Amalgamated raises eyebrows along with equity

The leisure and entertainment group yesterday unveiled plans for a $107 million equity raising with a structure that some in the market would deem a throwback now that almost every renounceable rights issue is an accelerated undertaking with accompanying bookbuilds for the rights not taken up.

Instead, Amalgamated will allow investors to trade any renounced entitlements on the stock exchange over the next few weeks.

The last raising under that structure is believed to be Argo Investment's $440 million rights issue in February 2007, but they could make a comeback as they tend to provide more value for renounced rights than a bookbuild.

Adding to the relative uniqueness of the Melbourne Cup day raising was the fact that it was not underwritten.

Of course, considering that seven of the largest shareholders with control of 70 per cent of the stock including Investors Mutual, Maple-Brown Abbott and Perennial Value Management agreed to participate after signing confidentiality agreements last week certainly lessened the risk of proceeding without an underwriter.

Caliburn was the only adviser on the raising and will receive $1.3 million, which is well below the 3 per cent or so an underwriter would have received.

It was also interesting that the funds raised by Amalgamated from the one-for-five rights issue at $4.10 a share will be put towards growth and acquisitions rather than repaying debt.

Few other recent raisings have been undertaken by companies that had no need to repay lenders. However, if the market remains relatively stable, that could become a more common occurrence.

Amalgamated has recently acquired two hotels and leasehold interests in two cinemas and is examining the purchase of another hotel, possibly with help from a partner.

Amalgamated shares closed 2? lower at $5.95, with rights trading starting on Friday.

Elsewhere in the leisure sector, Gage Roads Brewing has revealed it is in talks with lenders and major shareholders to raise money to speed up its expansion plans.

Woolworths is Gage's largest shareholder, with 25 per cent of the company, after the pair cut a deal to make it a contract brewer for the retailer's private-label beers earlier this year.

Shelling out

AFTER months of speculation, Royal Dutch Shell finally appears close to offloading its downstream oil assets in New Zealand.

Infratil and New Zealand Superannuation Fund consortium have entered exclusive negotiations with Shell over the petrol stations and 17.1 per cent stake in that nation's only oil refinery.

The proposed selling price, reached after other bidders also submitted binding offers to Shell's advisers at UBS, is expected to be around $NZ600 million ($A477 million).

Private equity group TPG is believed to be one of the jilted bidders.

Infratil and its partner are in the final stage of due diligence, and it is expected that a deal is likely to be completed by the end of the year.

In contrast to the Australian Competition and Consumer Commission's close scrutiny of the sale of ExxonMobil's Australian service stations to Caltex, this deal is not expected to attract much attention from New Zealand regulators.

ExxonMobil has also put some of its downstream assets in New Zealand on the block in a process run by Goldman Sachs JBWere. There are some suggestions those assets could be worth less than the ones being sold by Shell.

Mining for buyers

THE official resurrection of Rio Tinto's sale of the Northparkes copper-gold mine in NSW expected to fetch about $US1 billion ($A1.1 billion) has led to investment bankers scrambling to pitch (or re-pitch) the acquisition to potential buyers.

As noted yesterday, OZ Minerals had expressed serious interest in the asset before the sales process, run by Macquarie Capital, was pulled during the depths of the global financial crisis last year.

Northparkes is a mid-tier asset that is probably too small to attract the interest of major diversified miners such as BHP Billiton, Anglo American, Vale and Xstrata.

Additionally, Japanese trading house Sumitomo owns 20 per cent of the mine, and it is unclear whether it holds a pre-emptive right over the remaining stake.

Industry sources said potential buyers of Northparkes were likely to include companies such as OZ, Antofagasta, Vedanta, Hindalco, China Minmetals, and possibly Glencore, which owns the Cobar copper mine in NSW.

Meanwhile, there is also expected to be strong interest in Rio's Sweetwater uranium assets for sale in the US.

Uranium One had agreed to pay $US110 million for the package in 2006 before Rio yanked it off the market when uranium prices rose.

The uranium spot price has risen in recent weeks in light of BHP's production troubles at Olympic Dam.

Potential buyers for Sweetwater could include Uranium One, Paladin Energy, Mega Uranium, Denison Mines, Cameco and Asian utility groups.

Finally, Rio has also modified the prospectus for its proposed US listing of its Powder River Basin coal assets under the moniker Cloud Peak Energy.

It now expects the initial public offering, led by Credit Suisse, Morgan Stanley and RBC Capital Markets, could raise $US650 million, up from an earlier prediction of $US500 million.

On Friday, Rio said it thought the coal float could occur by the end of the year.

jfreed@fairfaxmedia.com.au