BREAKFAST DEALS: Rinehart wrangle

Gina Rinehart and Angela Bennett get set to slug it out over Hope Downs, while time is running out for Dulux and Alesco.

Mining billionaires Gina Rinehart and Angela Bennett are headed for another day in court, with the make-up of the Hope Downs at stake. Alesco Corporation and DuluxGroup are talking to each other again with a deadline looming. Elsehwere, Chinese investors are front-and-centre for the Gunns Limited assets, TPG Telecom is favourite to win the Leighton Holdings telco assets and according to fresh data, Australian M&A, generally speaking, is in the toilet.

Gina Rinehart, Hancock Prospecting, Wright Prospecting

The houses of Rinehart and Wright are once again destined to meet in court over matters that could radically alter the fate of Australia’s richest woman.

Gina Rinehart’s 50 per cent stake in Hope Downs in Western Australia, via Hancock Prospecting, is the subject of this unpleasantness.

Rival billionaire Angela Bennett, through her private company Wright Prospecting, has launched legal action in the hope of securing some control over tenements and claiming a share of the profits that fall under the Hope Downs banner.

Hope Downs is actually six deposits. Rio Tinto owns a 50 per cent stake in two of them, one of which is Hope Downs 4 that’s being developed. The legal action pertains to Hope Downs 4, 5 and 6.

Rinehart’s ultimate aim, as we all know, is to transform Hancock Prospecting into a miner in its own right, by developing the Roy Hill iron ore mine in the Pilbara.

The mining billionaire has already sold a 15 per cent stake in Roy Hill to South Korean giant POSCO for $1.5 billion. It’s not difficult to see how a dilution of her earnings from Hope Downs courtesy of Bennett could make her manoeuvring at Roy Hill more difficult.

For those familiar with Rinehart’s affairs, this court confrontation with Bennett won’t be surprising.

The two mining house families have been engaged in royalty court battles since 2010.

This columnist is not fond of referring to Rinehart as a mining heiress. She’s done more than enough to distinguish herself sufficiently from her father’s legacy.

But, both Rinehart and Bennett got their beginnings from the assets of their fathers, Lang Hancock and Peter Wright.

The two men discovered iron ore out in the Pilbara back in the late 1950s and borrowed 500 pounds from present-day billionaire Stan Perron to keep looking.

This agreement also turned into a court battle, that Rinehart has since settled.

Alesco Corporation, DuluxGroup

With just a few business days left before the DuluxGroup takeover offer goes unconditional and the target’s shareholders kiss some extra franking credits goodbye, Alesco Corporation is ready to talk.

The garage door maker has gone into a trading halt to give Dulux time to consider a proposal that would include an additional fully-franked dividend of 27 cents per share to go with its $210 million offer.

Media reports indicate that Alesco chairman Mark Luby and Dulux chairman Peter Kirby sat down in Sydney yesterday to discuss the situation, but a decision could not be reached.

Dulux is gaining the upper hand after months of tedious wrangling that’s involved various statements from both companies that often mutually ignore each other and trips to the Takeovers Panel.

Gunns Limited

Yesterday this column’s lead discussed Australia’s incoming foreign investment policy, focusing particularly on agricultural assets and interest from China.

That discussion was followed by a separate report on the collapse of timber company Gunns Limited, which holds some assets that international players would be interested in.

How this columnist didn’t put the two together beggars belief. But it’s all clear this morning.

The Australian Financial Review reports comments from Tasmanian Premier Lara Giddings that she sought out potential Asian investors that might be interested in Gunns during her recent international trip.

Chinese investors have become the primary candidates for the scraps left over from the company, although it’s still early days with PPB Advisory confirmed as voluntary administrator only yesterday.

The AFR reports that the fallen company’s receivers, KordaMentha, say the pulp mill project might be brought back to life under a new capital structure. All the necessary permits for such a move are secured, the main question would be the Foreign Investment Review Board (FIRB).

Leighton Holdings, Nextgen Networks, Metronode, Infoplex, TPG Telecom, iiNet, M2 Telecommunications

TPG Telecom and iiNet, frequently touted as potential merger partners, could be headed for a battle over the telecommunication assets of Leighton Holdings.

The construction giant has put its highly profitable Nextgen Networks, Metronode and Infoplex businesses up for sale following a strategic review.

Macquarie Capital has been charged with finding the best deal for Leighton, which some believe could fetch $1 billion.

The Australian Financial Review says TPG is increasingly looking like the favourite to secure the assets, but iiNet and M2 Telecommunications are also interested.

The Leighton deal has come at an interesting time given the push for consolidation in the broadband market as the National Broadband Network is rolled out to homes and businesses around the country.

It’s been frequently hypothesised that TPG and iiNet could become partners. The chief reason for this theory stems largely from the 7 per cent stake that TPG boss David Teoh has in iiNet.

Quite where the telecommunications sector is going will be interesting to watch, particularly in the wake of yesterday’s $1 billion selldown in the owner of Australia’s second largest operator.

Singaporean giant Temasek, recently in the news via its stake in Singapore Airlines, slices its stake in Singapore Telecommunications to the tune of $1 billion yesterday.

Nexus Energy, Don Voelte

Much of the commentary surrounding Don Voelte’s new role as chairman of Nexus Energy centres on whether he can also do the Chief executive officer job at Seven West Media.

Two things. Firstly, the Seven West gig was never seen as a long-term prospect anyway. Secondly, doubt the energy of Voelte at your peril.

Outgoing Nexus chairman Michael Fowler said he’d informed the board of his intention to step away from the business once the Browse Basin gas field deal had been done with Royal Dutch Shell.

Now Nexus has to focus on developing its other assets, for which it will also most likely need the help of bigger players. Hence the appointment of Voelte.

The connections in the oil and gas industry of the former Woodside Petroleum chief executive are what you’d expect – strong and high up.

With the Crux deal done, Nexus has given itself the best chance of getting its next deal booked in a swift fashion.

Australian M&A data

Although it’s still three months away, the Christmas parties at Australia’s investment banks are again likely to be a little less jolly than previous years.

The Australian carries a report this morning detailing some of the findings from an analysis conducted for the newspaper by Thomson Reuters on the state of Australian M&A. It ain’t a pretty picture.

With three months left in calendar 2012, announced M&A activity is sitting at $US62.8 billion, which is 58 per cent lower than last year.

It’s the slowest pace since 2009, which was a dour year on the back of the global financial crisis. If the final number comes in less than $US69 billion, 2012 will have been the worst year in a decade.

Wrapping up

GrainCorp has been forced to wear a $28 million shortfall in the retail component of its $159 million capital raising.

The company’s share price has been trading below the $8.80 offer price thanks to lowered crop forecasts and fears that the heavens mightn’t be as kind with sufficient rain.

Crescent Capital Partners has dropped all the conditions on its bid for ClearView Wealth Management with its stake in the company reaching 71.2 per cent.

In financial services, ANZ Bank is dropping its National Bank brand in New Zealand, with all branches now falling under the mainland’s name.

CHAMP Private Equity is picking up a 33 per cent stake in service vessel company Miclyn Express Offshore for $199 million. Macquarie Capital Group is the seller.

And finally, the government deal that’s captured much of the attention of the investment banking community, the NSW power privatisation, will have to overcome one of those unholy hurdles – a state election.

NSW Energy Minister Chris Hartcher told a business lunch yesterday that the government would decide on its policy for the assets in late 2014/early 2015 and the plan would be put to the people in the following election.

Given the present state of Labor in NSW, the mandate should be pretty solid.

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