BREAKFAST DEALS: CVC changes gears

Nine Entertainment's private equity owner CVC Asia Pacific lightens its debt burden with a $562 million block sale of its stake in carsales.com, but what does it mean for Nine's $5 billion IPO? Elsewhere, Rio Tinto muddles up the numbers when it comes to its stake in Riversdale Mining amid talk that a sweeter offer may be on its way, and SGX boss Magnus Bocker keeps the faith with Canberra. Meanwhile, ANZ Banking Group gets an open invitation to beef up its presence in Malaysia, copper player and potential takeover target Sandfire Resources pushes through with its Degrussa project, and HSBC plays down talk of a permanent move to Hong Kong.

Nine Entertainment, CVC Asia Pacific, Carsales

Nine Entertainment's owner CVC Asia Pacific has reportedly pulled off its first major asset sale in quite some time with news that the private equity firm has sold its 49.1 per cent stake in online car classified company carsales.com. CVC has reportedly sold the stake through a $562 million block sale to UBS, with the 114.2 million shares offloaded at $4.92 a share. There has been long running speculation that investment bankers had been pushing a reluctant CVC to sell the stake while things were looking good for Carsales. The online car advertiser beat expectations in the December half with a 45 per cent jump in its net profit and boss Greg Roebuck is confident of solid performance in the second half. Taking that into account, it is understandable why CVC was reticent to part with its interest in Carsales but presumably UBS made a convincing argument over the weekend to snare the sale. Perhaps one factor working in UBS' favour is CVC's need to cut down the $4 billion debt burden that needs to be financed by early 2013. There has been talk that cutting that debt burden is critical in making sure that the potential $5 billion IPO of Nine Entertainment gets the necessary traction. Then there are the possible tax benefits from the sale that might have also proved attractive. The Carsales deal certainly helps the debt situation but also removes the star asset from the Nine Entertainment portfolio. Keeping Carsales would have boosted Nine Entertainment's valuation but the sale does allow CVC to unlock some value and take some pressure off. The market will be keen to know how the move affects the IPO plans and on that front The Australian suggests that a further delay could now be possible. However, there is also a chance that the Carsales deal could be just the thing CVC needed if it's still keen to press go on the float in the second half of 2011.  

Ten Network Holdings, News Corporation, BSkyB

In other media matters, The Australian Financial Review reports that outdoor advertising company oOH!media is mulling a bid for Ten Network's Eye Corp division. The fate of EyeCorp is going to be one of the many issue on the agenda as Ten's management carries out its strategic review. Media scions and major shareholders James Packer and Lachlan Murdoch have made no secret of their vision for Ten and Eye Corp may not have a role in that future. The paper also adds that there could be a further shake-up in the executive ranks at Ten with new CEO James Warburton reportedly set to hire a new national sales director, and that some of the network's key senior executive team could leave during the course of the strategic review. Meanwhile, Rupert Murdoch's News Corp may have inched closer to getting its hands on BSkyB after winning government approval for its $12 billion takeover. But it looks like the satellite broadcaster's shareholders aren't willing to sell just yet. According to UK's Sunday Times, one of BSkyB's major institutional investor, Fidelity Investments, has demanded more money from Murdoch. Fidelity, which owns a £300 million stake in the target, reckons that News Corp needs to pay an extra £3 billion to make the deal worthwhile.

Rio Tinto, Riversdale Mining, Ivanhoe Mines  

Rio Tinto is still trying to claw its way into Riversdale Mining's share registry, and with only 17.86 per cent of the target so far secured there is talk that the suitor may have no choice but to raise its offer a touch. Interestingly, Rio told the market last Friday that it had acquired a 19.14 per cent stake in Riversdale only to retract the statement later in the day. Rio's correction said that it had overstated its stake in Riversdale by three million shares, about 1.8 per cent, due to an administrative error. Rio's statement came as one of Riversdale's shareholders, US hedge fund Sumana Capital, said it had reduced its stake in the miner by 1 per cent to 5.4 per cent. Rio is playing a delicate game here: on one hand it can choose to let the bid lapse and put the pressure back on Riversdale's major shareholders Tata Steel and Brazil's CSN. Both want Riversdale's coal and would probably prefer the likes of Rio to run the projects. Conversely, Rio would presumably like to chalk up a win in its first M&A move since the Alcan fiasco and a sweetened offer along with the promise of a board seat or two could be enough to encourage Tata and CSN to throw some of their shares Rio's way. Meanwhile, Rio and Ivanhoe Mines' Oyu Tolgoi mine in Mongolia is just that little bit more attractive with the copper-gold project now apparently also blessed with silver. Ivanhoe boss Robert Friedland has told the market that the mine is expected to produce an average of more than three million ounces of silver a year. Just to keep things in perspective, the mine is estimated to produce 650,000 ounces of gold and around 544,000 tonnes of copper. So the silver isn't the main game in town here but it certainly adds a gloss to the project at a time when the silver market is shining. Silver prices have moved up above $US35 an ounce, a fair bit higher than the $US20 mark a year or so ago. Oyu Tolgoi's three million ounces won't exactly make a dent when it comes to global silver production, which is well in excess of 650 million ounces, but it should help lower operational costs a touch. Elsewhere, the mining giant is set to bid adieu to Sir Rod Eddington and Yves Fortier as non-executive directors, with both set to retire after the mining giant's 2011 annual general meeting on May 5. The miner also said that senior independent director Andrew Gould will stay on for another year before retiring in 2012. The miner added that a search was underway to find the replacements for Eddington and Fortier, with particular focus on finding an Australian director of the same pedigree and calibre as Eddington.

