Executive Summary: Friday, 3 July, 2009
By | smh.com.au | 03 July
Business Focus
Sydney Morning Herald, 3 July, 2009
Santos chases gas
Santos has taken a 19.9 per cent stake in Eastern Star Gas, a NSW coal-seam gas explorer. It has also acquired additional coal seam gas acreage in the state under a separate deal. The total value of the deals was $476 million.
Discounts scrapped
Westpac Bank has scrapped its discounted products and services package for retail shareholders because of a low take-up rate. It has been available since 1998.
American Esky
The outdoor recreation company Coleman Australia has bought the Esky brand from Nylex (now in receivership) and plans to expand the Australian brand internationally. Coleman's parent company is based in Kansas.
Rockfall study ordered
BHP Billiton has been ordered by the West Australian state mining engineer to commission an independent engineering study at one of its nickel mines because of two rockfalls at the site in the past three weeks.
Insurance takeover
Lombard Group will be 90 per cent owned by the shareholders of the Perth insurer Australian Consolidated Insurance under a reverse takeover.
ANZ moves on RBS
ANZ has moved a step closer to acquiring parts of Royal Bank of Scotland's Asian banking empire after entering into exclusive talks for the assets.
The Financial Times last night reported ANZ has been granted preferred-bidder status for RBS in Hong Kong, Taiwan, Singapore, Vietnam and Indonesia while Standard Chartered, in London, has entered into exclusive talks to acquire the Chinese, Indian and Malaysian business.
Both now have up to 45 days to seal an agreement, although a deal is being targeted to coincide with RBS's interim results next month.
An ANZ spokesman last night said it was one of several parties participating in a competitive sale process being conducted by the RBS Group. Combined, the assets are expected to fetch as much as US$1.5 billion ($1.86 billion) for RBS. Analysts caution HSBC could emerge with a spoiling bid.
CBD
Michael Evans, Sydney Morning Herald, 3 July 2009
BEING walloped around the ears every day for months on end can be a cathartic experience if you're that way inclined.
At Rio Tinto it must feel as though a migraine has suddenly lifted, what with shareholders no longer baying for blood but instead piling into the rights issue to save the company from sinking into a debt-filled mud pit.
Perhaps that's why the company decided yesterday to fling a little largesse in the direction of the Royal Flying Doctor Service, the nation's third largest airline. (Not that anyone chooses to fly it.)
Rio has donated the first ever jet to the flying doctors, taking its fleet to a mighty 51 aircraft.
Some wags at the Sydney Mining Club, where the donation was announced, posed a few questions: was it Tom Albanese's old workhorse? Or maybe one Jim Leng never got to use.
Regardless, it was gratefully received and warmly applauded.
Rupert gets matey
That's what friends are for, said Rupert Murdoch when he hired his chum Chase Carey back in to the News Corp fold to be his right-hand man.
"He's been one of my closest advisers and friends for years," Murdoch said last month.
So we're not too surprised to see that Murdoch has dug deep into the News Corp coffers to recompense his new deputy up to $US43 million ($53 million) for the first year alone.
And we thought media was having a tough time of it.
Still, we can already hear Carey agreeing with whatever the boss says to earn that kind of loot.
In fact, the Rupester was in such a generous mood that he reimbursed Carey for "reasonable legal fees and disbursements" involved in negotiating the contract.
Another nice clause involves his performance pay, which is based on adjusted earnings per share, eliminating impairments on investments and write-downs and restructuring. Take out write-downs for the boss's mildly underperforming acquisitions and still get a bonus. Nice.
Meanwhile Carey's predecessor, Peter Chernin, didn't just get a film contract on the way out, he also scored use of a corporate jet and a car as well as his own private movie screening room.
Oh, and Murdoch, or at least shareholders, picked up his legal fees to negotiate the perks, too.
Sell, Mirvac boss says
It's important to have some faith in your own ability.
Nick Collishaw may have emerged from Greg Paramor's shadow at Mirvac, when securities were at $2.50, but the new boy has nevertheless decided to lighten his load.
Having successfully tapped the market for nearly a billion in readies, Collishaw has offloaded more than 280,000 stapled securities he indirectly holds to pocket about $320,000.
The price? A bit less, at $1.13 per security.
Blink and its All-gone
As if seeing your empire crumble under a pile of debt wasn't enough. David Coe's Allco Finance Group has suffered the final ignominy.
Allco's website has disappeared because its licence had expired and wasn't renewed, no doubt a cost-saving measure by the administrators of the group.
It appears there's no future for Allco, not even in cyberspace.
Coe and his chums, not to mention burned investors, can reminisce at www.allco.com.au.
Poached egg on face
And so the disappearing act from ANZ continues.
Not content with shutting the door all too quickly on the bank's just-departed Australian divisional boss Brian Hartzer, ANZ has airbrushed any mention of its long-serving retail banking chief from its latest newsletter to shareholders.
