cents rise for BHP Billiton to A$28.65 a share, and Rio Tinto's A$1.46 gain to $79.56. 'The market has kicked off the first day of the month on a positive note, making it over the 5000 [points] mark,' reported Macquarie Equities adviser, Helen Spencer. Page B2.
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The average size of new mortgages in Australia has jumped to more than A$300,000, driven by the booming West Australian property market, according to a new survey. The AFG Mortgage Index for May found that the average new mortgage was A$301,000, an increase of 11 per cent from a year ago. In Western Australia, the average new mortgage has risen by 35 per cent in the past year to A$319,000. AFG executive director, Kevin Matthews, warned 'we should treat the [results] with some caution,' as AFG was 'tilted to the upper end of the market.' Page B2. --
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((Reuters Sydney Newsroom, 61-2 9373 1800, [email protected])) Keywords: DIGEST AUSTRALIA BUSINESS