Singapore Exchange, ASX Ltd

Singapore Exchange's boss Magnus Bocker has no doubt added a few more meetings and interviews to the 300 or so he has already notched up since launching his offer for ASX Ltd, and the suitor's boss has wasted no time in spruiking the proposed deal. Bocker has told ABC's Inside Business that he is leaving the talking in Canberra to ASX executives but his comments that a SGX-ASX merger will open new funding doors for Australian companies seem to be squarely aimed at the political detractors who have questioned whether the deal is in national interests. After all, what could be more in national interest than helping Australian companies grow and come to market? Bocker also makes no bones about the fact that the merger will help the SGX compete more strongly with its Hong Kong counterpart, thanks to the strength of Australia's listed mining sector and the attractive banking sector. Bocker maintains that he is confident that Canberra will deliver a right verdict on the deal and he would no doubt be heartened by the recent comments by independent MP Rob Oakeshott, who said that he was supportive of the merger.

ANZ Banking Group, AMMB Holdings

ANZ Banking Group (ANZ) might have missed out on its chance to expand into Asia after its failed tilt for Korea Exchange Bank (KEB), but the lender may have a chance to expand its presence in another Asian market, Malaysia. The open invitation to beef up its presence in Malaysia has reportedly come straight from the Malaysian government, with the country's Prime Minister Najib Razak telling Reuters that his government was open to ANZ doubling its stake in Malaysian lender AMMB Holdings to 49 per cent. The window of opportunity comes as the Malaysian government mulls plans to raise the foreign ownership cap on Malaysian banks from 30 per cent to 49 per cent. ANZ made its foray into Malaysia in 2007 after paying $383 million to buy a 13.5 per cent stake in AMMB. It currently holds 24 per cent of  AMMB and there is speculation that the Malaysian lender's billionaire chairman and majority shareholder Azman Hashim may be in the mood to sell his 16.7 stake in AMMB. Hashim was instrumental in bringing ANZ on board the first time around and if he is willing to part with his stake ANZ, presumably, would be the logical buyer. ANZ boss Mike Smith said earlier this year that the KEB experience had opened his eyes to the potential of Northern Asia (South Korea, Japan) and while he has hinted about a possible move in Japan, it will be interesting to see if ANZ will choose to take this chance to build its presence in Malaysia.  

Wrapping up

Sandfire Resources has conditionally approved the development of the DeGrussa VMS copper-gold project on the back of a healthy pre-feasibility study. Sandfire went into a trading halt on Friday morning which immediately set tongues wagging about a possible deal with OZ Minerals but the talk quickly dampened once everyone realised that OZ Minerals was trading as usual. Back to Degrussa, the miner said that a definitive feasibility study was on track to be completed in the second quarter of this year, along with an appropriate funding package. The project is anticipated to generate average annual pre-tax operating cash flows of $330 to $350 million from the 2012/2013 financial year onwards. Pre-production capital including contingencies is estimated at $270 million for plant and infrastructure and $130 million for open pit and underground development. Meanwhile, Neptune Marine Services has managed to raise the $60 million it needed to pay its debts and stay afloat, and has announced Singapore-listed marine group MTQ, which will take a 12 per cent stake, as a cornerstone investor. The company, which is looking to raise as much as $80.6 million, said it was now working with joint lead managers – Patersons Securities and Euroz Securities – to cover the shortfall. Neptune posted a first half net loss of $111 million, including $99.5 million in write-downs in asset values in February, compared to a net profit of $1.3 million for the previous corresponding period, and the highly dilutive 3.6-for-one entitlement offer priced at 5 cents has justifiably angered a lot of shareholders. Neptune's board has also come under severe fire in recent months and it has appointed independent advisers to review the board composition and structure. Meanwhile, Fletcher Building has extended its $700 million takeover offer for Crane Group to March 25. Crane's board has already thrown its support behind the bid but there are some dissenting Crane shareholders who are being urged to rally around minority Crane shareholder and member of the Crane family Peter Crane. Fletcher currently holds a 43 per cent stake in the target and maintains that it has acceptances from about 50 per cent of Crane shareholders. In overseas news, UK banking heavyweight HSBC has played down talk that it is seeking a permanent change of address after a report in Sunday Telegraph that the lender was eyeing a move to Hong Kong. HSBC's full year results were less than pretty last week and the finger of blame had been fairly pointed at the UK's regulatory and tax regime. That sparked the speculation that the bank could look to move to a more favourable jurisdiction. However, HSBC chairman Douglas Flint and chief executive Stuart Gulliver have firmly dismissed the talk, saying in a joint statement that the rumours were "speculative and presumptuous.”