BREAKFAST DEALS: Gunns target

Pressure builds on Gunns to deliver better news as shares resume trading, while Gina Rinehart gets close to sealing Roy Hill investment.

Shares in timber company Gunns, which have shed 95 per cent of their value over the last five years, are set to emerge from a trading suspension today and the embattled woodchipper really needs to deliver some good news. Apparently, the sale of the company’s Green Triangle estate has been given the thumbs up by the foreign investment regulator, clearing the way for its capital raising – at last! Meanwhile, billionaire Gina Rinehart is reportedly getting very close to securing equity investments from Japan and South Korea for the Roy Hill iron ore mine, a welcome distraction from her family courtroom battle, no doubt. Elsewhere, there are calls for disclosure laws to be altered in a way that would consign share raids – like James Packer’s on Echo Entertainment – to the history books and Virgin Australia’s structural separation has apparently got all the green lights it needs for take-off. And finally, BHP Billiton and Newcrest Mining are headed for the negotiating tables in Indonesia.

Gunns

With Gunns shares scheduled to come out of a trading suspension this morning, investors will be wondering what the timber company has come up with in the wake of failed capital raising efforts with New Zealand billionaire Richard Chandler. The Australian Financial Review understands that the Foreign Investment Review Board has given the green light to the $380 million sale of the Green Triangle estate, which clears room for Gunns to launch its $200 million equity raising.

There’s still no word on the other potential investor that Gunns said it was speaking to when the suspension was taken out. However, the newspaper says the suspension could very well be extended, which could indicate that talks are still on.

Hancock Prospecting, Marubeni, STX

Gina Rinehart might be able to fight an open and bitter battle with three of her children in court and secure the Roy Hill stake sale at the same time. The Australian understands that the final structure of the equity sale is close to being finalised, with Japan’s Marubeni getting 12.5 per cent and South Korea’s STX received 2.5 per cent for a grand total of $2 billion. That still leaves South Korea’s POSCO, which has 3.75 per cent with intentions to increase that to 15 per cent. At the end of that, Rinehart’s company, Hancock Prospecting, will be left with 70 per cent.

Crown, Echo Entertainment

James Packer’s move on Echo Entertainment through derivatives might be one of the last of its kind in Australia. Australian Securities and Investments Commission chairman Greg Medcraft said in an interview that the laws covering disclosure should be changed to reflect economic interest instead of legal control so that derivatives trading can’t hide one company building a significant stake in another, according to The Australian. The comments were made in reference to the disclosure issues at Leighton Holdings.

GrainCorp, Ellerstone Capital

Meanwhile, a funds management business backed by James Packer has increased its stake in GrainCorp. Ellerston Capital, which increased its stake to 6.24 per cent from 5.16 per cent, looks like it’s betting on expectations that GrainCorp is the next Australian agribusiness on the takeover list. Glencore International and Cargill are thought to be having a look at Canada’s Viterra and the theory goes that GrainCorp might be strategically significant in this wave of industry consolidation.

Virgin Australia

Virgin Australia chief executive John Borghetti looks to have secured yet another win over major rival Qantas Airways, with the carrier announcing that all the conditions for the restructure proposal have been met or waived. The proposal spins off the company’s international business into an unlisted entity that existing shareholders will get their share of, which clears the airline of the 49 per cent ownership cap. Shareholders will also pick up an in specie dividend of $0.000001 a share.

Etihad Airways and Air New Zealand are the most likely to pick up shares in the newly freed up Virgin, particularly the former. Although, the FIRB will still get a look at any attempt by a foreign airline to pick up a stake in Virgin.

BHP Billiton, Newcrest Mining

A senior officer from the Indonesian government department that’s caused the ruckus in the global mining industry has reportedly confirmed BHP Billiton and Newcrest Mining will have to renegotiate their leases for their respective mines in Indonesia. Earlier this month, the Indonesian government announced that foreign companies won’t be able to own more than 49 per cent of a mining project, but existing investments would be subject to negotiation.

BHP and Newcrest have separately stated that they don’t expect their holdings in their respective majority stakes in the IndoMet and Gosowong mines. Speaking to Fairfax, the senior adviser to Indonesia’s director general of mines and energy, Thamrin Sihiti, said that both companies would be subject to fresh negotiations. Both could be right, but for the statement from the miners to be true, they must assume that the Indonesians won’t get anything from the talks.

Insurance Australia Group

Hybrids could be about to re-enter the headlines, with Insurance Australia Group reportedly the likely party behind moves towards a coverable preference share issue late last week. The Australian Financial Review reports that potential investors were being tapped over the possibility for an insurance company, with IAG the most likely player. Those investors were told the convertible preference shares would convert after seven years and a redeeming option would be available after five, which is slightly shorter than deals from ANZ Banking Group and Westpac Banking Corporation.

Wrapping up

Mining giant Rio Tinto says the one-page submission that the government used as the basis of the decision to dump the conditional approval of its South of Embley bauxite mine contains factual errors. The chief objection from the submission, led by the Wilderness Society, is the increase in ship traffic through the Great Barrier Reef, but Rio says most of its ships will be trafficked from the north and won’t go near the reef.

SEEK is reportedly keeping tabs on movements at US-based Monster Worldwide, which is currently in the middle of a strategic review. The downturn in Europe and the introduction of LinkedIn haven't been good for the job listing company and The Australian Financial Review understands that SEEK boss Paul Bassatt is keeping an eye on the developments, having considered a takeover bid for Monster about three years ago when the share price was twice what it is now. Who smells a bargain?

And finally, Perth engineering company Clough mightn’t be about to completely change hands, but there’s going to be a new presence on its register. Majority shareholder Murray & Roberts has been thinking about selling down its 62 per cent share for a couple of months but now things are getting serious with the appointment of a broker to investigate.