BREAKFAST DEALS: Discovery disposal

Discovery Metals has put itself up for sale, irritating suitor and major shareholder Cathay Fortune Corporation in the process. It was always going to be this way. Seven West Media has said hello to chief Tim Worner and goodbye to major shareholder Kohlberg Kravis Roberts, though the two are not related. Meanwhile, Tatts Group is thinking about Ireland, Stockland is raising at home and Nathan Tinkler is selling property in Queensland.

Discovery Metals, Cathay Fortune Corporation

There are a number of signs available for those interested to suggest that this is the last play left for Discovery Metals.

Yesterday, Discovery announced that it has begun a sales process, that major shareholder and antagonist Cathay Fortune Corporation has lobbed an indicative proposal of 35-40 cents and that its chairman Gordon Galt is leaving immediately.

The miner also informed the market that it had defaulted a profitability covenant and available cash covenant under its revolving credit facility.

“The lenders have not taken any action in respect to these defaults, but have reserved their rights,” said Discovery in a statement to the market.

Upon hearing this news, along with other details, the African-focused copper miner’s shares started trading for the first time in over a month and plunged 41.2 per cent to finish the session at 20 cents a pop.

There was no mention of the equity raising that Cathay Fortune had objected to last month. UBS AG and Credit Suisse have been appointed as financial advisers for the sale process.

“The process is expected to take approximately four weeks from today, with a closing date for receipt of binding proposals of no later than 10 June 2013,” said Discovery.

As for Cathay Fortune, they were grumpy with Discovery for releasing to the market yesterday a proposal that it had put to the copper miner’s board on April 26, which reads: “Strictly private and confidential. Not for market release. Non-binding.”

Upon hearing that Discovery had released the document, Cathay Fortune released a statement of its own pointing out that its target was “not legally required” to do this and that it was not itself bound to make any statement on the offer.

It serves the suitor right for behaving so bizarrely last month, where it demanded a number of things from the board that simply couldn’t be accepted. That’s not to mention the structure of its original offer late last year that arguably allowed it too many ‘outs’ to leave the Discovery board high and dry.

Still, Cathay Fortune appears to be up for 35-40 cents a share and was never demanding exclusivity, which is fair. Why is the stock languishing at 20 cents, 43 per cent beneath even the lowest edge of its suitor’s range?

It’s possibly because the market doesn’t believe Cathay Fortune will actually follow through with its plans and, more annoyingly, it holds 13.7 per cent of the target so it can prove a pain for other potential bidders.

Seven West Media, Kohlberg Kravis Roberts

Seven West Media returned Don Voelte to the boardroom yesterday afternoon after a brief stint in the chief executive’s chair.

A few hours later, billionaire Kerry Stokes was waving goodbye to major private equity firm Kohlberg Kravis Roberts.

KKR has announced that it’s selling its 12 per cent stake in Seven West, though this is not because Tim Worner is taking the reins from Voelte.

No, the private equity firm is taking advantage of a fall in the Australian dollar. Everyone knows that the dollar has further to fall, but KKR’s selling decision appears to be a signal from the giant that it believes this could happen soon.

Or at least it doesn’t want to take any chances.

Tatts Group

Australian gaming company Tatts Group is thinking about tapping into the luck of the Irish, according to The Australian Financial Review.

The newspaper reports that Tatts boss Robbie Cooke is thinking about putting in a €400 million ($525.7 million) offer for Ireland’s 20-year lottery licence, with expressions of interest opened up earlier this month.

Tatts flagged Ireland as a potential expansion market about a year ago. So far the group hasn’t moved outside Australia.

The AFR says the Irish lottery business could be worth between €400 million and €600 million.

Stockland

Property group Stockland is looking to raise $400 million through an institutional placement to cut its debt and expand its retail development efforts.

It’s a good time to be raising, if you need the room. The market is up 18.6 per cent in the last six months and Stockland is almost bang on in line with it. The higher your share price, the more room you’ve got to issue discounted stock.

Speaking of which, at $3.88 the 103 million shares represent a slim 2.5 per cent discount to its last trading price of $3.98 and about 4.7 per cent of the company’s issued capital.

UBS is underwriting the issue, which comes after a strategic review from new chief Mark Steinert.

The Australian’s John Durie believes this could be the start of another campaign drive from the investment banks to big corporates to raise capital…for little reason.

“Right now the debt market is not a problem and the case for raising equity is in most cases thin, but that is unlikely to stop the campaign,” writes Durie.

“In defence of the Stockland deal, Steinert is new to the job and has big plans. But as of last week he had no burning desire to raise more equity.”

Wrapping up

Investment bank Macquarie Group has bid goodbye to one of its last pre-GFC property funds management arms.

Macquarie owned a 56 per cent stake in real estate advisory firm MGPA. But now that’s been offloaded to US giant BlackRock for a reported $200 million.

Elsewhere, packaging major Amcor could be closer to selling its Alphington factory in Victoria.

Fairfax reports that sources close to the sale of the site believe “a little-known medium-tier developer” is pushing a $130 million offer for the site that will become unconditional next week.

And finally, troubled coal baron Nathan Tinkler has put his Queensland mansion up for sale.

Most of Tinkler’s asset sales are immediately juxtaposed with his debt problems, which have been weighing on the Whitehaven Coal share price.

Tinkler is now a resident of Singapore, and reports from Fairfax Media suggest he and his wife Rebecca have separated.

The Queensland mansion is held in his wife’s name. But more importantly, during court proceedings held in March over Tinkler’s problems with Blackwood Resources, the coal tycoon indicated that Tinkler Group Family Trust, which holds his most important assets, is controlled by his wife.

It’s unfortunate to speculate about this idea, but his ownership structure demands it. What would a separation do to his crumbling empire?