Breakfast Deals: Optus' Singaporean opening

Singapore may be the best market for a potential Optus Satellite float, while Equity Trustees nudges in on Perpetual’s Trust Company bid.

So SingTel has called off the sale of Optus Satellite. An IPO looks like the most likely ‘plan B’ – but what kind of exchange would we be talking about? Elsewhere, The Trust Company has opened up to Equity Trustees while standing by Perpetual’s offer, Sydney Airport had a busy time yesterday to say the least, and Brockman Resources has won negotiations with Fortescue Metals Group.

Singapore Telecommunications, Optus Satellite

Singapore Telecommunications now has to think about what it might do with Optus Satellite after bids for the business apparently failed to live up to the company’s $2 billion hopes.

The speculative consensus is that the most likely option is an IPO. The question is where.

The Australian Financial Review suggests that Singapore might be the preferred option because the satellite business, treated by many as a utility, would receive more support there than in Australia.

Morgan Stanley and Credit Suisse received a large number of bids from the world’s largest satellite companies and private equity firms.

Optus Satellite is a respected business, but the difference in thinking between the sellers and potential buyers appears to rest on what the future of the business is. Is it a money machine, or a growth play?

Trust Company, Equity Trustees

The Trust Company is continuing to recommend shareholders accept a scrip $220 million takeover offer from Perpetual. But… it has opened the door to rival suitor Equity Trustees for two-way due diligence as the competition regulator looks into Perpetual’s bid.

TTC told shareholders yesterday that the “reciprocal” due diligence with a “focussed nature” would be completed in coming weeks.

The move comes in response to EQT saying it would deliver information to TTC, and amid investigations from the Australian Competition and Consumer Commission into the Perpetual bid.

The ACCC expects to announce its decision on the Perpetual deal by September 19.

At the time the inquiry was announced, ACCC chairman Rod Sims indicated that the consumer watchdog’s main concern was Perpetual’s strength in trustees services for debt capital market products.

“Perpetual and The Trust Company are both strong providers of particular types of custody services, while the feedback about the ability of other parties to constrain the merged entity has been mixed,” said Sims.

That’s the bad news for Perpetual. Here’s the good news.

“However, there are a number of factors that impose some degree of competitive constraint on Perpetual, including competition from existing trust corporations and the ability of some customers to provide these services in house.”

Sydney Airport

Sydney Airport has opted for a major reorganisation of its corporate structure that will see the issuing of $1.2 billion worth of new shares to buy out minority shareholders.

It’s actually Southern Cross Airports Corporation Holdings that owns the harbour city’s airport and the Macquarie-backed Sydney Airports owns 84.8 per cent of that.

The listed Sydney Airport is buying out minority shareholders including the Future Fund and MTAA Super. Shares in the company were suspended so Sydney Airport could issue 333 million new shares, including 247 million that will be issued to investors that will remain committed.

Macquarie Group is underwriting the issue, which will raise up to $311 million in a range of $3.50-$3.60.

Interestingly, The Australian Financial Review reports that UBS is looking for buyers of a 5.5 per cent stake in Sydney Airport worth $371 million, which is believed to belong to Abu Dhabi Investment Authority.

It was a hell of a day for Sydney Airport with the corporate restructure coming with news that it has settled a dispute with the Australian Taxation Office.

When the federal government sold the airport to Macquarie in 2002 it had a very simple ownership structure. But complexity crept in over the years and this ultimately became an issue for the ATO, which began looking at deductions.

Sydney Airport has agreed to hand over $69 million to the ATO and negotiated for the ownership limit for foreign investors to be lifted from 40 per cent to 49 per cent.

Fortescue Metals Group, Brockman Resources

The Hong Kong-backed Brockman Resources has secured a win over Fortescue Metals Group as the ‘third force’ in iron ore tries to sell a minority stake in its infrastructure.

Western Australia’s Economic Regulation Authority has rejected Fortescue’s argument that Brockman securing third party access would preclude other potential third parties from gaining access.

Now the two will begin negotiations over rail access.

That rail is of course housed in The Pilbara Infrastructure, which Andrew Forrest’s company is trying to sell a minority stake in.

Two broad questions have been raised about this strategy. The first is that improved iron ore prices give the debt-heavy Fortescue a little extra room to move. The second is that third-party access deals could make the investment opportunity less attractive for infrastructure buyers.

Fortescue has to some extent refuted both of these arguments.

Wrapping up

Commonwealth Bank of Australia boss Ian Narev was the bell of the ball yesterday with the lender’s formidable set of numbers.

Narev says the bank’s pending decision on the future of its property funds management arm, including the listed CFS Retail Property Trust and Commonwealth Property Office Fund, will be determined very soon.

“Our proposals are in there and the next steps are ... some degrees of engagements with the boards that happen over the (next) few weeks,” said Narev, speaking to The Australian.

Meanwhile, CFS Retail Property Trust is reportedly likely to hold on to its four sub-regional shopping centres that it had hoped to sell to Pacific Retail REIT.

The Australian carries the story amid more questions about precisely what will happen with Pacific Retail REIT, which has been combining with investment bank Moelis to raise cash.

Speaking of property, The Australian Financial Review reports that “major global real estate fund managers” are zeroing in on the sunshine state government’s Queensland Investment Corporation’s property funds management business.

And finally, Whirlpool is buying a majority stake in Chinese appliance company Hefei Rongshide Sanyo Electric for around $US552 million ($605.2 million).

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