Breakfast Deals: Lynas roars

Lynas Corp's debt deal put a fire under its shares, while Westfield is moving forward on its US plans.

Lynas Corp shareholders received some good news yesterday with renegotiated terms to its debt facility. The stock clawed back some much-needed ground after a long slide since mid-May. Meanwhile, Westfield continues its US asset sale drive, a crucial stakeholder backs Bega for Warrnambool Cheese & Butter and a new boss for Billabong International, in the event that Altamont is shafted for Oaktree-Centerbridge, has reportedly been identified.

Lynas Corporation, Sojitz Corp, Japan Oil, Gas and Metals National Corp

Rare earths miner Lynas Corp managed a 6 per cent surge during yesterday’s session as investors reacted to the renegotiated terms of its $US225 million ($241 million) loan facility.

Lynas will have to start paying the debt back next year instead of 2015, at which point it must begin meeting production volumes and cash operating margins. The debt will have to be completely settled by 2016.

These were the conditions set by its Japanese lenders Sojitz Corp and Japan Oil, Gas and Metals National.

It mightn’t sound like great news. But in return the previous obligation for Lynas to kick start its ‘phase two’ production and cash margin expansion targets has been waived for 15 months. This is about giving Lynas more time.

The Malaysian-focused ASX company said the renegotiated terms reflect ‘subdued global rare earths demand and previous delays to the start up of the Lynas Advanced Materials Plant’.

Lynas is a closely followed company considering its $843 million market cap. Rare earths are an interesting field and Lynas is made all the more unique because it’s not owned by the Chinese, which control the vast majority of the industry.

So it’s a rare rare-earths miner, or rare2 for fellow dorks out there.

Westfield Group, Starwood Capital Group

Retail real estate giant Westfield Group has jettisoned another seven shopping centres in the US to Starwood Capital Group with a $US1.64 billion ($1.75 billion) deal.

Starwood will pick up the Belden Village, Franklin Park and Great Northern malls in Ohio, the Capital mall in Washington, the Parkway, Indiana and West Covina sites in California and the Southlake shopping centre in the state of Indiana.

Starwood will own and manage the majority interest in the centres and Westfield will keep a 10 per cent equity interest.

After the sale is finalised, Westfield will own and operate 40 US centres. The Australian giant Westfield offloaded majority stakes in eight of its US centres for $US1.15 billion last year, most of which went to Starwood.

Warrnambool Cheese & Butter, Bega Cheese, United Dairy Farmers

United Dairy Farmers of Victoria president Kerry Callow has reportedly thrown her support behind Bega Cheese’s $319 million bid for Warrnambool Cheese & Butter.

The Australian Financial Review reports that Callow believes the cash-and-scrip deal will give the target better scale without reducing competition.

“Certainly when you look at the Australian industry we do need some strong Australian-owned companies to balance things up a bit,” said Callow, according to the newspaper.

As Archer Daniels Midland is discovering with its $3 billion GrainCorp bid, industry support is crucial when it comes to winning over regulatory approval as farmers can be a powerful lobby group.

This column is not comparing the two deals in that respect, that’d be silly; it’s just good news for Bega. That is, unless fellow shareholder Murray Goulburn makes a counter-offer.

That would be good news for Warrnambool. Scratch that…it’d be epic news for Warrnambool.

Billabong International, Oaktree Capital, Centerbridge Partners

A potential new boss for Billabong International has reportedly been lined up in the case that US hedge funds Oaktree Capital and Centerbridge Partners win over the sceptical board.

The Australian Financial Review reports that a “senior surf industry executive” has been tapped, but hasn’t given notice to his current employer. Hence, his name remains unknown.

Billabong is going through the Oaktree-Centerbridge proposal and the Altamont Capital proposal at the moment to see which offer is best for shareholders.

Previously it has favoured the Altamont proposal, which puts former Oakley chief executive Scott Olivet in the hot seat over this mystery man.

AGL Energy, Australian Power and Gas Company

AGL Energy is continuing to run through the tasks suitors look forward to when they first approach a target.

The energy giant announced that it has secured 81 per cent of Australian Power and Gas Company, which isn’t far off the 90 per cent compulsory acquisition finish line.

It’s also announced that the task of filling the chief executive’s seat has begun, with James Myatt department and chief financial officer Warren Kember taking over on an interim basis.


Health insurance comparison website iSelect has confirmed the corporate regulator is sniffing around its reporting after the company missed its prospectus forecasts. Getting your first forecast right is Float Class 101.

iSelect said it would ‘continue to fully cooperate’ with the Australian Securities and Investments Commission in relation to requests it received on September 6.

The shares sank 4.3 per cent to $1.35, which is miles from its issue price of $1.85 in June.

The worry is that this news could dent demand from IPOs and those concerns aren’t unrealistic.

But the tide still feels to be in favour of Team Float.

Wrapping up

Billionaire James Packer and Seek co-founder Paul Bassat are part of a group of big names investing an extra $3 million in taxi booking at goCatch, according to The Australian Financial Review.

Meanwhile, venture capitalist Mark Carnegie is looking to raise coin for a second fund for next year that will have $250 million to $300 million on its books.

In resources, one-time takeover target Discovery Metals has issued an update on its flagship African Boseto copper project without any update on its efforts to bring in equity partners to bring the idea to life.

Elsewhere, the Indian owner of cash-challenged Griffin Coal, which has assets in Western Australia, anticipates it’ll secure a deal that will significantly bump up sales overseas by the end of the year, according to The Australian Financial Review.

In construction Leighton subsidiary Thiess has picked up a $186 million contract to design and build a coal handling and preparation facility for Boggabri Coal in the Gunnedah Basin in New South Wales.

Meanwhile, another Leighton subsidiary John Holland has won $257 million of business from Gina Rinehart’s Roy Hill iron ore project to build nearly 350km of heavy haulage railway track.

Also, The Australian reports that Leighton Properties has won approval to build a $200 million office tower that will become the first stage of Parramatta Square.

Alright, enough Leighton already. Elsewhere, Archer Capital has been rejected for a tweaked takeover bid for New Zealand’s Abano Healthcare Group.

Archer ‘re-activated’ (what is this, a comic book move?) its unsolicited proposal that it first made last month for Abano, which is currently valued at $NZ113.9 million ($100.1 million).

But Abano isn’t playing yet.

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