BREAKFAST DEALS: Rio coal dump

Investors have plenty of reason to welcome Sam Walsh's Mozambique backflip, while Billabong shares dive again after lenders split.

Rio Tinto boss Sam Walsh is reportedly considering a sale of some sort of its Mozambique coal arm, the same business that helped eject his predecessor from the top job at the mining giant. Meanwhile, more lenders are leaving Billabong International, Origin Energy and EnergyAustralia are in line for some big New South Wales government businesses and Paladin Energy's flagship asset stake sale delay caused some unmistakable sharemarket pain.

Rio Tinto

Mining giant Rio Tinto is reportedly thinking about a whole or partial sale of its beleaguered Mozambique coal unit that ultimately contributed greatly to the departure of Tom Albanese.

According to media reports Rio Tinto has picked a financial adviser to help with the process.

Such a move would amount to a backflip of sorts from new boss Sam Walsh, who said in February that Rio Tinto wasn’t looking at a sale following a damaging $US3 billion ($3.23 billion) writedown on the business.

“I should just confirm that Mozambique is not part of the divestment [plans],” said Walsh at the time.

Some Rio Tinto shareholders might be a bit miffed at the idea of Walsh investigating a Mozambique sale in any capacity given that comment, but two things need to be taken into account.

First of all, he’d only just been put in the Rio hot seat and it’s difficult to make firm pledges when the company is obviously in a state of transition from one chief’s philosophies and plans to another.

Secondly, since those comments, coal prices have slumped even further. BHP Billiton is trying to exit some assets. Reports pointed to Linc Energy thinking about buying one of them, only for them to say it’s planning to do exactly what BHP is doing (gettin’ the hell outta dodge).

Coal is cold at the moment and the shift in stance of the major miners from capex expansion to consolidation of top shelf core assets is a messy one.

Walsh stepped right into the middle of this transition.

Billabong International

Billabong International shares have handed back some of the gains booked on Tuesday with news emerging that no less than two of the troubled surfwear company's lenders have bolted.

Media reports indicate that HSBC and Commonwealth Bank of Australia have jettisoned a total of $85 billion in debt on the secondary markets at discounts of up to 20 per cent.

The sales come as Billabong famously tries to refinance its debt with former suitors Altamont Capital Partners and Sycamore Partners.

We all know the deal here. There’s nothing more to say.

Origin Energy, EnergyAustralia

Origin Energy and EnergyAustralia are reportedly “on track” to announce within a week that they’ve won the first two components of the New South Wales government’s $3 billion in power sales.

The Australian Financial Review reports that Origin and EnergyAustralia will pick up Eraring Energy and Delta Western, respectively.

The third component is Macquarie Generation, which was valued at $2 billion after a writedown following the carbon tax. A change of government in Canberra could impact that situation, no doubt.

EnergyAustralia was once known as TRUenergy, the power provider owned by Hong Kong’s CLP Holdings.

CLP has at times been moving towards an IPO for EnergyAustralia and the name change was partially motivated to brand the company up for a good old Aussie float.

Gradually the date was pushed back and back as the lack of necessity for CLP ran into market volatility, brought about by the announcements regarding the end of quantitative easing in the US and reports indicating economic problems in China.

A good float for Virtus Health has helped the IPO market, while a terrible float from iSelect hasn't.

CLP doesn’t have to move for a while, so don’t expect them to.

Paladin Energy

Investors hit African-focused, ASX-listed uranium producer Paladin Energy pretty hard yesterday after the company announced a delay to a debt reduction sales process.

Paladin had been trying to sell a minority equity stake in its flagship Langer Heinrich site in Namibia, which would help put a dent in its $US740 million debt pile.

Managing director John Borshoff remains confident that the discussions with two unnamed nuclear groups will produce a positive outcome, but not until mid to late August.

Until yesterday, that deadline was set for June 30.

Paladin shares ended the session down 6.8 per cent at 82 cents a pop, which is almost as low as they’ve been for the past 12 months.

The shares have been moving lower in recent weeks in anticipation of yesterday’s news.

Back in February, Paladin received the scheduled $US150 million from French nuclear utility giant Électricité de France SA of the $US200 million in pre-payments for an offtake agreement that runs from 2019 to 2024.

Paladin promptly took those funds to repay the $US134 million balance of the March 2012 convertible bonds and kept the remainder for the balance sheet.

Wrapping up

Westpac Banking Corporation is reportedly finalising a $750 million-plus subordinated debt issue and a statement to the ASX could be with us as soon as Tuesday.

The Australian Financial Review has spoken to sources that indicate the bank may raise more than the headline target, which would be in line with previous efforts by the big banks.

And finally, The Australian believes Singapore’s Rockworth Real Estate Asset Management and Morgan Stanley’s Investa are in early talks to purchase a stake in Perth’s $350 million Exchange Plaza office building.

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