Breakfast Deals: Nine thrives

Nine Entertainment’s US hedge fund has quickened its stride towards a float later this year or early next year by calling in the investment banks. Meanwhile, Fortescue Metals Group has done yet another impressive deal that could render the infrastructure stake sale unnecessary. BHP Billiton is also selling in the Pilbara and CSR is reportedly talking to Boral about a brick and tile deal.

Nine Entertainment, Macquarie Group, Morgan Stanley, UBS, Commsec

The US hedge fund owners of Nine Entertainment have reportedly appointed investment banks for a possible float later this year or early next year.

Macquarie Group, Morgan Stanley and UBS have reportedly picked up gigs with Nine in a deal that could value the entire business at around $3 billion.

This is the second bit of Nine business UBS has picked up. The investment bank helped out with the network’s purchase of WIN Television’s Adelaide and Perth offices.

The Australian Financial Review reports that Commsec has been tapped to handle the retail part of the float if and when it comes along.

It’s not clear yet whether the network’s main hedge fund owners, Oaktree Capital and Apollo Global Management, will sell their entire stake. At the moment the expectation is that between $500 million and $1 billion in stock will be sold.

But first they’ve got to give the idea the green light. The two main factors will be the overall health of the Australian advertising market and the level of interest from investors for floats.

The particularly successful IPOs from insurance broker Steadfast Group and fertility clinic Fertus Health are doing a world of good for investor sentiment.

Fortescue Metals Group, Formosa

The dynamics of Fortescue Metals Group’s planned sale of a minority stake in its infrastructure has been dramatically changed by its magnetite stake sale.

The iron ore miner, together with joint venture partner Baosteel, has sold a 30 per cent stake in magnetite company Iron Bridge to Taiwan’s Formosa Plastics for $US1.15 billion ($1.26 billion).

Of that headline amount, $US623 million will be upfront, split between Fortescue and Baosteel, while $US527 million will go to development costs.

Basically it means that stage one of the Iron Bridge development will go ahead without Fortescue throwing in any coin.

This is terrific and very unexpected news for Fortescue. Magnetite developments in Australia suffer from a bad rap. Citic Pacific’s Sino Iron development has blown its budget and Gindalbie Metals is wrestling with its underperforming Karara project.

While Fortescue boss Nev Power is wisely declining to give his two cents on what the deal means for the sales process for The Pilbara Infrastructure.

But it’s clear the lightened debt load at Fortescue, coupled with the improved iron ore price, mean the company founded by Andrew Forrest has a better hand to play at the negotiating table.

BHP Billiton

Speaking of iron ore, BHP Billiton is reportedly thinking about selling its oil Mount Goldsworthy project in the Pilbara, but the plan is facing a big political hurdle.

The Australian reports that BHP Billiton has held confidential discussions with Nimbus Mines, according to documents obtained by the newspaper, for a deal that would see the mine reopened under the new owners.

The problem for the mining giant is the discovery of acid contamination at the site. It could end up that a $100 million cleaning bill is chalked up and it’s hardly likely that Nimbus would be footing the bill.

CSR, Boral

CSR is reportedly in talks with Boral to buy its brick and tile business, which is worth about $60 million.

According to The Australian, sources indicate that the two building materials rivals are in negotiations over the business that controls 45 per cent of the national market. One wonders whether the Australian Competition and Consumer Commission would have something to say about this.

The newspaper reports that CSR could also be circling private player Selkirk Bricks & Pavers, while Fletcher Building and BlueScope Steel are believed to be hunting Fielders and Orrcon Steel, which belongs to Hills Holdings. 

The sector is in consolidation mode. The ACCC will probably have some work ahead of it.

Macquarie Generation, AGL Energy, ERM Power

AGL Energy and Queensland’s ERM Power have emerged as probable frontrunners in the race for Macquarie Generation, according to The Australian Financial Review.

Sources indicate that Thailand’s RATCH-Australia, partly controlled by Transfield Services, as well as GDF Suez Australian Energy, are also likely to put themselves forward as interested suitors.

MacGen is the New South Wales government’s largest deal proposal on the books as part of its electricity privatisations.

Wrapping Up

The group of Indonesian-born Iwan Sunito has collected a site in Sydey’s Green Square for a $450 million apartment project that will start up next year.

According to The Australian, Crown Group has snapped up the site, which sits on Botany Road, for $40 million.

And finally, The Australian Financial Review has suggested that APN News & Media could be forced to go down the demerger route, as concerns linger that the company will be forced into a capital raising.