Breakfast Deals: Hancock's ANZ angel

Gina Rinehart – and her Roy Hill iron ore project – has reportedly won a $US1 billion endorsement from ANZ Banking Group. Meanwhile, Dexus Property Group is out of the blocks with Commonwealth Bank’s property trusts, EnergyAustralia has taken a headache off the New South Wales government’s hands, United Petroleum is reportedly considering its options and OZ Minerals is remaining tight-lipped about Rio Tinto’s Northparkes mine as production takes a hit.

Gina Rinehart, Hancock Prospecting, ANZ Banking Group

Mining magnate Gina Rinehart has reportedly secured up to $US1 billion ($1.09 billion) in bridging finance for Hancock Prospecting’s $10 billion Roy Hill iron ore project in Western Australia from ANZ Banking Group.

The Australian Financial Review reports that the funds were booked earlier this month as part of Rinehart’s efforts to get $4 billion together to get the project up and running.

One of the sources that spoke to the newspaper said, quite rightly, that it’s a risky move for ANZ to throw that much cash at a project before the remaining financing is even close to being in place because they run the risk of funding a portion of a project.

Mining ain’t done by halves.

Still, the signs for Rinehart and Hancock have been good lately. The ANZ news comes on the back of a site visit by some large potential banking backers to the site in May.

Additionally, the balance of existing investors in the project has arguably strengthened with the decision by Japan’s Marubeni to take an additional 2.5 per cent equity in the project from financially strapped STX Corp.

And then there’s the fly-in, fly-out agreement that Rinehart has struck with Qantas Airways, which will begin on August 13.

Commonwealth Bank of Australia, Dexus Property Group

It’s on. Dexus Property Group has wasted precisely no time getting into the game for Commonwealth Bank of Australia’s property trusts.

Dexus has picked up a 14.9 per cent stake in Commonwealth Property Office Fund. Chief executive Darren Steinberg denied that it was the beginning of a full takeover offer.

Steinberg is a former boss of Colonial First State Global Asset Management, which directly manages CBA’s property trusts.

The other units that CBA has thrown up in the air for opportunists are CFS Retail Property Trust Group and Kiwi Income Property Trust.

This column would love to claim that we made the call on Dexus, as it was the first on a list of usual suspects in yesterday’s column. Unfortunately, the phrase immediately before the name ‘Dexus’ was ‘in no particular order’.

Ah well. The others on the list are GPT Group, Investa, Lend Lease, Charter Hall and Mirvac Group.

Come on GPT Group – make us look clairvoyant over here!

EnergyAustralia

The New South Wales government has taken another important step on the long road towards privatising its power industry with the sale of two of its major power stations to CLP Holdings’ EnergyAustralia.

The company formerly known as TRUenergy picked up the Mt Piper and Wallerawang power stations, both located in the NSW Central West, for $160 million.

That might sound like bugger all, but these agreements undo the disastrous arrangements negotiated by the former state Labor government that somehow had NSW taxpayers on the line for around $200 million in liabilities for those sites.

Now attention is turning to the NSW government’s next big ticket item, which is Macquarie Generation. That’s on the books at $2 billion and it’s expected that the government will move quickly to jettison its largest electricity generator.

TRUenergy, or EnergyAustralia, is of course one of the big companies that some investors hoped would be floated onto the ASX sometime this year by its Hong Kong parent. They’ve been left disappointed.

United Petroleum

Australia’s biggest independent fuel supplier and retailer United Petroleum is reportedly looking at a $1 billion sale of strategic alliance with an international player.

The Australian Financial Review understands that United has appointed KPMG Corporation Finance to have a look at the options, following the $625 million sale of Ausfuel by Archer Capital to Puma Energy.

Apparently the investigation is in its very early stages and KPMG, understandably, declined to comment when contacted.

OZ Minerals, Rio Tinto

Copper-gold miner OZ Minerals copped an absolute pasting from the market yesterday after revealing that gold production would fall by more than expected this year.

OZ shares dived 7 per cent after the miner cut its 2013 production guidance to 120,000-130,000 ounces from 130,000-150,000 ounces.

Chief executive Terry Burgess has been battling calls from investors and analysts to either return some of the company’s warchest to shareholders, or make an acquisition to take over from the wind down of Prominent Hill.

Burgess has sought to assure investors that Prominent Hill’s life can be extended and its planned Carrapateena project can be brought online in a reasonable timeframe.

This balance of extending the life of one current project as steps are made towards the next has been part of a broader conversation at OZ. To put it simply, Burgess has a big pile of cash and some investors have been encouraging (to put it lightly) him to buy something to plug that hole.

Burgess has been hesitant to buy something just for the sake of it because the mining industry's recent history is littered with bad acquisitions – some of them company-breakers.

But these production problems don’t help. OZ shares are dwindling near all-time lows, down 35.8 per cent for the year.

It’s interesting to note that Burgess, who is normally happy to talk about M&A strategy, wouldn’t be drawn on OZ’s play for Rio Tinto’s 80 per cent stake in the Northparkes copper mine in NSW.

Wrapping up

Qantas Airways and Middle Eastern giant Emirates will consummate the final part of their five-year alliance on August 14 when the pair starts taking bookings for trans-Tasman flights across their networks.

About 130 services a week will be operated by the pair by Australia’s east coast and the New Zealand cities of Auckland, Christchurch, Wellington and Queenstown.

Speaking of deals moving forward, Billabong Internationals’ surf-lifesaver Altamont Capital Partners has appointed its own boss to the DaKine brand, which it picked up as part of the deal with the company.

Altamont’s nominee Leslie Lane will take over from the long-time Billabong servant Francois Carrete.

And finally, high-end components manufacturer Quickstep surged 19.4 per cent to 18.5 cents after announcing the commercial sales of its patented Quickstep Process system. Russian firm ORPE Technologiya is the lucky one on the $6 million contract.