BREAKFAST DEALS: Centro medicine

Centro Properties remains on the critical list despite slight signs of improvement and with a radical restructure the only medicine it's the shopping centre's lenders who hold the key to the rescue. Meanwhile, Fortescue's boss Andrew Forrest renews his fight with BHP Billiton and Rio Tinto on third party rail access and time runs out for Queensland toll road operator RiverCity Motorway. Elsewhere, fists fly at UBS trading floor and while the two traders may have kissed and made up the investment bank may not be quite as accommodating; Downer's imminent $250 million capital raising could be inadequate and Andrew Forrest's biotech vehicle, Allied Medical, gets closer to listing on the ASX.

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Centro Properties

Centro Properties has managed to post a first half net profit of $553 million, thanks to a surging Australian dollar, but the key metrics of performance are still lagging behind. Underlying profit fell 42 per cent to $48.2 million for the period while net operating income remains in the red. Then there is the debt, $16 billion of it across the whole group, with $3.1 billion of headstock debt set to mature in December. So it's little wonder that Centro Properties boss Robert Tsenin has reiterated his call for a critical restructure. His view was echoed by chief financial officer Chris Nunn, who said that the shopping centre giant's future depended on it. The fate of that restructure really rests in the hands of a group of 55 hedge funds – including Paulson & Co and Appaloosa – that own most of Centro's headstock debt. The recent decision by Centro to scuttle the potential sale of its syndicates business to Brisbane-based Cromwell Property Group has been seen by many as the level of influence the lenders are exerting on moulding Centro's future, despite the protestation by Tsenin that the lenders don't call all the shots on the matter. Tsenin was at pains to point out yesterday that the lenders were open to the idea of a recapitalisation that would involve debt for equity swaps and possibly even the injection of new capital. There is even talk that Centro properties could perhaps merge with it's somewhat healthier spin-off Centro Retail. The one message that is clear is that Centro Properties' lenders have made it clear to Tsenin that he and his team need to expand their options with regards to the restructure. In fact, The Australian reports that some of the hedge funds have even raised issues about the potential sale of Centro Properties' US portfolio, suggesting that it is better of holding on to them and flogging off the Australian portfolio. For the time being the sale looks on track and Tsenin seems to be backing the recapitalisation option. But with a December deadline looming, it's Centro Properties' lenders who hold the keys.  
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Fortescue Metals Group, BC Iron, BHP Billiton, Rio Tinto

Fortescue Metals boss Andrew Forrest may have his hands full with his long running stoush with the Australian Securities and Investments Commission (ASIC) headed for the High Court, but that hasn't stopped the mining billionaire from spouting invectives at regulators. This time around Forrest's venom was directed towards the Australian Competition Tribunal (ACT) and the issue of rail access for iron ore juniors in the Pilbara. Fortescue has been involved in a long-running fight with BHP Billiton and Rio Tinto in a bid to get the mining majors to open up their lines to smaller miners. The ACT ruled against the call last year, hence Forrest's discontent, but Fortescue has started its appeal against the decision in Federal Court. Forrest certainly picked an opportune time to renew his fight with BHP and Rio as the first ore shipment from BC Iron and Fortescue's jointly owned Nullagine project was loaded on to a China-bound ship in Port Hedland. In fact Fortescue has extended its largesse to four other juniors in the area, including Brockman Resources. For Forrest, this is proof positive that third party access to the rail lines of major miners was possible despite BHP and Rio's objections – and that's the line Fortescue is taking to the court.  
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RiverCity Motorway

RiverCity MotorWay Group looks to have gone under with the operator of the Clem7 tunnel in Brisbane reportedly poised to call in administrators this morning. RiverCity entered a trading halt yesterday pending an announcement on the result of its discussions with its lenders. It would seem that that result is not the one RiverCity's management was seeking. RiverCity chairman Robert Morris is reportedly set to appoint PPB Advisory as administrators to the company, with Korda Mentha expected to act as receivers for the lenders. Morris and his team have evidently failed in their attempts to convince its lenders to agree to a standstill on interest payments on $1.3 billion in debts. The local banks have been selling their positions in the company's debt for some time to hedge funds and investment banks, who have obviously decided to put RiverCity out of its misery. RiverCity, which floated in 2006 with a share price of $1, was last trading below 1 cent. The Clem Jones tunnel will remain open but RiverCity's demise will cast a shadow on the other tunnel projects in Brisbane, including the $5.6 billion Airport Link project and the $1.7 billion Northern Link Project.  
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Downer EDI

