Whitehaven Coal’s wild ride yesterday reinforces the vulnerability of equity markets to mischiefs. Mariner Corporation is calling for a Becton Property Group meeting as Goldman Sachs and Fortress Investment Group reveal their hand. GrainCorp has received yet another boost, as if it needed another, Macquarie is going hard at Brisconnections and Qantas Airways has a Chinese partner interested in taking things to the next level.
Whitehaven Coal has become the David Jones of 2012. Yesterday’s email hoax on the coal miner was cleverly executed by the environmental activists behind it and again highlights how vulnerable the Australian Securities Exchange is to market manipulation.
Activist Jonathan Moylan has claimed responsibility for the prank that wiped $300 million off the value of the miner that’s 19.4 per cent owned by embattled coal tycoon Nathan Tinkler at one stage.
Whitehaven shares recovered after the press release claiming that ANZ Bank had withdrawn a $1.2 billion loan facility for the miner’s Maules Creek project was fake to finish the session down just 0.6 per cent.
The Australian Securities and Investments Commission is investigating the event.
Moylan defended his deception on the basis of its environmental merits and likened it to a ‘Chaser’ style prank.
Let’s put aside the fact that the Chaser team are satirical and, well, funny, the prank was very well executed and highlights a few problems with trading practises.
Genuine statements about financing would far more likely come via the ASX, not directly from ANZ as this one appeared to do. They also probably wouldn’t quote the head of ANZ sustainability, at least not primarily.
However, Moylan was very clever to use ANZ because the bank pulled funding for the Gunns Bell Bay pulp mill back in May 2008 following strong pressure from environmental groups. This knocked 6 per cent off the value of the timber company, which entered administration last year.
Whitehaven is even more vulnerable to short sellers than Gunns was because Tinkler is under serious debt pressure and it’s thought something like this could drag the baron into a margin call.
Becton Property Group, Mariner Corporation, Goldman Sachs, Fortress Investment Group
Corporate raider Mariner Corporation has moved swiftly to bulk up its representation on the Becton Property Group board and its overall interest in the company after it was revealed Goldman Sachs and partner Fortress Investment Group might have quite a hand.
Mariner, which currently holds 18 per cent of Becton, is calling for a shareholder meeting to vote on whether to convert its options to boost its stake to 31 per cent and whether to elect Mariner chairman Darren Olney-Fraser to the Becton board.
As a substantial shareholder, Becton has 21 days to dispatch the notices for the meeting.
Just two hours prior, Becton announced that Goldman and Fortress had acquired not just $246 million in debt facilities from Lloyd’s, but also the UK lender’s preferred securities in the construction company. This is subject to approval from the Foreign Investment Review Board.
Becton said that these securities can, subject to certain approvals, be converted into stapled securities that would deliver a combined voting power of 47.6 per cent for Goldman and Fortress.
That sounds important.
Speaking of Mariner, streetwear company Globe International has released its target statement in relation to the raider’s $13 million takeover offer.
The company’s brother directors own and control over 70 per cent of the register and intend to reject the offer; end of thing.
GrainCorp, Archer Daniels Midland
Morningstar has bumped up its profit forecast for stellar takeover target GrainCorp in 2013, with better than anticipated crops now likely. Analyst Peter Rae now expects 2013 profit to come in 4 per cent higher at $191.2 million.
We haven’t really heard anything from GrainCorp since its annual general meeting in December, where chairman Don Taylor and chief executive Alison Watkins exuded and unmistakable confidence that they have the upper hand with US suitor Archer Daniels Midland.
The American giant has been knocked back at $11.75 and then again at $12.20 a share, or $2.8 billion for the lot.
The Morningstar upgrade just strengthens the current hand that GrainCorp has to play against ADM, which also has a 19.9 per cent stake in its target.
ADM won’t be too concerned however, if its public utterances about the merits of its proposal are to be believed.
The US company has emphasised that GrainCorp is in a seasonal business and the good crops won’t always come – the heat wave we’re currently baking in serves as a potent reminder of that.
Brisconnections, Macquarie Group
Investment bank Macquarie Group has reportedly muscled in further on the debt situation in Brisconnections, which is in charge of the Brisbane Airport Link tunnel in Brisbane.
The Australian Financial Review understands that Macquarie has purchased another $300 million in Brisconnections debt from Allied Irish Bank to go with the $300 million it picked up in December.
Macquarie Infrastructure has 46 per cent of Brisconnections equity and the questions about whether the company’s debt is outweighing the value of its assets has drawn Macquarie out to protect its interests.
Qantas Airways code sharing partner China Eastern is reportedly "pushing for progress” in drawn out talks with the Australian airline to secure a deeper relationship between the two companies.
Qantas recently secured interim approval from the Australian Competition and Consumer Commission for its 10-year alliance with Middle Eastern giant Emirates.
This is a bit of a hammer-blow to the activist investors agitating for a greater focus on Asia and/or asset sales.
Qantas boss Alan Joyce is under no illusions that the airline’s growth is Asia-focused, but had to sort out its loss-making routes to Europe. Perhaps this is an option.
While we’re talking aviation, Sydney Airport’s foreign ownership level has decreased slightly to 35.8 per cent from 36.7 per cent. The limit is 40 per cent.
On less celestial travel matters, the Australian operator of automaker Saab has confirmed that its doors will close after the bankruptcy of its Swedish owners. Ferrier Hodgson has been called in as administrator.
And finally, Billabong International has reportedly copped yet another high profile departure, with The Australian Financial Review reporting that head of human resources Chris Zyner has left.
The newspaper also believes that sales/marketing head Reid Peter has taken the exit, putting more pressure on the board to seriously consider the $1.10 that director Paul Naude and US private equity player Sycamore Partners have thrown together.