Gina Rinehart may be having some personal problems with her children, but her dealmaking skills haven't suffered one bit. Australia's richest person has just emerged with three equity partners in her upcoming Roy Hill iron ore mine, and their big financial commitments should help make her next round of talks with creditors a breeze – just lead her to the negotiating table. Also in the mining sector, Rio Tinto and BHP Billiton face off over iron ore spot trading as Rio inks a deal with China. Elsewhere, bankers fight to advise Centro Retail Australia as suitors circle, and TRUenergy progresses its initial public offering. And finally, Woolworths sets a deadline for the sale of Dick Smith, which is said to have received plenty of interest.
Hancock Prospecting, Marubeni Corporation, POSCO, STX Corporation
Gina Rinehart's iron ore ambitions were given a big boost over the weekend as her company, Hancock Prospecting, dug up three equity partners for its upcoming Roy Hill project in Western Australia. Under the deal, worth about $3.2 billion and expected to be completed within a fortnight, Japanese trading house Marubeni Corporation would buy a 12.5 per cent share of the project, Korean steelmaker POSCO would own 15 per cent, and STX Corporation would take 2.5 per cent via a subsidiary, Roy Hill Holdings. Hancock would retain the remaining 70 per cent.
The consortium, which has already been cleared by the Foreign Investment Review Board, plans to provide $750 million upfront and another $2.4 billion once debt financing has been raised – Rinehart's next challenge. The Australian Financial Review says she plans to tap Korean and Japanese export credit agencies for up to $7 billion, and she will no doubt go into those negotiations with new confidence after locking down these big-name partners.
Centro Retail Australia
The newly renovated Centro Properties Group is said to be searching for defence advisors as it prepares to field offers in Australia and abroad, according to The Australian Financial Review. And for an idea about which bankers are most likely to get a slice of the inevitable action, look no further than Centro's debt facilities.
Merrill Lynch, Macquarie Group, Citigroup and UBS lent a combined $2 billion to Centro during its restructure, and so, the thinking goes, could be first in line for consideration as the group's new advisor. The AFR points out UBS has a particularly good understanding of Centro after advising on the restructure itself.
As for who might be interested in acquiring Centro, Lend Lease and Stockland would be likely contenders at home. But they would probably come up against sovereign wealth funds and cashed-up private equity players such Blackstone. Potential advisors will be expecting a feast of fees.
Rio Tinto, Vale, BHP Billiton
The battle over iron ore spot sales is heating up, as Rio Tinto and Vale go against BHP Billiton by inking deals with the China Beijing Metals Exchange. Last week, Fortescue Metals Group also signed on to Beijing's favoured trading platform, which counts Baosteel, China Minmetals, Sinosteel and Wuhan Iron and Steel as members and is said to rival a scheme being pushed by BHP.
According to Fairfax newspapers, BHP, now the only big Australian miner not on board with CBMX, is believed to be supporting the Singapore-based Global Ore trading platform. Competition has become so fierce that Chinese executives from CBMX are expected to visit Australia to present their cases to BHP personally, in an effort to twist the company's arm.
As BHP's competitors cosy up to their biggest customers, there must now be fears at BHP that it could lose some important friends in China.
TRUenergy, CLP Holdings
TRUenergy will be hoping the week after Easter is even sweeter than the holiday itself, as it prepares to begin shopping for joint lead managers for its planned initial public offering after the long weekend, according to The Australian Financial Review.
TRUenergy's Hong Kong-listed parent, CLP Holdings, has made no secret of its plans to take the Australian electricity retailer public, and is expected to seek up to $4 billion when it floats as much as 49 per cent of the company's stock later this year. Expect a full prospectus in September, if everything goes to plan.
Woolworths, Dick Smith
We'll probably know more about the sale of electronics retailer Dick Smith soon, after Woolworths last week requested final bids by early June, according to The Australian Financial Review. While the names of potential buyers are yet to be revealed, sources told the newspaper that Dick Smith's management team conducted "11 or 12 presentations" to parties who signed confidentiality agreements in early March.
Woolworths is hoping it can get about $100 million for the business, which it is currently attempting to shore up by closing underperforming stores.
APA Group, Hastings Diversified Utilities Fund
APA Group has come up against more resistance to its hostile bid for Hastings Diversified Utilities Fund, after the Australian Competition and Consumer Commission voiced strong concerns about the $1.8 billion deal. The regulator took particular issue with APA's potential ownership of 80 per cent of the long-haul gas pipelines in Australia's east, despite the suitor's promise to reduce some of its interests in the region.
The ACCC singled out pipelines from Moomba to Adelaide and Sydney and the South West Queensland Pipeline, without which the deal wouldn't make much sense, analysts told The Australian. This is all sure to come as a disappointment to Hastings shareholders, many of whom were hoping for a sweetened offer.
The ACCC is also the last remaining hurdle to the Foxtel's takeover of Austar United Communications, after the target's shareholders overwhelmingly approved the $1.9 billion deal at a vote last week. The competition watchdog delayed its decision on the deal as it considers concerns about the availability of content for the merged group's rivals.
In the property sector, Singapore's Ascendas Group is said to be negotiating the purchase of the remaining stake in a $500 million hotel fund managed by Mirvac Group, according to The Australian. Ascendas, which already owns 49.2 per cent of the fund with France's Accor, is now said to want the entire fund, so it is in talks with the five institutional investors who hold the balance of the group, including Mirvac.
Meanwhile, The Australian Financial Review reports that Illawarra Mutual Building Society, a Woollongong-based group with $4.8 billion in assets and 1,800 members, is investigating a demutualisation and initial public offering. IMB, which is being advised by investment bank Grant Samuel and counts Perpetual as an investor, is also open to a merger with another mutual, the paper said.