Downer EDI is poised to unveil a $250 million capital raising next Monday but that may unfortunately be a temporary reprieve for the embattled engineering company's shareholders. The $250 million raising, which will reportedly be carried out at a substantial discount to Downer's current trading price, is much needed if Downer hopes to avoid a downgrade from credit ratings agency Fitch. However, Fairfax papers highlight that some analysts are convinced that the company will need to pass the cap around again. According to the Sydney Morning Herald, CBA equities analyst Ben Brownette reckons that Downer needs to raise close to $670 million to meet its liquidity needs. And while the $250 million will help it tackle the writedowns from the delayed Waratah rail project, more will be needed to keep its credit rating afloat.    
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iiNet beats Hollywood again

Internet service provider (ISP) iiNet has again managed to evade the big guns from Hollywood in the online piracy battle, but that doesn't necessarily mean the war is over. A group of 34 movie studios headed by Village Roadshow have lost their appeal to hold iiNet responsible for its users illegally downloading movies and television shows. iiNet was initially cleared of any wrongdoing last year but the studios are yet to fully back down and there is a good chance that they will take the fight to High Court. They will be further bolstered by the fact that the Federal Court decision this time around was split, with one of the three judges ruling in favour of the studios. The question of responsibility lies at the heart of this issue and while iiNet has won another round, ISPs may find it difficult to take cover behind the Telecommunications Act and the Copyright Act.
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Flying fists of UBS

Investment Banking heavyweight UBS is keeping a pretty tight lid on the fisticuffs between its head of institutional sales George Kanaan and executive director Mark Fitzgerald, but the one thing we do know is that neither has reported back for duty yet. UBS will no doubt deal with the matter efficiently but the sight of two senior personnel going toe to toe at the trading floor is not a good look. Just what sparked the disagreement is still unknown but The Australian Financial Review points out a few rumours doing the rounds. The first theory is that the stoush was over one stealing another's trade, while another says that things got pretty heated but no punches were thrown. The paper adds that Kanaan and Fitzgerald have subsequently kissed and made up but it will be interesting to see how UBS chooses to chastise the two.  

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Wrapping up

Rio Tinto has unsurprisingly extended its $3.9 billion offer for Riversdale Mining as the target's two major shareholders – Tata Steel and CSN – continue to keep their cards close their chests with regard to the bid. Rio's offer is now due to close on March 18. Meanwhile, underground coal gasification (UCG) outfit Carbon Energy has executed a share sale agreement to buy US-based Clean Coal and UK-based Clean Coal Amasra. The deal will delivers projects in the US and Turkey as developed to Carbon Energy. The company said that the acquisition has the potential to increase its coal resources almost three fold to in excess of two billion tonnes. In other news, takeover target Allied Medical shareholder Avexa has decided to sell its 19.9 per cent stake to suitor bioMD. Allied Medical's key directors and executives have also agreed to sell their shares to bioMD once the offer is made unconditional. bioMD lobbed its off market scrip offer for Allied Medical last week, under which each Allied shareholder will get 32 bioMD shares for every Allied share they hold. The deal is essentially a reverse-takeover that will allow the Andrew Forrest-backed Allied Medical to list on the ASX. bioMD will issue 4.3 million shares to Allied shareholders, leaving Allied shareholders with 70 per cent of the issued capital of the combined group. Finally, Investa Property Group is reportedly close to sealing a deal to grab the ING Office Fund. According to the AFR, Investa has offered some lucrative incentives to ING Office unit holders, including revisions to the management fee arrangements and the prospect of a management internalisation.