BREAKFAST DEALS: Property promise

GPT's play lifts hopes for the property sector's year ahead, while Fortescue's latest buy is a game changer.

As M&A watchers look for signs of hope for 2013, GPT Group comes up with a gangbuster proposal for Australaland. It mightn’t get up, but it shows the sector has some real energy heading into the new year. Meanwhile, Fortescue Metals Group has done yet another fortune changing deal, while Macmahon Holdings, Ten Network and Newsat are getting capital raising attention. And finally, Nathan Tinkler is in court at the behest of the Australian Taxation Office.

GPT Group, Australand

GPT Group shares ended yesterday’s session well ahead of the benchmark index, which is a good signal from investors when the company in question is hoping to spend a few billion dollars.

GPT and Australand both released statements yesterday indicating that the former had made an unsolicited, conditional and non-binding proposal to acquire the latter’s investment property and commercial/industrial assets. The residential property business would be left alone.

Neither company put a figure on the proposal, but the businesses in question are estimated to be worth upwards of $2.3 billion. Australand, which hasn’t made a decision yet, is receiving advice from Fort Street Advisers and King & Wood Mallesons.

The main question being asked in the business pages, including here at Business Spectator by associate editor Stephen Bartholomeusz, is whether Australand’s largest shareholder, CapitaLand of Singapore, will go for the deal.

CapitaLand owns 59 per cent of the target and GPT’s proposal would not only constitute an acquisition of over 70 per cent of Australand’s assets, but leave it as a simple residential property business.

Given the increasing noises that the market has been making about the sectors GPT is playing for, CapitaLand is going to have to be pretty convinced about the premium GPT is willing to pay. Otherwise it could be trading itself into a problem.

What is encouraging for M&A watchers is that this is a lot of coin being thrown at a sector as it heads into 2013.

Fortescue Metals Group, BC Iron

Andrew Forrest’s Fortescue Metals Group has done yet another deal to help it rekindle the expansion of its Kings project that was so rudely interrupted by a collapse in iron ore prices earlier this year.

As announced yesterday, Fortescue has offloaded 25 per cent of its 50 per cent stake in the Nullagine joint venture with BC Iron for $190 million. BC also announced that it has completed a $US275 million ($263.5 million) financing package that will help it achieve 12 million tonnes production guidance in late 2013.

For Fortescue, this could also help it achieve its long-term production aspirations. The company called off the expansion as plunging iron ore prices eliminated its margins.

The subsequent $US4.5 billion debt refinancing and settlement of $US715 million in unsecured notes with New York’s Leucadia radically changed the outlook for Fortescue and it’s becoming increasingly clear that it’s a matter of if, rather than when, Forrest gets Kings back on track.

Macmahon Holdings, Ten Network Holdings, NewSat

It was a big session for capital raising news yesterday.

Let’s start off with mining services company Macmahon Holdings. The company is in a trading halt ahead of a possible capital raising, expected to be in the order of $80 million to $100 million, according to The Australian. Macquarie Capital and Deutsche Bank are helping out.

The newspaper also understands that Macmahon is thinking about ending its relationship with its construction business, passing it off on to major shareholder Leighton Holdings.

Macmahon shareholders have had a terrible year, with the share price down 53 per cent for 2012. The stock will undoubtedly fall further if it raises capital, courtesy of the discount.

Shareholders will have to wait to find out how deep the discount is. They’ll just be hoping that it’s not as severe as Ten Network.

The free-to-air broadcaster emerged from its $230 million trading halt yesterday with the stock trading at 24.5 cents, which is a 39 per cent discount to the previous trading price.

That brings the company’s share price performance for 2013 to a decline of 71 per cent.

In the end, billionaire Gina Rinehart did participate in the capital raising. Choosing not to do so would have undoubtedly made her position as a billionaire director more complicated.

And shareholders in satellite company Newsat will have to wait a little longer for their own capital raising to come through.

Newsat remains in a trading halt as negotiations continue to get the deal done.

Nathan Tinkler, Whitehaven Coal

The empire of embattled coal tycoon Nathan Tinkler appears to be facing an increasingly dire outlook, but questions remain about just what will happen to his 19.4 per cent stake in Whitehaven Coal – the source of most of his diminished wealth.

This column is still perturbed by the splash of media reports from late last month pointing to a $US200 million "liquidity event” from his largest lender Farallon Capital, followed by an eerie silence.

Yesterday, the Australian Taxation Office took over from New South Wales authorities as the petitioning creditor for a wind-up action against Tinkler Group Holdings Administration.

The Australian Financial Review understands that Whitehaven Coal is looking for a strategic buyer for Tinkler’s stake, but publicly it’s keeping very quiet. Common sense would point to a Chinese or Indian buyer.

Tinkler is facing a daunting number of legal battles across his empire. There’s the Ferrier Hodgson wind-up of Mulsanne Resources over a $28.4 million debt, along with the receivership of TGHA Aviation, which houses his private jet and helicopter.

There are also potential wind-up actions and cases to be brought against his horse business Patinack Farm Administration, as well as Hunter Sports Group.

Wrapping up

Westfield Retail Trust offloaded a shopping centre in Auckland, New Zealand to Ladstone Pakuranga for $NZ81.7 million ($65 million), which will be put towards paying down debt.

Still in New Zealand, the country’s largest listed retail company, The Warehouse Group, has picked up consumer electronics and appliance company Noel Leeming Group for $NZ65 million).

Meanwhile, street and skatewear maker Globe International has reportedly struck out at predator Mariner Corporation for its $19.7 million scrip offer.

According to The Australian Financial Review, chairman Paul Isherwood said the offer was "unhelpful, inopportune, untimely and opportunistic”. Given the fact that it’s a scrip offer, such annoyance is understandable.

Elsewhere, CHAMP Private Equity has leant on Macquarie Capital to think about its possible exit strategies for Golding Contractors, according to sources that have spoken to The Australian.

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