Nine Entertainment offloads ACP Magazines, while Fortescue's expansion downgrade stirs speculation on iron ore deals.

Nine Entertainment has got a major asset sale away with ACP Magazines offloaded to a German suitor. Expect a lot more wrestling over the company’s stable of prize media assets as private equity owners approach their debt deadline. Fortescue Metals Group could be selling its Solomon power station, but the company’s troubles have got onlookers thinking about who’s vulnerable in iron ore. Elsewhere, Alesco Corporation has found yet another way to not quite say yes to DuluxGroup, ClearView Wealth Management might stay on the ASX and Qantas Airways could have an Emirates deal very soon.

Nine Entertainment, ACP Magazines, CVC Asia Pacific

Ripples were sent through the entire media sector late yesterday when Nine Entertainment successfully sold ACP Magazines to German publisher Bauer for $500 million.

Nine’s owner CVC Asia Pacific is hopelessly indebted on its investment in the network, with $2.8 billion due to mature in May next year.

The holders of what is said to be a majority of that debt, US hedge funds Apollo Global Management and Oaktree Capital, have been agitating for a debt-for-equity swap for many months now, where CVC would likely be wiped out.

Nine also has another $900 million-plus in mezzanine debt with Goldman Sachs that’s due in 2014. It’ll be interesting to see how the two lenders jostle as the final chapter of Nine in CVC’s ownership approaches.

The pricetag for the publisher of titles like Women’s Weekly was on the high end of expectations, about six to seven times EBITDA, lending weight to the argument that besieged media companies might get better-than-expected offers if they put themselves out there. Media companies have been shorted recently, along with the retailers – looks out for some price support today.

Also, remember this isn’t the only sale that Nine has been contemplating over the last few months. The company’s Ticketek division was put on the chopping block earlier this year.

However, the sales process hit the wall when revised bids came in between $300 million and $350 million. The owners had been hoping for something around $400 million, while some analysts saw the value closed to $500 million.

Fortescue Metals Group, Atlas Iron, Flinders Mines, Sundance Resources

The sudden about face of Fortescue Metals Group chief executive Nev Power has set minds racing about the potential deals that could be destined for the iron ore sector.

First and foremost, Power flagged the possible sale of the Solomon power station for an estimated $300 million in a bid to ease the company’s cashflow situation. However, with deposits associated with the station delayed, the headline price might be a bit too high.

Secondly, it serves as a stark reminder that the more peripheral operators become vulnerable when the iron ore price tanks.

Atlas Iron is a case in point. Chief executive David Flanagan has led a commendable battle for small and mid-tier operators by commencing a feasibility study with QR National about a rail line for producers that don’t go by the name BHP Billiton, Rio Tinto or Fortescue.

The problem is that rail line is going to be steep and for a $1.2 billion company, even with the backing of fellow producers, it’s going to be a tough ask in this environment.

Of course, the commodity could very well rebound and this discussion becomes a footnote. It just serves to highlight how big operators have options in the bad times, smaller ones don’t.

The big infrastructure spend arguably protects Atlas from takeover overtures. Some attention might end up falling on players like Gindalbie Metals and Mount Gibson Iron.

Perhaps even Flinders Mines could get another run. The company’s stock has lost 70 per cent of its value since the takeover proposal from Russia’s Magnitogorsk Iron & Steel Works began running off the rails.

But Flinders, like Atlas, has been frequently mentioned as a possible takeover target for Fortescue.

That ain’t happening. The most likely scenario is for a Chinese suitor to step in. If that were to happen, it would be a heartening thought for the market.

On that note, the project delays and deferrals from BHP and Fortescue reinforce the argument that the board of Sundance Resources was right to give ground to suitor Sichuan Hanlong Mining late last month.

The company agreed to a revised, conditional offer of 45 cents as a share, as opposed to the original 57 cents offer. That’s a headline price of $1.37 billion, compared to $1.65 billion.

It’s a 17 per cent reduction, but when you consider the reality that some of the players mentioned above have lost a third of their market value in the last six months, the deal suddenly looks generous.

DuluxGroup, Alesco Corporation

The Takeovers Panel seemingly left Alesco Corporation with nowhere left to turn but recommend the $210 million takeover offer. And yet they found a way.

The Panel declined to conduct proceedings into the post-"best and final” franking credit issue, but unquestionably stood in the way of the 75 cents dividend deal.

Between the stake it holds on Alesco Corporation and the shareholders that have opted in to its facility, Dulux speaks about 46 per cent of the register.

Alesco is establishing its own facility, arguing that it’s the best way to ensure that shareholders get the 42 cents dividend deal with Dulux, which is conditional on the suitor obtaining 90 per cent of the register.

But, as The Australian’s John Durie points out this morning, there’s a much simpler and more effective way for Alesco chairman Mark Luby to achieve that end for shareholders.

"Luby is no doubt aware that the absolute safest way of doing that would be to recommend the bid today,” Durie wrote in a column yesterday.

Be that as it may, Dulux is confident that it can get a deal done in coming weeks. The paints company has extended the deadline on its offer to October 2.

Just two weeks ago Dulux extended the offer until September 11.

ClearView Wealth Management, Crescent Capital Partners

There’s nothing that ClearView Wealth Management managing director Simon Swanson can do about control of the mid-tier insurer transferring to Crescent Capital Partners – near-majority shareholder Guinness Peat Group wants out.

But there’s a good chance the company will remain an ASX-listed company.

Swanson has rejected the revised offer from Crescent’s CCP BidCo as inadequate and not representing "fair value”.

CCP opened with an offer of 50 cents a share, which looked a bit short, even to GPG that’s been looking to exit some of its investments.

A subsequent offer of 59 cents a share was accepted by GPG and from then on control was headed for CCP.

But the independent expert’s report by KPMG said the book value of the company rested somewhere between 68 cents and 74 cents a share, providing cover for the directors that weren’t flattered by the CCP offer.

Wrapping up

Further news on the story from Monday, Emirates chief executive Tim Clark is reportedly flying in to Sydney later this week for a short trip.

Fairfax carries that story, which greatly increases expectations that Qantas Airways will be signing its code-sharing agreement with the Middle Eastern carrier.

Singapore’s Wilmar International is now looking at offloading its 10.1 per cent stake in Goodman Fielder, now that the sale of the Integro oil and fats business is away, according to The Australian Financial Review.

This puts an end to the strange ‘he said she said’ between Goodman and Wilmar about an apparent takeover proposal for the whole company before Integro was sold to GrainCorp.

And the AFR also reports that Ironbridge Capital has formally put New Zealand-based waste management company EnviroWaste. Macquarie Capital is acting as adviser in the sale, which could generate between $NZ500 million ($390 million) and $NZ600 million.


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