While there's a merry welcome from the chairman, Charlie B. Goode, for the new head honcho of the institutional bank, Shayne Elliott, and a pat on the back or the internal promotions of David Hisco, Graham Hodges and Jenny Fagg, poor old Brian doesn't merit a word despite his 13 years of loyal service, a period in which he was pipped to the post of chief executive by Mike Smith just over 18 months ago.
Nothing to do with the fact that he's gone off to run the British retail business of the Royal Bank of Scotland, which just so happens to be selling some valuable Asian operations that ANZ would dearly love to get its hands on, or that RBS's line-up of non-executive directors includes Smith's predecessor as ANZ boss, John McFarlane, who is believed to have been responsible for Hartzer's poaching.
Sing with me now …
Once a jolly Jumbuck lost its chief executive,
Under the shade of director Jeff Kennett …
But enough of that. Jumbuck Entertainment, a mobile phone social networking tiddler whose directors include the former Victorian premier, has lost its founder and chief executive, Adrian Risch, who resigned.
Nothing like losing the bloke who dreamed it all up.
Risch's departure comes a few months after Jumbuck sold its 15 per cent stake in something called Mobileactive to pocket $398,000 and generate more than $750,000 in reduced tax benefits.
Still, good to note that at last report Jumbuck had $6 million in cash and no debt. Just the way a surplus-loving conservative premier would have it.
XCHANGE
Edited by Vanda Carson, Sydney Morning Herald, July 3, 2009
Housing perspectives - fertiliser or weedkiller
SINCE economists are looking to the housing market to provide the fertiliser for the green shoots of recovery it is worth weighing the pros and cons of such a rebound.
The latest figures for building approvals have provided much food for thought, with the apartment sector bearing the brunt of what Citi says is a "stunning reversal", a 44 per cent drop which wiped out all the growth recorded in February and March.
The economic laggard, NSW, was again to blame, proving that life for listed residential builders like Stockland and Mirvac is unlikely to get any easier soon, especially when building units of four storeys or higher.
Still, approvals for houses have held up reasonably well and the sector should be helped by the levelling out or even fall in prices, and the impact of the various stimulus packages, tax breaks and the low interest rates.
Questions, though, remain about how long prices will remain subdued and when the Reserve Bank may reverse its policy of easing interest rates.
Then there's the inevitable caution that many prospective homebuyers will have about taking on more debt when rising unemployment is still a problem.
Those are all issues investors will have to consider when they look at the likes of housing market suppliers such as Boral, CSR, Wattyl and Crane Group and retailers like Harvey Norman, where homebuyers go to furnish their new pads.
Who said stock picking was easy?
Better than hell
So far, so good for Patrick Snowball, the newly appointed chief executive of Suncorp-Metway. His elevation to the hardest job in Australian financial services has been warmly welcomed by analysts.
Although he does not start work until September 1, the former head of Aviva UK operations threw himself into a round of meetings with investors in Sydney immediately after news of his arrival was released. Their reaction was largely positive seeing they wanted a new chief executive with a background in insurance rather than banking - Suncorp's bank is considered a major problem and a candidate for disposal.
But joining the group and replacing his predecessor, the hapless John Mulcahy, is the easy bit.
Market watchers are already compiling a "to do" list for the new boss - though most, if not all, of the items will mirror his own.
According to analysts at the Royal Bank of Scotland, the first task is to offload the bank, which is likely to be harder than first thought, particularly given the competition regulator's hardening stance against further consolidation in the industry since the takeovers of St George and BankWest. Still, that shouldn't stop him trying.
In the meantime, the CEO's appointment and the removal of uncertainty should add some upside to the stock, they say.
According to UBS, Mr Snowball's other immediate challenge is finding a replacement for the well-regarded Chris Skilton, Suncorp's finance director who has been acting chief executive. He is leaving the group once the new boss takes over.
And then there's a successor for its chief risk officer. Andrew Harmer is due to return to Ernst & Young - he was on secondment and only filling in for a few months.
For the team at Citigroup, Mr Snowball's appointment is a positive but they would like to get a better measure of the man, who they say lacks experience in the Australian market even if he knows British insurers back to front.
Given the question marks over the bank, its bad debt position and the need to generate better earnings from the dominant insurance business, Citi says the short-term risks at Suncorp remain high but its longer-term prospects are better.
Extra added extra time
In yet another chapter in the survival saga of Network Ten's key shareholder, CanWest, the Canadian media company has managed to wring out a further reprieve from its creditors.
Its chief executive, Leonard Asper, now has until the end of the month to reach a binding agreement to recapitalise the company, which is crumbling under its debt load.
The definitive deal has to be signed by July 31.
CanWest sold two small TV stations in Canada this week, which were set to close if a buyer was not found. But the sale will not make much difference to its fate. According to Canadian media reports, the two stations went for less than $C5000 to an upstart broadcaster.
xchange@smh.com.au
First published by Smh.com.au on July 03 2009
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