Nine Entertainment, CVC Asia Pacific, Harry Sloan
Nine Entertainment might have struck a hit with The Voice, but owners CVC Asia Pacific have apparently unearthed the most unlikely of plots to avoid losing the company to US hedge funds. According to The Australian Financial Review, Nine chief executive David Gyngell met Hollywood tycoon Harry Sloan on the company’s US roadshow and an interesting pitch has emerged since that meeting.
The newspaper says sources claim that Sloan, former chairman of MGM Studios, met with CVC and fellow Nine-backer Goldman Sachs earlier this month. It’s believed that Sloan is pushing a proposal that would value Nine at $3 billion. Amongst the details, Sloan would raise enough capital to take care of the network’s lenders, then take a controlling stake in the refinanced company listed on the NASDAQ. Apparently, CVC doesn’t like the valuation.
The private equiteers will probably have to put up with a few more versions of this story right up until the refinancing deadline for the $2.7 billion in debt it has hanging over Nine comes in February.
Cast your mind back to December last year. CVC had just given up its "amend and extend” negotiations with its lenders and alternative scenarios were being kicked around. It was reported that Gyngell had spoken to and impressed US hedge funds Apollo Global Management and Oaktree Capital, which in turn suggested that the TV executive could be offered some equity if they eventually secured the company. There are a few more of these yarns to come.
AGL Energy, Loy Yang A Power station
Power company AGL Energy will find out today whether the competition watchdog has approved its proposed takeover of the Loy Yang A Power Station. The Australian Competition and Consumer Commission is due to hand down its findings on AGL’s $US3.1 billion proposal to acquire the stakes of Tokyo Electric Power Corp and the remaining smaller investors.
AGL shareholders should be preparing themselves for an $850 million capital raising if the ACCC gives the green light to the proposal, as many expect. The power company said that acquiring Loy Yang A would require $1.5 billion, of which $650 million has already been taken care of through a hybrid issue.
Loy Yang generates about a third of Victoria’s power supply and can continue to do so for almost another 40 years. The move will increase AGL’s capacity to the point where it will be able to rub shoulders with Origin Energy and TRUenergy.
Goodman Fielder, Cargill Australia
Speaking of the ACCC, commodity company Cargill Australia is making a tilt for Goodman Fielder’s edible fats and oils business two years after the competition watchdog rejected such a deal. Cargill posted a message on its website indicating that it is proposing to purchase the business, adding that: "The ACCC is considering the proposed acquisition in light of the current competitive environment and any developments in the relevant markets.”
Cargill’s name hasn’t been synonymous with the Goodman sales process largely because of the ACCC’s previous ruling. Singapore’s Wilmar International is seen as front-and-centre for the oil and fats business after conducting a share raid on Goodman earlier this year to snap up 10 per cent. If that was the beginning of a play for total control of the company then things have gone pretty quiet. Many onlookers believe Wilmar was simply buying a front-row seat.
Pallet giant Brambles hasn’t given any indication when discussions over the sale of its Recall document management business will be concluded. According to Reuters, Brambles has held talks with document destruction company Shred-it and Ohio’s Cintas Corp, but the question of valuation is still a sticking point.
Brambles made it clear from the outset when it first announced the sale in August last year that it wasn’t in any kind of financial trouble and wouldn’t accept anything less than what it believes the business is worth – at least $2 billion. It appears the potential buyers aren’t quite willing to put up that sort of cash and Brambles might have to call them on it and hold on to the business.
Stories have emerged indicating that Brambles has spoken to a number of private equity players about Recall, but the pallet maker's price tag has been an immovable obstacle for those looking for quick value. The pallet company has received a lot of encouragement from the market not to accept anything less than $2 billion for the business.
Ivanhoe Mines, Rio Tinto
Rio Tinto could increase its stake in Ivanhoe Mines beyond its slim majority now that the Canadian miner is proceeding with its rights issue. The $US1.8 billion than Ivanhoe plans to raise will help fund its end of the Mongolian copper-gold megaproject, Oyu Tolgoi. Rio has already stated that it will take up its entitlements with the offer and also has a standby agreement to pick up entitlements that aren’t taken up by existing shareholders. This allows Rio to increase its stake in Ivanhoe at a discount.
It appears that Rio isn’t the only Australian major identifying opportunity in Mongolia. Investment bank Macquarie Group has reportedly been named as joint lead manager of a float for the country’s iron ore miner Altain Khunder, one of Mongolia’s largest miners. According to the Wall Street Journal, sources indicate that Macquarie and Bank of America-Merrill Lynch have been locked in as global coordinators and bookrunners. The float isn’t a lightweight either. The report says it could be worth up to $US1 billion in the Hong Kong exchange in the fourth quarter.
Altain Khunder is apart of the same narrative that Rio is tapping into with Oyu Tolgoi. Its main asset is the Tayan Nuur iron ore mine within a few hours of Mongolia’s border with China. While Rio is looking to capitalise on China’s growing demand for copper in particular, Altain has agreements with companies like Baosteel to transport iron ore into the People’s Republic.
Local companies prettying themselves up for a takeover offer would be well advised to think international. According to Fairfax, research from law firm Corrs Chambers Westgarth has found that foreign bidders are coming up with better offers for our assets, generally speaking. The report found that Australian bidders tend to offer premiums in the order of 43.5 per cent, while foreign buyers – who will more likely offer cash – are coming in with premiums of 47.5 per cent.
Meanwhile, News Limited reports that more than 30 possible buyers have come out of the woodwork for a gaming company called, rather directly, Game. This is in spite of the fact that Game has about $120 million in debt. By contrast, Matrix Composites & Engineering is in the money with a plan for a $37 million capital raising through Argonaut Capital.
And finally, Gina Rinehart might have locked in the number one position on the BRW Rich List, but her cash splash on a 12 per cent stake in Fairfax Media hasn’t yielded a board seat as she’d hoped. Corporate reconstruction executive James Millar will pick up the seat just vacated by Robert Savage, which certainly creates the impression that Fairfax is headed for a restructure of some description.