BREAKFAST DEALS: Flighty funds

Australian Infrastructure Fund holders will eye AustralianSuper warily as they prepare for an airports windfall, while PrimeAg moves closer to delisting.

Australian Infrastructure Fund is getting ready to deliver $2 billion to shareholders from the Future Fund deal; the question is whether AustralianSuper decides to chase after some damages. PrimeAg is a step closer to delisting after sealing a deal with a US-based asset manager. Meanwhile, GrainCorp is unmoved by its suitor’s lingering presence on the register, Myer has given an ominous message to fashion designers with exclusive distribution deals, Emirates has joined the ‘I object to that airline alliance’ club and RM Williams has done a deal for almost 50 per cent of the iconic company.

Australian Infrastructure Fund, Future Fund, AustralianSuper

Australian Infrastructure Fund announced to the market late yesterday that it is preparing to distribute about $2 billion to shareholders after offloading a suite of stakes in airports.

The Future Fund has secured a 30 per cent stake in Perth Airport, which made up about $1 billion of the deal. The majority of the remaining $1 billion came from minority shareholders in other airports exercising their pre-emptive rights and increasing their share.

AIX has previously said that it aims to distribute the funds to shareholders between May and June. Judging by the statement some funds will be sent to shareholders by the end of May, but subsequent payments could be delayed until July.

The question on the lips of AIX shareholders is whether the fund will keep some of the proceeds back in the event that AustralianSuper sues Hastings Funds Management, the AIX trustee, and suitor the Future Fund.

The Australian Financial Review understands that the superannuation giant is still considering its options, despite reported threats from a UK hedge fund of subsequent legal action for threatening the bid’s payout.

AustralianSuper believes that the Future Fund has used ‘gaming’ to loosen the pre-emptive rights of existing shareholders.

This column has previously argued that AustralianSuper has a direct 5 per cent stake in Perth Airport, which rises to 18 per cent if you take into account indirect holdings through specialist funds.

This column believes AustralianSuper should publicly offer to sell its 5 per cent stake to the Future Fund at the price the fund has implied in the AIX offer. That would be a quick, cheap way to call it out.

PrimeAg, TIAA-CREF Global Agriculture

PrimeAg shareholders have approved the sale of some of its land and water portfolio to US asset manager TIAA-CREF Global Agriculture as the company moves inevitably towards a delisting.

Investors gave the go-ahead to the sale proposal at a meeting in Sydney. The US-based bidder has also been given the green light by the Foreign Investment review Board.

In mid-February, PrimeAg made a deal with TIAA-CREF to offload four properties in Queensland and NSW, with the option of selling two more.

If the deal on the last two properties is done, the total value of the transaction could rise to $126 million.

While we’re talking agriculture, GrainCorp boss Alison Watkins has reportedly said there’s “nothing more to say” about the $2.8 billion run at the grains handler by US giant Archer Daniels Midland.

The Australian Financial Review reports the comments, the first from Watkins on the rejected offer since the company’s results in December. Since then, the share price has drifted well below the $12.20 indicative, conditional bid price.

“ADM made a couple of conditional non-binding proposals to us last year,” Watkins said, according to the AFR.

“They own 19.9 per cent of us and I’m sure we’ll be a very good investment for them because we’re getting on and doing what we need to do to improve our business and to deliver on about $110 million worth of earnings uplift that we’ve identified and have got specific initiatives.”

ADM warned at the time of its last offer that agriculture is a cyclical business, while GrainCorp argued that its strategic footprint across Australia’s east coast means it commands a noticeable premium to similar transactions.

The figure that’s apparently been leaked to the market is something north of $13 a share. Given the deals that have been done in this sector, it’s a fair ask.

The question is whether shareholders stick with them.

Myer, Ellery, David Jones

Department store Myer has indirectly issued a stern warning to the fashion designers it holds exclusive distribution deals with – break them, and we’ll take you to court for damages.

Myer is seeking such damages from rising Sydney fashion star Kimberley Ellery, the talent behind the label baring her surname, for breach of contract and failing to complete an order for the autumn-winter collection of 2013.

Relations between Myer and Ellery broke down when the department store found out that she was negotiating with rival David Jones. It’s been reported that Ellery has been frustrated with Myer’s handling of her line.

The deal is important because exclusive distribution deals is one of the ways the big department stores are competing against each other, as well as maintaining relevancy against the explosion in online operators.

Exclusive distribution means designed with a growing reputation will necessarily attract interested customers. At least Ellery is dealing with the competition, rather than abandoning the platform and going online, where sales are not restricted by floor space and staff numbers.

Emirates, Qantas Airways, Virgin Australia, Air New Zealand

It’s quickly becoming clear that if the Australian Competition and Consumer Commission listened to every objection to an aviation alliance from a competitor, not one would win approval.

Qantas Airways alliance partner Emirates has objected to the request by Virgin Australia for the conditions of its trans-Tasman alliance to be loosened.

The request comes in the wake of the consumer watchdog’s approval of Emirates’ five-year alliance with Qantas, with Virgin claiming that it will be unable to keep pace with Qantas if its own capacity floors are maintained.

Virgin of course objected to Qantas’s alliance with Emirates. Qantas objected to Virgin’s alliance with Etihad.

It’s the cost of doing business.

RM Williams, L Capital Asia

Speaking of clothing, though not high-end fashion, outdoor clothing and bootmaker RM Williams has offloaded a 49.9 per cent stake to L Capital Asia.

The private equity fund, backed by French luxury giant LVMH Group (perhaps bushwear is coming in) is believed to be worth about $53 million, according to The Australian.

The pricetag is right on the money. When it first emerged the company was up for sale, the iconic Australian company was valued at $100 million all-up.

Speaking of Australiana, The Australian Financial Review has learned that Cricket Australia has entered exclusive negotiations with Ten Network over a $350 million bid to pinch the broadcasting rights of Nine Entertainment and Fox Sports.

Nine has a last-bidder’s clause with its deal, which means it only has to match Ten to keep the cricket at Australia’s home of cricket.

The newspaper says Credit Suisse is advising Ten.

Wrapping up

Staying with all things Aussie, Aussie Home Loans chief executive Stephen Porges has resigned, with founder and chairman John Symond expressing confidence he will win support for a replacement.

The Australian Competition and Consumer Commission gave approval to Commonwealth Bank of Australia to lift its stake in Aussie to 80 per cent from 30 per cent.

Meanwhile, The Australian Financial Review reports that lead managers for the planned float of Virtus Health, Morgan Stanley and UBS, have begun meeting with fund managers as owner Quadrant Private Equity gets ready for the IPO.

And finally, Leighton Holdings subsidiary Thiess has picked up a new two-year deal with Western Power to upgrade and maintain electrical distribution networks throughout Perth. The deal could be worth up to $125 million.

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