Gunns' long march towards recapitalisation has been slow and full of painful setbacks. And with still no end in sight, the company's desperate lenders are having yet another shot at repairing the company's balance sheet. Also this morning, Coates Hire is a step closer to the bourse and there's movement in Nine's debt markets.
It appears that lenders to embattled timber company Gunns are becoming increasingly nervous about the $500 million they are owed by the end of the year.
The creditors, led by ANZ Bank, are understood to have tapped insolvency specialists KordaMentha to review Gunns' balance sheet, according to The Australian Financial Review. While the report is said to have been due last Friday, there's no word about what KordaMentha uncovered.
For its part, Gunns, whose shares have been suspended since March, is making slow progress. Last week it offloaded its Victorian woodchipping export plant to Australian Bluegum Plantations. That followed the May sale of the Heyfield native forest sawmill, also in Victoria, although that deal faces a legal challenge.
In the meantime, Gunns continues to search for investors to back a $400 recapitalisation, after Singapore’s Richard Chandler walked away from a potential $150 million deal in March.
All investors can do is wait.
Carlyle Group, Coates Hire, Seven Group
Coates Hire may be a step closer to the stock exchange, after its owners reportedly refinanced $1.85 billion of debt linked to the company.
A source told The Australian that Carlyle Group and Seven Group Holdings, which each own about 46 per cent of Coates, have extended two tranches of debt until 2015. Most of the original syndicate, including Westpac, ANZ, Sumitomo Mitsui Financial Group and Mizuho Financial Group, signed back on.
Deal watchers have long expected Carlyle and Seven to exit their investments through an initial public offering, perhaps combined with the Seven-owned National Hire Group. The merged entity could be worth as much as $3 billion on the bourse.
Goldman Sachs analysts say the refinancing has cleared a major hurdle to a potential float, which would help make Seven's stake more transparent.
Debt investors may deliver a verdict on TPG's potential bid for Nine Entertainment, amid reports one of the Australian company's smaller hedge fund owners is shopping around a $70 million parcel of its loans.
According to The Australian Financial Review, the price of Nine's debt has increased as the company has attracted new interest from prospective buyers. The last package of loans was sold in April for 88 cents in the dollar, reflecting persisting fears the company wouldn't be able to service its $3.8 billion debt burden. Most of Nine's original creditors exited their positions at a loss long ago.
It will be interesting to note how the latest Nine buyout rumours affect the company's debt prices. On Friday, it was revealed that TPG managing partner Ben Gray was in talks with Nine chief David Gyngell and other senior management about a takeover in partnership with Hollywood mogul Harry Sloan. However, Sloan and TPG were still said to be considering whether to make a formal offer.
Of course, big names such as News Corp and Telstra are already said to have kicked Nine's tires but passed. Potential debt investors might want to see a proper offer before making a bet on Nine's financial future.
There are fresh rumours about Toll Holdings exiting Japan, after the logistics company brought in an external advisor to help review its operations there, according to The Australian.
Toll Global Express, previously called Footwork Express, was already under review after Toll was forced to write down its value by about $150 million following Japan's 2011 earthquake and tsunami. But the new appointment suggests deal wheels may be in motion.
Speculation about a possible sale has also been stoked by Toll's recent disposal of the majority of its Toll Refrigerated business to Automotive Holdings Group earlier this month.
JP Morgan had previously estimated that TGE's book value is about $210 million. However, the broker noted that buyers would probably only be willing to pay between $103-$181 million given uncertainties about operating conditions in post-crisis Japan.