Today the ACCC will hand down what’s expected to be a negative verdict on the request by Kerry Stokes to increase his stake in Consolidated Media Holdings. With CMH’s 25 per cent stake in Foxtel seemingly headed for News Limited, Nine Entertainment won a concession from mezzanine lender Goldman Sachs yesterday, but will it be enough for its senior lenders? Also Echo Entertainment might be tweaking its tune as billionaire stalkers James Packer and KT Lim build their warchests, while Frank O’Halloran will be heading to chair Steadfast with what on the agenda? Acquisitions of course!
Seven Group Holdings, Consolidated Media Holdings, Foxtel
The consumer watchdog is set to rule Kerry Stokes’s desire to make a play for James Packer’s Consolidated Media Holdings, but it’s unlikely that the media billionaire will enjoy the answer.
It’s widely expected that the Australian Competition and Consumer Commission (ACCC) will rule against Seven Group Holdings increasing its 24 per cent stake in CMH.
Stokes asked the ACCC to look into the matter so he could explore all possible options, with News Limited (owner of this website) stalking CMH, which is a 25 per cent owner in Foxtel and 50 per cent owner of Fox Sports Australia, with a $1.94 billion bid.
The vexing issue for ACCC chairman Rod Sims is the central position that Fox Sports occupied in the bidding for major sports broadcasting deals – chiefly the AFL and NRL.
If Stokes gets a hand on CMH, there’s the obvious potential that Seven will gain an unassailable advantage over rivals Nine Entertainment and Ten Network.
If, as expected, the ACCC rules against Seven, then there’s some bargaining to be done.
Stokes could hold out for a higher bid from News. There has been some talk that Seven might be able to secure some kind of concessions from Fox Sports in exchange for agreeing to the $1.94 billion. However, the ACCC might have a problem with that too.
Speaking of Foxtel, the pay TV company has purchased the Showcase and Showtime channels directly from the owner Premium Movie Partnerships. The move will bring those channels in-house.
A statement from Foxtel said the majority of PMP staff will be offered positions at the company.
Additionally, the management team of price comparison website Getprice has purchased the asset from News Limited for an undisclosed amount.
Nine Entertainment, Goldman Sachs, Apollo Global Management, Oaktree Capital
While we’re talking television, Nine Entertainment secured a crucial breakthrough yesterday by getting its mezzanine lender Goldman Sachs to agree to a restructure deal.
Media reports point to a new deal where Goldman would take 7.5 per cent equity plus additional payments if the business is passed on for more than $2.3 billion.
All up, Goldman went from asking for about $400 million in value to roughly $150 million it initially asked for. But it could all amount to very little.
Some are expecting the hedge funds that control Nine’s senior debt, Apollo Global Management and Oaktree Capital, to reject the new offer in spite of all the ground that Goldman has given.
In a sense they’re well within their rights. The hedge funds speak for the senior debt, totally $2.2 billion, that ranks above the $1 billion in mezzanine debt that Goldman accounts for.
But this is a giant game of chicken. Everyone loses out if Nine is tipped into receivership. So if the hedge funds knock this deal back, we just wait for the next step.
Echo Entertainment, Crown, Genting
With Crown billionaire James Packer staring at a big payday courtesy of News Limited, his target Echo Entertainment is starting to make some interesting noises given its present state.
The company’s annual general meeting is coming up on October 25 and in anticipation of that, Echo chairman John O’Neill sent a letter out to shareholders with the following line about maximising value.
"In working towards this objective, the board will proactively consider all potential value-enhancing opportunities, including new development opportunities under our existing casino licences, and will be rigorous in determining which opportunities are pursued in the interest of all shareholders,” said the.
Packer and Malaysia’s Genting gaming billionaire KT Lim are sitting on the register with stakes that they hope regulators will allow them to push to 25 per cent.
The Australian billionaire has just come into the money, while Genting Hong Kong has gone to the debt markets for a $US700 million war chest.
The ominous signs for Echo come after a tumultuous period where chief executive Larry Mullins departing the day after ling-term director Brett Paton found the exit.
The Australian’s John Durie has a good yarn this morning detailing the new contracts that NBN Co chief executive Mike Quigley is trying to get sorted with the network’s construction companies.
At present, Leighton Holdings vehicle Visionstream is on a four-year deal to manage the rollout in Tasmania. However, Silcar, Transfield and Syntheo are on shorter-term deals with potential extensions.
Durie reports that Quigley is hoping to get all the constructors on four-year deals, which could provide a bit more certainty for the participants and speed up the rollout.
There can’t be much more than a year left before the federal election puts all these contracts, and Telstra Corporation’s deal with the government, centre-stage.
Longer-term contracts will be more difficult for an incoming Coalition government, with Malcolm Turnbull as Communications Minister, to alter.
Calibre Group, G&S Engineering
Mining contractor Calibre Group has been quietly racking up acquisitions in the last couple of years and added G&S Engineering to the list yesterday.
G&S is a private Queensland-based operator that specialises in maintenance in the coal sector.
Calibre has won the company over with a $90 million cash-and-scrip offer that’s $39.2 million in cash, 14.2 million shares and the assumption of $26.1 million in G&S debt.
The shareholders certainly seemed to like the deal. The Calibre share price surged 16.2 per cent to finish the session at $1.15. That’s quite unusual for an acquiring company, particularly when there’s scrip involved.
But it’s a welcome event for the company, Calibre only listed on the ASX in August and despite yesterday’s surge, the stock is down 23.3 per cent.
Although it should be said that this has a little less to do with anything Calibre has done and the dour condition that the mining and mining services sectors are in thanks to tanking commodity prices.
You’ve got to hand it to QBE legend Frank O’Halloran. He hasn’t even taken the chair at insurance broker Steadfast Group and already they’re looking at acquisitions and a listing.
This columnist is being glib, obviously. According to The Australian Financial Review, Steadfast boss Robert Kelly says the company is looking at acquisitions in the financial planning space.
"There is big potential for us to do something long-term in that area,” said Kelly, with the company also gearing towards a $350 million float in 2013.
The same newspaper also believes that Billabong International management have presented more data to its last remaining suitor TPG Capital. Probably a good idea considering the state of the share price, which closed below $1 yesterday.
Qantas Airways boss Alan Joyce appears to have made an impression during this week’s trip to Canberra.
Tourism Minister Martin Ferguson has thrown his support behind the carrier’s 10-year alliance with Emirates and called on the ACCC to give it the green light.
Meanwhile, the receivers of collapsed timber company Gunns Limited, Kordamentha, says there remains a strong level of support from stakeholders towards the company’s flagship $2.2 billion pulp mill project. Environmentalists cannot rest easy on this one.