BREAKFAST DEALS: NBN Plan B

Stephen Conroy defends NBN Co's change of heart with its $14 billion construction contract tender despite concerns that the entire process was bungled. With the original process now binned it looks like Leighton Holdings' JV with Siemens, Silcar, is in the box seat to grab a major piece of the action. Meanwhile, it looks like former Babcock and Brown boss Phil Green may be pulling the strings behind a move on Rams Home Loans, and Kerry Stokes' Seven Media comes in second best in its legal argy bargy with Ten Network. Elsewhere, Westfield looks to rustle a posse of prospective buyers for some of its US assets, iSoft finds a saviour to help it climb out of its $260 million debt hole and Brazilian mining giant Vale dumps its boss.

NBN Co, Leighton Holdings

The Gillard government may have managed to get the all important legislation on the $36 billion National Broadband Network through the senate but it hasn't taken long for the project to run into a fresh controversy, one that justifiably raises concerns about the execution, management and budget risks of the ambitious endeavour. Communications Minister Stephen Conroy did his best over the weekend to defend the NBN Co, after the company building the network suspended its nine-month long tendering process to start the rollout of fibre across most of Australia. However, NBN Co's decision to go for plan B has given the project's detractors the necessary ammunition to attack the viability of the NBN and question whether the budget for the project was too low. However, Conroy has told the ABC that he was fully behind the NBN Co's decision and rejected suggestions that the budget for the building of the network is inadequate. The NBN Co was reportedly in talks with 14 companies with regard to the contract, worth between $12 to $14 billion, but binned the process after receiving higher than expected tender bids. The NBN Co's original idea to get the network built on the cheap by getting a number of companies to bid for separate parts of the network may have made sense at the time but as The Australian points out, the company clearly embarked on a procurement strategy that failed to take into account the risks associated with the contracts. So after four rounds of tenders it's back to the drawing board for the NBN Co, and it looks like Leighton Holdings' unit Silcar – a joint venture with Siemens – is in the box seat to grab a major piece of the action in the new process, although it's unlikely that the entire task will be handed to just one firm. The move has drawn fire from the construction industry and unions and they certainly won't be pleased with Conroy's comments that the bidders burned by the tender bungle had only themselves to blame after they tried to gouge a little extra from the government.

RAMS Home Loans, Phil Green, National Australia Bank

It looks like the acrimonious situation at RAMS Home Loans (now known as RHG) has piqued the interest of former Babcock & Brown boss Phil Green, who is reportedly working behind the scenes at Alceon Group to have a go at picking up the business and its $4.4 billion loan book. Things turned sour at RHG after founder John Kinghorn proposed a share buyback, which gives shareholders 88 cents a share for the trouble or risk delisting. The real prize at RHG is the loan book and Fairfax papers report that a number of banks are eyeing RHG, with National Australia Bank seen as the front runner. Meanwhile, the papers report that the bid being put together by Green in his role as a consultant to Alceon is believed to value RHG shares at about $1 each. That's around $300 million for the company. RHG's shareholders won't mind an alternative to what Kinghorn has put on the table but prospective bidders will have to contend with the intervention launched by two prominent funds managers – Geoff Wilson of Wilson Asset Management and Karl Siegling of Cadence Asset Management – who are calling for a special meeting of RHG shareholders to seek the removal of Kinghorn's confidantes Greg Jones and John McGuigan from the board and changes to the buyback proposal. Wilson Asset Management and Cadence Asset Management represent more than 8 per cent of shares in RHG. Interestingly, Wilson has told Fairfax papers that he values RHG shares at up to $1.40 each.

