Executive Summary: October 14, 2009
By Scott Rochfort | smh.com.au | 14 October
Mike Smith of ANZ ... will the greening go right to the top? Illustration:John Shakespeare
CBD
Telstra player not so clued up on Optus
The former Howard government finance minister who pushed for the full privatisation of Telstra appears a little rusty on his knowledge of the wider Australian stockmarket.
Nick Minchin, who is now the Opposition spokesman on communications, showed he probably remains too focused on Telstra when he helped oversee the Senate inquiry into the proposed separation of the telco in Melbourne yesterday.
When a Sol Trujillo-loving Telstra shareholder, Investor Mutual's Anton Tagliaferro, appeared at the inquiry he launched a stinging salvo at the SingTel-owned telco Optus.
It had benefitted from being majority-owned by the Singapore Government's investment vehicle Temasek Holdings, he said. Tagliaferro: "SingTel is very well-protected by their government, which makes it strange that Optus is banging so hard for Telstra to be dismantled.
But there you go, one rule for them and one rule for us." Minchin seized on the comments.
"On that point, Optus isn't listed in Australia, is it?" Tagliaferro: "It's Singtel. You can buy shares in SingTel." Minchin: "What, on the Singapore stock exchange?"
Tagliaferro: "In Australia, too." Minchin: "You can buy them in Australia?" Tagliaferro: "They're dual-listed." SingTel is in the ASX top 100.
Hands off
It seems not all ANZ staff are happy about the relocation of the bank's headquarters into Docklands, Melbourne.
The bank's new $478 million office tower, which will house 6500 staffers, is being trumpeted as one of the few commercial office buildings in the nation to have a five-star tree-hugging Green Star rating.
The 10-storey building even has wind-turbines on its roof to help reduce its carbon footprint, and a rainwater tank.
But one thing that has apparently upset some paper-hungry ANZ employees is how they will now be accountable for the number of times they visit the printer.
"We're trying to reduce the amount of electricity because its one of the largest contributors to our greenhouse gas emissions," a company spokeswoman told CBD.
Each staff member will have to swipe their staff identification card every time they visit the Xerox machine. No word yet if ANZ's Aston Martin-loving chief executive, Mike "007" Smith, has any plans to buy a Toyota Prius.
Some staff are also unhappy that they will no longer be allowed to have double computer screens on their desks.
However, thankfully most of ANZ's traders will not move into the new building. The main ANZ trading floor in Melbourne will remain at 100 Queen Street.
Staff wanting a double screen in the new building will have to put forward a "business case" to management.
ANZ says the new green additions to its headquarters, which include a roof garden of drought-tolerant plants, will be equivalent to taking 2000 cars off the road each year.
Perls aplenty
It is good to see the corporate jet-loving chairman of the recently bailed-out Transpacific Group still has a few spare beans to throw around.
Terry Peabody and his wife, Mary, have popped up among the top 20 holders of the Commonwealth Bank's latest issue of $2 billion worth of Perpetual Exchangeable Resaleable Listed Securities.
The Peabodys have 25,000 PERLS worth $5 million. Maybe the PERLS are a better investment than Transpacific shares.
When the waste management company launched its $800 million entitlement issue and placement to pay down debt this year, the Peabodys did not take up their full entitlement.
They saw their shareholding diluted from 38 per cent to 18.5 per cent after they took up 28 per cent of their entitlement.
Other large holders of PERLS V scrip include Gerry Harvey's old business partner Ian Norman, whose private company has $10 million of the securities.
The Newcastle-based packaged holiday operator Scenic Tours owns $9.3 million of PERLS scrip. In all, 33,309 investors have bought into the offer.
'No excuses'
The new executive chairman of the marketing firm CommQuest seems rather frank about the group's progress as a listed entity.
Roger Sharp, who is also proposing to recapitalise the group through a 0.75 cent share issue to his firm Co-Investor Capital Partners, said: "CommQuest started its short life with much promise but failed to deliver, reporting a loss of $52 million in the financial year to 30 June 2009.
It is distressing to witness such a profound destruction in shareholder value. There are no excuses."
The company was listed at $1 a share by ABN Amro Morgans in November 2007 and last traded at 1.5c a pop before it was suspended in March.
Two dollars
New Zealand has continued to threaten Australia with its concept of a "single economic market".
"From New Zealand's point of view, the discussion should not be shaped around arguments of sovereignty, rather about how deeper integration can, if managed correctly, improve our long-term economic growth," said the country's Minister of Commerce, Simon Power, in a speech in Wellington yesterday.
In a disturbing sign New Zealand could be planning a reverse takeover of Australia, Power added: "In short, we share a level of understanding and comfort with each other that is not replicated elsewhere."
However, Power said the idea of a single currency could be some time off.
"Any discussion about what we mean by a single economic market should not start by debating the benefits or otherwise of a single currency, a common monetary policy, or a single tax regime."
But there still seems to be many differences to overcome with our friends across the ditch. Power failed to concede that the Lamington was actually from Australia, or say whether Sir Edmund Hillary could be knocked off the $NZ5 note.
Nor would the minister concede whether the racehorse Phar Lap was a naturalised Australian.
Got a tip? email srochfort@smh.com.au
Insider
Edited by Jamie Freed
US ad recovery bolsters hopes at Macquarie Media
Macquarie Media Group (MMG) has more on its plate than working out the best way to cut management ties with Macquarie Capital and unwinding its stapled structure.
