BREAKFAST DEALS: Hochtief creep

Hochtief's latest Leighton grab puts an end to its standstill agreement, while Billabong debt attracts a US buyer.

After the close of trading on Friday, as the new prime minister continued to set the headlines, Leighton Holdings announced that the long standstill agreement with Spanish giant Hochtief was history. Meanwhile, now we know one of the buyers of Billabong debt, while Pearson Plc has denied it’s in talks to sell the Financial Times to a News Corp consortium, and Macquarie has bumped up its stake in Yellow Brick Road as part of a capital raising with a big premium.

Leighton Holdings, Hochtief

The grand march up the Leighton Holdings register has begun, with majority shareholder Hochtief increasing its stake in the contractor to 54.96 per cent from 53.5 per cent.

Leighton has long had a standstill agreement with its Spanish parent, owned by Spanish contractor ACS, which limits it to 55 per cent. That agreement is over.

“Hochtief has also advised Leighton of its intention to exercise its right to creep, subject to prevailing market conditions and provisions of the Corporations Act,” said Leighton chairman Bob Humphries in a statement to the market concerning the Hochtief share purchases.

“We have enjoyed a long and beneficial relationship with Hochtief,” said Humphries, who also announced the completion of a sale of 70 per cent of its telecommunications assets to Ontario Teachers’ Pension Plan for about $885 million.

The relationship with Hochtief might be long, but many would contest that at times it has hardly been beneficial. Or at least the question would be, beneficial for whom?

Three independent directors, including Humphries’ predecessor Stephen Johns, resigned in March over a perceived “breakdown” in relations with Hochtief. The suggestion was that the Spanish parent no longer supported an independent board.

The notices to the ASX detail trades made since May 27. Most of them are small sales and purchases for Hochtief and its associated entities, mostly north of the $20 mark.

On June 20, there’s a big purchase of 2.95 million shares worth $45.6 million at $15.45. This underlines the opportunity that Hochtief is exploiting – Leighton shares are down a staggering 28.8 per cent since the boardroom blue.

Under creep provisions, Hochtief could be surpassing the 60 per cent mark sometime next year. At what point does the ideal of independence take a back seat to the realities of the register?

Billabong International

Billabong International shares took another stumble on Friday, bringing the market cap down to $71.8 million as lenders sell loans at a discount on the secondary markets.

Now we know who’s buying.

The Australian Financial Review reports the sources indicate New York hedge fund Centerbridge Partners has purchased $80 million in Billabong debt from Westpac Bank and HSBC. Commonwealth Bank of Australia has also been selling out.

Whatever you have to say about Billabong, the opportunistic yanks like it.

The two investors talking to Billabong about a recapitalisation plan are Altamont Capital Partners and Sycamore Partners, both of which are from the states.

News Corp, Pearson Plc, FT Group

No sooner had media billionaire Rupert Murdoch secured the historic splits of his newspaper assets from his entertainment business that news emerged he was talking about investing in another prized newspaper.

Malaysia’s digital magazine Edge Review reported that Murdoch is in talks to purchase the Financial Times Group from Pearson Plc for about $US1.2 billion ($1.31 billion).

The deal would be a 25-75 per cent deal, with Abu Dhabi Media Group taking the lion’s share.

This is hardly a surprising angle as Murdoch, the chairman of this website’s parent company, has a long-documented affinity for respected newspapers around the globe. He’s also reportedly had his eye on The Los Angeles Times.

But this particular story ran into a big brick wall in the form of a statement from Pearson that indicated the FT Group isn’t for sale and there are no talks to sell it.

"As Pearson chief executive John Fallon told analysts at our recent results presentation, The Financial Times is an important part of Pearson’s strategy to tap the substantial market for learning among globally minded business people,” said a spokesperson, according to The Telegraph in the UK.

That sounds pretty definitive.

Yellow Brick Road, Macquarie Group

Investment bank Macquarie Group has significantly increased its stake in Mark Bouris’s mortgage start-up Yellow Brick Road as part of a premium capital raising.

Macquarie’s stake has jumped to 14.9 per cent from 10.5 per cent after taking up $7 million of the $10 million capital raising on Friday.

The remaining $3 million was taken up by Chris Ellison, a strategic investor worth over $500 million who is known for having started up Mineral Resources. He now boasts a 5.1 per cent stake.

It’ll be interesting to see what the market makes of the raising. The announcement came after the market close on Friday and the shares were issued at a 30 per cent premium to the 54 cent closing price.

YBR said in a statement to the ASX that the funds would be deployed to assist in its growth initiatives, which Macquarie is helping out with.

Macquarie only just increased its stake to 10.5 per cent from 8.3 per cent on June 20.

Wrapping up

Oil and gas company Woodside Petroleum has moved again to expand its horizons beyond Australia with acreage purchases off the west coast of Ireland.

The Perth-based energy player has struck agreements with London-listed Petrel Resources (not a typo!) and the privately-held Bluestack Energy for farm-out agreements over 85 per cent and 90 per cent of their respective territories in the area.

And finally, Spark Infrastructure says that CitiPower, in which it holds a 49 per cent stake, has done a $100 million, 12-month debt facility with National Australia Bank.