Could the Silver Donut throw together home loans on the Yellow Brick Road? No, this isn’t the most boring rewrite of a classic children’s novel. Macquarie Group and Yellow Brick Road are apparently understood to be in talks over a plan to take on the big four banks. Leighton Holdings and Coca-Cola Amatil are tapping bond markets for funds. Meanwhile, Nine Entertainment might be saddled with a bid of debt after all, Richard Cottee’s booked another deal at Central Petroleum and the price tags are coming in for CMC’s broking arm.
Macquarie Group, Yellow Brick Road
An apparent fifth pillar could be taking shape for the Australian banking sector, according to some gossip emanating from the Birdcage at yesterday’s run of the Melbourne Cup.
Fairfax believes that investment bank Macquarie Group and Mark Bouris’ Yellow Brick Road are in talks over a distribution deal that would see the latter get access to the hefty balance sheet of the former. The report stems from whispers picked up at Flemington.
Yellow Brick Road has 140 sites across the country and with the firepower of Macquarie the Bouris vehicle could prove to be quite a formidable competitor to the big four.
Fairfax believes that the pair are planning to offer home loans that are a full percentage point beneath the big four on new home loans. This column will believe that figure if it comes to light, but it certainly underlined the apparent ambition between the pair.
The media group says Bouris was unavailable for comment.
Construction giant Leighton Holdings has jumped on board the debt issue train, with shareholders reportedly expressing interest in the company’s ownership structure.
Leighton issued $US500 million in its first public offer in the United States yesterday, joining a bevy of Australian companies that have been doing likewise recently, both in the land of the free and in the lucky country.
The 10-year note pays a coupon of 5.95 per cent and will be settled on November 13.
The Australian Financial Review reports that Leighton was forced to include a change of control clause in the offer after investors demanded the construction company make provisions for its all-too-famous ownership situation.
Leighton is of course 54 per cent owned by Germany’s Hochtief, which is run by Spain’s ACS.
Speculation about Leighton’s relationship with its elders is nothing new. But lately, questions have been raised about whether the company’s movements are being influenced by the short term priorities of its owners.
The sale of Leighton’s telecommunications assets, announced in late September, drew attention to the need of the company’s debt-laden owners for cash.
The Australian contractor maintains that the sale of Nextgen, Metronode and Infoplex is simply part of its strategy to divest asset it believes are non-core. And it’s true that since the end of legendary boss Wal King’s reign, it’s been suggested several times that Leighton needs to simplify things a little.
However, most of Leighton’s problems relate to cost blow-outs at some big projects – think desalination plant and the Middle East.
But back to the bond issue, which was handled by HSBC and JPMorgan. The deal was announced amid news of a $1.4 billion three-year facility for Leighton, courtesy of almost 20 lenders.
It comes just a few days after BlueScope deal went the same way with a $US300 million issue in the US.
Standard & Poor’s ranks BlueScope with a BB-rating, which is two below the highly desired investment grade, which Leighton can boast.
Other players that have been tapping the US lending markets recently are Fortescue Metals Group, Ausdrill, APA Group and Nufarm.
Closer to home, the Australian bond market continued to heat up yesterday with Coca-Cola Amatil apparently joining the fray.
According to media reports, CCA is hoping to raise $100 million from local investors. Coincidentally, that’s not far off what TabCorp took in yesterday via their tote platforms in Victoria and NSW on the Melbourne Cup.
The CCA issue comes after Telstra Corporation really lent some extra muscle to the local bond market with a $500 million issue of its own. This follows similar moves by mining giant BHP Billiton and Westfield Retail Trust.
The simple fact is that the Australian-denominated bond market is taking off.
The story of Nine Entertainment’s debt situation and structure quickly retreated from the national headlines after an agreement of sorts was struck between its senior lenders and mezzanine lender, Goldman Sachs. But it’s been quietly ticking on as final details are sorted.
The initial feeling was that Nine’s $3.2 billion debt burden would be erased as the senior lenders converted their loans to equity, while the American investment bank would get a few crumbs.
However, Fairfax reports that Nine is in fact expected to emerge with a debt burden of between $500 million and $700 million.
Crucially, this is expected to be fresh loans made to the network, some of which will be diverted to lenders and some to give Nine boss David Gyngell some working capital to play with.
All in all, it makes sense.
Reports have indicated over the last couple of days that Dutch lender Rabobank, one of the original companies Nine borrowed from, has sold its debt position at a discount because a push to have that rolled over into the new structure didn’t get anywhere.
Central Petroleum, Total
Richard Cottee is already making an impression as managing director of Central Petroleum. The resources executive only started duties in June, but he’s just penned another major partnership deal.
Central announced yesterday that French giant Total has signed on to a farm-out agreement that could see up to $US190 million invested in shale gas exploration covering four "highly prospective” areas in the Southern Georgina Basin in central Australia.
Total is flipping 80 per cent of the bill that commences with an initial total investment between the pair of $US60 million.
Central struck a similar agreement with Australian energy company Santos that will cover $150 million of exploration across the Amadeus and Pedirka basins, both of which are also in central Australia.
The broking industry continues to gain attention, with CMC Markets reportedly set to receive bids in excess of $10 million for its stockbroking arm.
The whole retail broking industry has been in a funk of late with low volumes hurting revenue streams badly.
According to The Australian Financial Review, CMC is understood to have initial proposals above $10 million, with two weeks to go for offers to be tabled.
Nathan Tinkler's legal saga continues next week, when the mining magnate is set to return to the NSW Supreme Court for his battle with explorer Blackwood Corporation over a $28.4 million in debt.
Blackwood is taking Tinkler’s Mulsanne Resources over an agreement between the two for the latter to buy a 33.85 per cent stake in the former.
Still in resources, Evolution Mining has inked a $200 million loan that will go towards refinancing an existing debt facility. Some will also go to working capital.
Macquarie Bank was the lead arranger and bookrunner, with ANZ Bank also participating as a lead arranger.