It is also preparing for a large equity raising to help pay down debt in its Macquarie Southern Cross Media division.
Nothing has been finalised yet, but MMG said yesterday it could use most of its $347 million of cash on hand, plus the proceeds of a rights issue of an unspecified amount to help repay the $873 million of debt in MSCM maturing in November next year.
In the meantime, MMG is also playing an interesting round of poker with the syndicate providing debt to its American Consolidated Media (ACM) newspaper assets in the US.
ACM is worth less than its $US133.7 million ($147.8 million) of debt, and MMG has previously said it has no plans to pump in more equity.
MMG yesterday revealed it expected ACM would breach its debt covenants, based on preliminary internal estimates of its performance to September 30.
A breach could allow the banks to take control of ACM. But banks are hardly a natural owner of a string of local newspapers, and they would be unable to recoup their funds in the present market.
Such a move could annoy North American lenders enough to do at least some damage to the Macquarie brand in that market, where the Australian group is trying to expand rapidly.
The saving grace for MMG could be that ACM has positive operational cashflows and is meeting all of its interest payments.
So the banks may be willing to relax a covenant or two as long as the payments are being met, to save themselves the trouble of owning the business.
MMG is not investigating the sale of ACM because of the lack of equity left in the division and the weak market for US newspapers. That is not to say that ACM could not improve its performance as the market recovers.
Credit Suisse has noted consensus earnings estimates for US media groups have been revised upward by 5 per cent in the past three months, albeit from a very low base, as the advertising market shows signs of recovery.
UBS on guard
UBS has nabbed the defence mandates on two of the more talked about mid-sized takeover deals going in the market.
Breville Group yesterday announced it had appointed UBS to help it ponder a $300 million unsolicited takeover bid from GUD Holdings, and Insider understands the Swiss investment bank is also advising the iron ore hopeful United Minerals on a proposal from BHP Billiton worth more than $200 million.
Breville has told shareholders to take no action on GUD's scrip bid. In the meantime it is willing to consider rival approaches from the likes of Solomon Lew's Premier Investments and a number of offshore trade buyers who have previously expressed some interest in Breville.
Lew and Premier are key to any deal because, combined, they own 30.5 per cent of Breville. Breville has handily pointed out that that means Lew and Premier can block tax roll-over relief for all shareholders who accept GUD's offer, since without their support it will not get past the 80 per cent mark.
There is no doubt a Breville-GUD merger is logical in light of the potential for a large amount of cost savings. GUD, advised by Macquarie Capital, has not chosen to enunciate the potential savings to the market, and unless it does so it is hard for the market to decide just how much GUD could afford to pay for its rival.
Meanwhile, United and BHP – and their respective advisers in Perth at UBS and Gresham – are continuing to plot the finer details of a proposed takeover deal, which is not expected to be ready to present to the market until tomorrow or Friday.
Bonds are back
The corporate bond market's emergence as a viable, or even preferable, alternative to tough negotiations with lenders to gain extensions on existing facilities has clearly been noted by Incitec Pivot.
Yesterday it revealed that Standard & Poor's had assigned it a maiden BBB rating with a stable outlook. Incitec has quite a bit of bank debt, including a $698 million working capital facility, which reduces over a term ending October next year, and a $1.68 billion syndicated facility maturing in September 2011.
It would not be surprising if the company, and probably some of its lenders, would prefer to see it diversify its sources of funding. Incitec said it was seeking to gain access to a "broad range" of debt markets.
Asciano is trying to do the same. The rail and ports group is in talks with ratings agencies about getting a maiden rating, and is said to be targeting a grade of BBB or BBB+.
Dealogic figures show that in the first nine months of the year Australian companies, excluding banks, raised $11 billion from bond markets. This is the highest year-to-date level ever and almost double the $5.8 billion raised in the same period last year.
In the local bond market, Leighton Holdings, which has a BBB rating, priced five-year notes at 400 basis points over swap a few months back.
And last month Wesfarmers, which is rated BBB+, priced $500 million of five-year notesat 260 basis points over swap.
The conglomerate has also met recently with prospective bond investors in the US and Europe.
jfreed@smh.com.au
Briefs
Litigation
ABC probe Litigation funder IMF Australia says it will provide funding to the administrators of ABC Learning for public examinations over $1 billion worth of charges granted by ABC Learning to a syndicate of banks before its collapse last year. "If the examinations provide satisfactory evidence in support of causes of actions available to the administrators, then IMF will provide funding for recovery action which may benefit all unsecured creditors," it said.
Energy
New World IPO Geothermal company New World Energy is hoping to raise $10 million through an initial public offering to develop exploration leases in several areas including Western Australia's Pilbara region. New World Energy expects to list on the Australian Securities Exchange by year end.
Media
APN guidance APN News & Media has confirmed its earnings for calendar 2009 are likely to be in line with the consensus forecast of leading analysts. APN has forecast a net profit before one-offs of between $90 million and $95 million.
Freight
Toll purchase Transport and logistics company Toll Holdings has done a deal to take over Japanese freight operator Footwork Express. The deal is subject to regulatory approval but would see Toll, which owns 36 per cent of Footwork, purchase the remaining stake for $95 million.
Mortgages
Reverse market The reverse mortgage market continued to grow through the financial crisis but at a slower rate. A study of the reverse mortgage market by Deloitte Actuaries and Consultants and industry body Senior Australians Equity Release Association of Lenders shows market growth of 5 per cent in the six months to June 30 to $2.61 billion.
First published by Smh.com.au on October 14 2009
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