BREAKFAST DEALS: KT's casino call

KT Lim's Sydney visit refuels casino market speculation, while Billabong's last suitor reportedly waits on crucial details.

Malaysian billionaire KT Lim has blown suggestions that he's no longer interested in Echo Entertainment out of the water with a well-timed visit to Sydney. Billabong International shareholders are reportedly set for yet another delay. Meanwhile, OZ Minerals could come under renewed pressure to deploy its warchest, Discovery Metals continues to struggle with Cathay Fortune and Qantas boss Alan Joyce doesn't look like he'll be breaking bread with Tourism Australia's Geoff Dixon anytime soon.

Echo Entertainment, KT Lim, Genting, James Packer

Malaysian gaming tycoon KT Lim has reportedly paid a visit to the New South Wales Independent Liquor and Gaming Authority, which adds a brilliantly timed subplot to the jostling over Echo Entertainment and the future of Sydney's casino market.

According to media reports, Lim flew in to Sydney one night for a meeting with the regulator as he seeks permission to increase his stake in Echo, through the Hong Kong arm of his Genting empire to 25 per cent from 5.2 per cent. He also met with Echo's top brass, although this was apparently less formal.

Billionaire James Packer also wants permission to lift his stake to the same level from its current 10 per cent. There is speculation that regulators could give the go-ahead this week, at long last.

Lim's visit also comes on the back of a rival, unsolicited proposal that Echo has given the New South Wales government to expand the Star casino, which would act as an alternative proposal to Packer's $6 billion Barangaroo project.

It feels like this player is making Packer earn this hand.

Billabong International, Paul Naude, Sycamore Partners

After three months of due diligence and 10 business days of exclusive negotiations, Billabong International is reportedly set to give its last remaining bidder even more time to work this deal out.

The Australian Financial Review understands that former Billabong director Paul Naude and Sycamore Partners have been waiting for the embattled target to hand over important information in regards to the reliability of future earnings.

Sycamore's lender Jefferies Group tapped PricewaterhouseCoopers to give Billabong one last look before it would give the green light to the $287 million offer at 60 cents a share.

Speaking of retail, Fairfax Media reports that Australia's largest footwear retailer, Colorado, has been put up for sale by its private equity owners Anchorage Capital Partners and Ice Canyon.

The report says previous attempts to sell the business, which was picked up less than two years ago after a debt swap, failed to produce offers that met expectations. Apparently, the beds only came in at around $70 million.

Not a great time for retail deals.

OZ Minerals

OZ Minerals boss Terry Burgess is likely to face more questions as to why he hasn't put the company's $1 billion war chest to use following yet another disappointing revelation about production guidance at Prominent Hill.

The copper-gold miner's share price dived 7.1 per cent to 10-year lows – probably an unfair comparison given the changes son the Oxiana-Zinifex merger in 2008 and the major asset sales in 2009 – after OZ said copper production would likely come in 8-10 per cent less this year following a wall slide at its flagship project.

Worryingly, it could take until August for the wall to be fixed.

Burgess has already had to wear some punishment from shareholders after issuing disappointing production forecasts in January and has been steadfast in his strategy.

The respected mining executive has maintained that acquisitions are a risky strategy – simply pointing to the experiences of BHP Billiton and Rio Tinto in the last five years reveals this observation is true for the best in the business.

But when shareholders gather on May 28, the case will probably be made that if acquisitions are so risky that OZ would sooner cover a potential production gap between Prominent Hill and the incoming Carrapateena project with alternative measures, rather than purchase an asset, why keep the money at all? Why not give it to the owners?

Burgess is a cool customer and is well versed in his defence of the company's strategy. The difference now is that his register is staring at a share price beaten down not only by poor production news, but a slide in copper and gold prices.

Discovery Metals, Cathay Fortune Corp

African-focused Discovery Metals is continuing to pay the price for rejecting Chinese billionaire Yu Yong at $1.70 a share, regardless of what its concerns were.

Discovery is set to emerge from a trading halt today with an announcement about a plan to shore up its finances with its largest shareholder having already objected to it.

Yu's Cathay Fortune Corp has written to fellow shareholders – it holds 13.7 per cent of Discovery – arguing that the proposal would hurt them and that management has failed in achieving some pretty fundamental goals.

The Australian Financial Review reports that Discovery is poised to announce a raising at 25 cents a share. Given that the stock last traded at 34 cents a share and Yu came knocking at $1.70 a share, investors will quite legitimately be disappointed.

Discovery has complained to the corporate regulator that Cathay structured its deal in a way that unfairly gave it too much room to walk away from the $830 million deal.

Annoyingly, Discovery can't walk away unless it sells out. A heavily dilutive capital raising is certainly one way to test its patience.

Wrapping up

Qantas Airways boss Alan Joyce has shown he is far from putting aside his feud with predecessor Geoff Dixon.

As reported by Business Spectator's Stephen Bartholomeusz yesterday, Qantas has handed $15 million to New South Wales to promote tourism in the state, instead of reconnecting with Tourism Australia, which is headed by Dixon.

Meanwhile, engineering company Calibre Group has picked up a $140 million contract to upgrade the Hay Point coal export terminal in Queensland for BHP Billiton's alliance with Japan's Mitsubishi.

In capital raising news, property developer AVJennings is tapping investors for $41.2 million for working capital and debt reduction.

And finally, New Zealand fast food chain operator Restaurant Brands has swiped away speculation that it's thinking of buying 40 KFC stores in Western Australia.

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