BREAKFAST DEALS: Airport ambush

AustralianSuper can officially kiss that larger stake in Perth Airport goodbye, the question now is whether it still wants to hit the Future Fund with its lawyers. Breakfast Deals has another idea. In Queensland, the shortlist winners have been picked for the Abbot Point expansion. Meanwhile, Beach Energy has selected Origin Energy as a billion dollar Cooper Basin customer, Billabong and Sundance continue to reel from their bad-to-worse takeover battles and Bank of Queensland has bagged Richard Branson’s Virgin Money for $40 million.

AustralianSuper, Future Fund, Australian Infrastructure Fund

Last night, AustralianSuper would have begrudgingly given the final green light for the Future Fund to take a 30 per cent stake in Perth Airport off the hands of Australian Infrastructure Fund.

The consent is more of a formality than anything else. The deadline to exercise its pre-emptive rights, the rights it believes the Fund has cleverly managed to negate as part of a $2 billion deal with AIX, passed last month.

The question now is whether the superannuation fund sues the Future Fund to recoup any damages.

The Australian Financial Review reported recently that a UK hedge fund had written to AustralianSuper warning it of legal action if it pursued AIX.

The concern is that such action might delay AIX from distributing the proceeds from the deal.

In the beginning there were two obvious avenues for AustralianSuper to take.

The first was legal action to prevent the Future Fund from taking the increased stake. That moment has passed and the Fund has won.

The second was legal action to get some compensation for the alleged practice of gaming the bid, which is where certain assets in a portfolio are overvalued to make it more difficult for pre-emptive rights of other shareholders to be exercised.

But there is a third that, so far, this columnist hasn’t seen raised.

The Fund has apparently attached a 43 per cent premium to the Perth airport above a valuation that was conducted at the end of the last financial year.

It’s always an awkward thing to go before a judge to complain than someone has overvalued your asset.

So call their bluff. AustralianSuper could publicly call on the Future Fund to purchase its stake in Perth Airport as well in line with the valuation attached to the AIX deal.

If they do it, the fund manager would collect a handy premium their books didn’t reflect. If the Fund declines, they’re going to look either suspicious or stupid.

It’s certainly cheaper than calling in the lawyers.

And while we’re talking about the Future Fund, The Australian believes that Charter Hall and GPT Group are competing with the $82 billion giant in the final rounds of the bidding for Perth’s Raine Square skyscraper. It’s tipped to go for about $420 million.

Abbot Point

The Queensland government has revealed the companies that made the shortlist for the planned expansion of the Abbot Point coal export terminal in the state’s north.

Mining giant Anglo American and a joint venture between haulage giant Aurizon and construction company Lend Lease won from 19 expressions of interest in the project.

While the scale of the project has been wound back from the blueprint considered by the former state Labor government, it will still be one of the world’s largest coal terminals.

The winners have now been charged with working on proposals to construct two additional coal loading facilities.

The reason Queensland needs the extra capacity is the Galilee Basin, which holds the coal deposits of Adani and GVK Hancock (which is part-owned by billionaire Gina Rinehart), along with the holdings of irrepressible coal tycoon Clive Palmer.

Speaking of coal, BHP Billiton has dumped Leighton Holdings as a mining operations contractor at its Peak Downs coalmine in Queensland. The move to end the contract two years early will cost Leighton about $260 million in earnings.

Meanwhile, BHP rival Rio Tinto has reportedly put two growth projects in the United States under review (which means a sale could be on the cards) as the big miners continue to trim their portfolios to core investments.

The two assets are at the $US600 million Moly Autoclave Process in Utah and the $US500 million Eagle nickel and copper project in Michigan, according to The Australian Financial Review.

Beach Energy, Origin Energy

Staying with resources, there have been some big movements in the domestic energy market.

Shares in Beach Energy jumped 3.9 per cent yesterday after announcing that Origin Energy has won its Cooper Basin supply deal, which could generate up to $1.5 billion.

That share price gain brings Beach’s weekly total to 7.7 per cent. Origin was up too.

Origin knocked off rival LNG producers Santos and BG Group for the privilege. The eight-year deal covers 139 petajoules of gas from the basin with an option of a two-year extension.

It’s widely thought that the price range is $7-9 per gigajoule, which has been circulated recently as a price target for the local gas players.

If the upper end of that range and the two-year extension is assumed, Beach stands to get $1.5 billion.

Meanwhile, Hydro Tasmania has signed a strategic cooperation agreement with China’s Shenhua that could lead to wind power investments totalling $1.6 billion.

The agreement is designed to guide the pair towards a successful completion of plans to build and operator an additional 700 megawatts of Australian wind farms by 2020.

Billabong International, Sundance Resources

The only things these two companies have in common are recently drawn out takeover discussions either falling apart entirely or seriously disappointing shareholders. The ripples from both these events are still being felt.

Starting with Billabong, the company’s stock plummeted at yesterday’s open after the market took stock of the 60 cents a share takeover offer the board is considering. The share price finished the session down 26.7 per cent at 53.5 cents.

That’s still a 10.8 per cent discount on the takeover offer, reflecting the market’s utter lack of confidence that all the negative Billabong surprises are behind it. The offer remains conditional and if the deal falls apart, a capital raising is on the cards.

Chief executive Launa Inman had to artfully dodge some of these questions at a summit in Sydney yesterday. The company is in 10 days of exclusive negotiations with suitor and former director Paul Naude, along with New York-based backer Sycamore Partners.

Meanwhile, Sundance Resources suffered yet another share price hit as the company tried to reassure the register that it can get its Mbalam iron ore dreams in Africa back on track.

Having finally cancelled talks with Sichuan Hanlong Mining over a 45 cents a share takeover offer, the company’s stock shed another 9.1 per cent yesterday to finish the session at a mere 10 cents apiece.

Sundance chairman George Jones maintains that the iron ore company’s board is capable of dealing with the situation, but adds that the search for some additional boardroom support is under way.

Speaking of Sundance and boardrooms, the company’s former suitor Hanlong has dumped three directors at Australian junior Moly Mines.

Additionally, detained Hanlong chairman Liu Han will be replaced by chief operations officer Nelson Chen.

Bank of Queensland, Virgin Money

Bank of Queensland boss Stuart Grimshaw will have to wait around 18 months before Virgin Money Australia stops losing, well, money for his business.

The bank picked up the Richard Branson business for $40 million yesterday, with $30 million in scrip and $10 million in cash. Again, this column has to note that scrip was poison just a few months ago. Deals are still quiet no doubt, but the structures are becoming more flexible.

In return Bank of Queensland gets the Virgin business and its 250,000 customers and exclusive use of Virgin’s brand in Australia for 40 years.

Grimshaw has brought in former Colonial First State chief Brian Bissaker as Virgin Money chief executive. That’s a good pickup.

Virgin Money has been expanding rapidly and investing in technology, which means the business is currently running at a loss. Once it’s settled, so will the balance sheet.

Wrapping up

Suncorp has confirmed reports than it’s planning to raise $500 million through a subordinated note debt issue.

The money will go towards general corporate purposes as well as refinancing of the convertible preference shares the company launched in 2008, back when it was still called Suncorp-Metway.

UBS has been named as sole structuring adviser and it’s also picked up a joint lead manager gig with ANZ Bank, National Australia Bank, RBS Morgans and Westpac Institutional.

The co-managers are Bell Potter and JBWere.

And finally, Guinness Peat Group has agreed to sell its 19.9 per cent stake in listed property developer CIC Australia for $15.1 million to Peet, which is bidding $76 million in cash for the whole company.

CIC is currently overseeing seven projects across four states worth $148 million.