Seven Media Group, Ten Network Holdings

It looks like Kerry Stokes' Seven Media Holdings has come out second best in its legal argy bargy with Ten Network Holdings after the NSW Supreme Court threw Seven's case out and ordered it to pay Ten's legal costs. The court obviously didn't buy Seven's claims that Ten had broken any rules in poaching James Warburton away from Stokes' fold. To add insult to injury, Warburton has now launched a counter-claim against Seven, alleging the company had wrongfully terminated his contract. That claim will now be heard at the same time as Seven continues its proceedings against Warburton. Seven is claiming that conditions in his employment contract prevent Mr Warburton from working for another media company under October 2012. Seven may have not had a strong enough case against Ten but reckons that the case against Warburton is a different story. The real gambit for Seven is to delay Warburton's move as much as possible and Kerry Stokes is unlikely to pull any punches in that regard.  

Westfield Group

The world's biggest shopping mall owner, Westfield Group is reportedly set to sell a number of its non-core assets in the US in the coming months. According to Fairfax papers, Westfield is looking to rustle up a posse of prospective buyers for the assets, which are expected to be sold individually rather as part of a portfolio. Westfield's US portfolio has a book value of $1.5 billion and there is talk that the assets up for grab may include malls in California and the mid-west. If a sales process is indeed underway then Westfield has picked a good time for it given signs of improving conditions in the shopping centre space in the US and the cash earned could come in handy if the Lowys decide to spread their wings in Asia.

iSoft, Computer Sciences Corporation

Australia's largest health IT services provider, iSOFT, has found a white knight to help it climb out of the $260 million debt hole, with US-based Computer Sciences Corporation offering to buy the company for $188 million. CSC is offering iSoft shareholders 17 cents a share in cash, which looks pretty good given that iSoft's shares last traded at 5.2 cents. The US suitor has also agreed to immediately pay iSoft's bank debt and also take care of convertible note, estimated at $40 million, to major shareholder Oceania Capital Partners, if it wins the necessary shareholder and regulatory approvals. The offer, which implies an enterprise value of $480 million has the full support of iSoft's board, provided a better bid doesn't appear.

Wrapping up

BHP Billiton and Rio Tinto's arch rival Vale is looking for a new boss after the Brazilian mining giant announced the departure of chief executive Roger Agnelli. Vale said in a statement last Friday that its controlling shareholder Valepar is looking for a replacement for Agnelli, whose contract will not be renewed in May. There is talk that the move is politically motivated with the Brazilian government pushing to get rid of Agnelli, who has fallen out of favour in Brasilia after sacking thousands of workers in 2008. In other mining news, Kyrgyzstan-focused gold junior Kentor Gold is looking to turn some of its attention back at home, with its friendly $7.8 million takeover offer for public unlisted company Jinka Minerals. Jinka Minerals holds the Burnakura gold projects and Gabanintha copper gold project in Western Australia and the deal comes amid doubts that Kentor's flagship Andash project in Kyrgyzstan may be facing delays. Elsewhere, the Australian Financial Review reports that Mongolian coal developer Gobi Coal is eyeing a $300 million listing on the ASX. Gobi was initially looking top list in Hong Kong. Meanwhile, there's some more action in the local health sector, with diagnostics company Cellestis reportedly set to be scooped up by a foreign heavyweight. According to the AFR, Cellestis is in the sights of Dutch giant Qiagen which is in advanced negotiations to buy the company. In the property sector, Growthpoint Properties Australia has confirmed it is in talks with Rabinov Property Trust about a possible transaction. Growthpoint, with a market capitalisation of $393 million, said it was in talks with "a number of parties", including Rabinov, capitalised at $36.5 million. Finally in overseas news, the fight for NYSE Euronext looks to be heating up with US exchange operators Nasdaq OMX Group and Intercontinental Exchange putting forward a rival bid to derail NYSE's planned deal with Deutsche Borse. The new bidders are keeping it simple with their plan to build a dominant global exchange operator that will be keep US at the centre of the financial universe. However, it does throw a curveball for US antitrust regulators who can now save the NYSE from the clutches of a German suitor – but only at the risk of green-lighting a NASDAQ, ICE, NYSE behemoth that will have immense market power.