BREAKFAST DEALS: Penn's mighty payout

AXA APH boss Andrew Penn looks set to walk away with a $9 million golden handshake as part of a $17 million payout provided that shareholders are willing to approve the hefty sum for his 20 years of service. The NBN rollout provides a $1.6 billion windfall for three cabling companies but the Queensland floods could provide a headache for NBN Co boss Mike Quigley. Meanwhile, Riversdale's second largest shareholder, Passport Capital, continues to cut its stake much to the delight of Rio Tinto and UK's BP to start exploration in the Great Southern Bight. Elsewhere, Canadian mining magnate and Ivanhoe Mines boss Robert Friedland looks set to expand his footprint in Mongolia.

AXA Asia Pacific Holdings, Andrew Penn, AMP

Well they say good things come to those who wait and as the long and winding takeover play of AXA Asia Pacific Holdings (AXA APH) gets closer to the finish line it looks like the financial services firm's chief executive Andrew Penn is in line to collect total termination benefits of about $17 million if shareholders approve the AXA APH's takeover by rival AMP. The figure was revealed in the explanatory memorandum published for investors which also highlighted the recommendation by independent expert, law firm Grant Samuel & Associated, that AMP's $14.6 billion offer was compelling in the absence of a superior proposal. Penn is set to receive $8 million in performance related share-based incentive payments and another $9 million in termination payout for his 20 years of service at AXA APH. The payments take into consideration a number of elements including annual and long service leave, redundancy severance payment and performance rights. AXA APH shareholders will get their chance to approve or scuttle the substantial "golden parachute” in an extraordinary general meeting on March 2 under new laws that make such a vote mandatory if a termination payment exceeds one year's base pay. In this case, Penn's remuneration for last year stood at $3.6 million. If approved, the $17 million payout will be one of the most substantial payouts in some time – much higher than the $8.4 million paid to former Oxiana boss Owen Hegarty, the $6.5 million paid to Telstra's former supremo Sol Trujillo and former Publishing & Broadcasting Ltd executive John Alexander's $15.5 million payout. Penn also has a further personal holding of more than 200,000 AXA shares, worth more than $1.3 million under the terms of AMP's $6.43 per share offer. Penn is expected to stay on with AXA APH's French parent AXA SA and The Herald Sun reports that he sent out an email to AXA APH staff informing them of his departure once the merger is approved. So after 20 years with the wealth manager Penn's final pay cheque will now rest on the whims of AXA APH shareholders and there are some who may not be happy to sign off on it straight away. The Australian Shareholders Association (ASA) for one is asking for more information with ASA policy and research director telling The Australian Financial Review that the disclosure in the explanatory memorandum is not adequate.

NBN Co, Corning, Prysmian, Warren & Brown Technologies

As the National Broadband Network rollout continues to gather pace the development of the largest infrastructure project in Australian history has provided a happy windfall for cabling firms Corning Cable Systems, Warren & Brown Technologies and Prysmian. The three companies have been awarded equipment contracts worth up to $1.6 billion by the NBN Co with US optical-fibre maker Corning taking the lion's share of the business. Corning has secured a contract for multiple types of equipment worth up to $1.2 billion over five years while Italy's Prysmian, which has manufacturing facilities in Dee Why and Liverpool, New South Wales, has been awarded a third equipment contract worth $300 million over five years. There's also an Australian company in the mix with Victorian fibre optic equipment manufacturer, Warren & Brown Technologies, awarded an equipment contract worth up to $110 million over five years. The Gillard government has used the announcement to highlight the necessary urgency when it comes to getting the ball rolling on the ambitious project and NBN Co boss Mike Quigley was also quick to point out that the contract meant 400 new jobs. Doing the hard-sell on the local benefits of the project is all well and good but there may be other headaches coming Quigley's way courtesy of the Queensland floods. According to the AFR, there is talk that the network's overall budget could be cut as a result of the financial impact of the floods and the federal opposition's calls to divert some of the expenditure into the rebuilding efforts.

