Gunns has finally revealed its plan to reload — although the embattled timber company might be down to its last bullet. Investors have been waiting three long years for the company to solve its capital problems and get on with developing its Bell Bay pulp mill, and they're unlikely to give the company another chance after its giant new $400 million capital raising. What Gunns needs now is a partner. Also this morning, Oz Minerals opens its $890 million war chest as Origin Energy takes another look at its stake in Australia-Pacific Liquefied Natural Gas. Plus, find out why Leighton's NBN contract could pale in comparison to what it's expected to unveil next, as it mines for a big job in WA. Elsewhere, Glencore gets a nod from Canada, while ANZ might shake its head at Thailand's TMB Bank.
Gunns' capital raising may not have come as a surprise, but the corresponding figure did – at $400 million the equity offer is three times the size of the company's market cap. Gunns, which is being advised by Moelis & Company, hasn't finalised the details of the capital raising, but says it could involve the placement of shares to investors.
If Gunns can raise $400 million – it's original $280 million equity offer fell flat after the company lost a cornerstone investor last week – the funds would be used to help the company cope with the planned sale of non-core assets and with with its debt obligations. But that's just buying time. Investors will be hoping Gunns uses it wisely as they hold out hope the company will find a joint venture partner at its critical Bell Bay project.
Oz Minerals has finally opened up its hefty chequebook in a bid to buy Romania’s state-owned SC Cuprumin SA Abrud, according to The Australian, and the deal probably won't be the Melbourne-based miner's last. Oz, which is battling three other parties for the Romanian copper-gold play, would only need to pay about $80 million for the company, leaving it with more than $800 million in spare cash.
Oz has already confirmed that it is open to purchases – this could be the beginning of a much bigger program.
Origin Energy is considering how to fund the likely expansion of Australia-Pacific LNG, including selling down its stake in the Queensland liquified natural gas project – a joint venture with ConocoPhillips and Sinopec.
Origin is yet to commit to the $6 billion expansion, including a second processing unit that would increase annual LNG production at APLNG to 8.6 million tonnes, but has made repeated mention of the plan – including in a presentation yesterday. For now, all we can do is guess who the company might be speaking to about funding.
ANZ Banking Group, ING Groep, TMB Bank
There has been talk that ANZ Banking Group might be interested in buying ING Groep NV's 25 per cent stake in Thailand's TMB Bank, after the local lender explored taking a strategic stake in the Asian firm in 2003. It also follows recent comments from ANZ chief executive Mike Smith, who lists Thailand as one of the countries he would like to expand into.
Reuters reports that most of the interest in ING's overall Asian insurance and asset management businesses, including its TMB stake, is coming from Asia, Canada, Europe and the US. However, The Australian Financial Review points out that ANZ doesn't have a license to operate in Thailand, and believes the bank would prefer a controlling stake in an Asian lender.
Other contenders are said to include Prudential Financial, Sun Life Financial, AIA Group, South Korea's KB Financial Group, KB Life Insurance and Samsung Life, according to Reuters.
Leighton Holdings, National Broadband Network, Fortescue Metals Group
Leighton Holdings may be celebrating its $300 million contract to bring the national broadband network to Tasmania, but it appears to be close to securing a much larger job that could be worth a whole lot more.
According to The Australian Financial Review, the Commonwealth Bank of Australia has upgraded Leighton's stock to a 'buy' based on the expectation that it will win a $3.6 billion contract to expand Fortescue Metals Group's Solomon mining hub in Western Australia. The job would involve building two mines, railway infrastructure and running the mining camp.
Leighton confirmed it was in talks with Fortescue last week, and we expect to hear more from the company soon.
It's been less than a week since Glencore lobbed its $6 billion bid for Canadian grain handler Viterra, but the deal already appears to have received an important political nod.
According to The Australian Financial Review, Canadian Prime Minister Stephen Harper says he doesn't view the buyout as a foreign takeover because many of Viterra's assets will be sold back into Canadian hands. (As part of the deal, Swiss-based Glencore plans to sell some of Viterra to Canada's Richard International and Agrium.)
Harper's comments are sure to sooth fears that the deal will be knocked back by Ottawa, but Glencore still needs to win over regulators in the US.
Qantas Airways will be flying high after its Hong Kong joint venture received emphatic applause from shareholders, but it is worth asking what the deal says about the airline's overall strategy. Now that Jetstar's low cost model seems to be dominating, it's sure to raise questions about where its weaker parent can look to grow its flagship international operations, after it failed to establish a premium carrier in Malaysia.
Still, Jetstar presents plenty of opportunities. We know the budget airline was hunting for deals in Indonesia, Macau and the Phillipines — could it return to these favoured destinations in the future?
Former Oxiana chief Owen Hegarty is reportedly looking for an investor to take a 15 to 30 per cent stake in his current company, Tiger Realms Coal. Tiger, which owns coal assets in Columbia and Russia, and plans to raise about $20 million from the sale, according to The Australian Financial Review.
In the property sector, CFS Retail is $366 million richer after it sold a 50 per cent share of its Myer Centre in Brisbane to unlisted ISPT, The Australian reports. And in Sydney, billionaire Lang Walker is said to be in late-stage talks over the sale of $150 million worth of industrial properties to Tony Pitt's 360 Capital Property Group.
Finally, it has been revealed that Bank of Queensland has signed on Citigroup as underwriter for the local lender's $450 million equity raising, announced yesterday. It's the first time Citigroup's capital markets team has worked with BOQ, according to The Australian Financial Review.
BREAKFAST DEALS: Reloaded Gunns
Gunns seeks the capital it needs to get moving on its mill, while Oz Minerals eyes the first of what could be many buys.
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