Rio Tinto, Riversdale Mining, Passport Capital

Rio Tinto may not have had much luck so far in getting Riversdale Mining's major shareholder Tata Steel to change its tune but the takeover target's second biggest shareholder Passport Capital has continued to sell down its stake. The US hedge fund has sold an additional 1.6 per cent stake in Riversdale to bring its stake down to 12.97 per cent. The latest sale comes on the back of the 1.1 per cent stake sold last week. Passport has already given a pre-commitment to sell a 7.9 per cent stake in Riversdale to Rio and the upside for the suitor here is that the hedge fund's move to reduce its holding in the target would indicate that it isn't expecting a challenge to Rio's $3.9 billion. Things on the counterbid front should clear up a little in the weeks to come as the consortium of five Indian public sector companies, International Coal Ventures Ltd (ICVL), is expected to make its intentions known next week. Meanwhile, Tata Steel said overnight that it was open to investing part of the proceeds from its impending $800 million share sale in Riversdale, particularly its Benga project.

BP wins offshore exploration permits

BP is back in the news and days after announcing a $US16 billion share swap deal with Russian state energy giant Rosneft the UK oil major has now won four new offshore exploration permits in the Great Australian Bight. The permits come less than a year after the fiasco in the Gulf of Mexico which tarnished BP's global reputation. BP wasn't the only company granted permits with the Minister for Resources and Energy, Martin Ferguson, also issuing offshore petroleum exploration permits in the waters to Woodside Energy, Riverina Energy, and Finder No.4 Pty Ltd, a wholly owned subsidiary of Finder Exploration. However, given BP's recent track record and the fact that the permits cover ecologically sensitive areas Ferguson had a stern warning for BP saying that the company will have to meet "stringent safety and environmental safeguards” to ensure that there is no repeat of the Macondo well incident. BP will spend close to $600 million to explore an area totalling 24,000 square kilometres in the unexplored Ceduna Sub Basin for oil and gas reserves and will be subject to additional conditions imposed by the government.

Wrapping up

Canadian mining magnate and the boss of Ivanhoe Mines Robert Friedland may be closer to expanding his Mongolian footprint after Mongolia-focused coking coal explorer Aspire Mining confirmed that Hong Kong-based commodity trader Noble Group has grabbed a 4.1 per cent stake in the miner. The move opens the door for Friedland's SouthGobi Resources to make a possible full tilt at Aspire after it picked up a 19.9 per cent stake in Aspire in December last year. Under the terms of that agreement SouthGobi couldn't pick up any extra stake unless another party acquired one per cent or more of Aspire. Noble now owns a total of 22.1 million shares in Aspire via its subsidiary Osendo Pty Ltd and that means SouthGobi has the option to launch a bid for the coal miner. Aspire, which is currently developing its Ovoot Coking Coal Project in northern Mongolia, has a market value of $236 million. Elsewhere, it looks like media mogul James Packer may have found a buyer for his 51 per cent stake in beef processor Teys Bros with AFR saying that US agribusiness giant Cargill is poised to pick up the stake for just under $500 million. The pastoral empire created by Packer's illustrious father Kerry Packer is essentially non-core to the Packer empire of today so the sale make a lot of sense. The other thing to note is that the transaction, hot on the heels of its $870 million acquisition of AWB, further strengthens Cargill's position as a heavy hitter in the agribusiness sector. In other news, Sonic Healthcare has started 2011 in an acquisitive mood with the purchase of two new labs, KBL-BML-Unilabo Laboratory and Woestyn Laboratory, in Belgium and US-based Physicians Automated Laboratory for an undisclosed sum. Sonic said that all three acquisitions are immediately earnings per share accretive and have been funded from existing cash and debt facilities. The combined purchase price for the three laboratories is expected to equate to an enterprise value of about 6 times EBITDA once synergies are realised. More unhappy news for Photon Group shareholders with the company saying that it will write down the value of its Search Marketing businesses by $36 million for the period ended December 31 2010. Apart from that Photon is also set to book a $14 million non-cash loss on sale of the Findology Interactive Media. However, the company has managed to cut its debt facility limits from $230 million to $150 million.