Breakfast Deals: Super scuffle

AustralianSuper and the Future Fund square off Perth Airport, while Whitehaven’s personnel changes calm investors.

AustralianSuper lawyers are pressing the Future Fund for documents for the valuations of the Australian Infrastructure Fund deal. This isn’t a fight yet, but it feels like one really could be coming. Meanwhile, Whitehaven Coal’s newest board member brings a reassuring presence for shareholders, Billabong International levels with shareholders about what its brand is worth and Centuria Property Trust’s IPO plans are off the table for the moment.

AustralianSuper, Future Fund, Australian Infrastructure Fund

AustralianSuper hasn’t exactly started a fight with the Future Fund over the Perth Airport component of the Australian Infrastructure Fund deal yet. But it’s thinking about it.

A statement from Australia’s sovereign wealth fund said yesterday that AustralianSuper has lodged an application with the Victorian Supreme Court seeking preliminary discovery of documents pertaining to the Perth Airport valuations.

As we all know, AustralianSuper has complained the Fund priced it out of exercising its pre-emptive rights over a stake in Perth Airport, which was held by AIX, by inflating the value. It’s a practice known as ‘gaming.’

It’s an awkward legal argument because you’re complaining about an asset you own a stake in being overvalued.

The Fund of course denies any wrongdoing.

In legal terms, this isn’t a punch, but it certainly serves as a warning that despite the enormous passage of time since the $2 billion AIX deal went through.

AustralianSuper says it’s pressing the Fund for documents “in the best interests” of its two million members.

Those members could be wondering why it took so long to take action, given that it’s understood AustralianSuper was considering its legal options months ago.

Whatever the reason, it sets up a potential mouth-watering battle between Australia’s largest private servant for retirees and Australia’s largest public counterpart.

At the end of the day, this is a fight over pension dollars.

Whitehaven Coal

A key backer of Nathan Tinkler’s bid to buy the Maules Creek mine has joined the board of the now Tinkler-less Whitehaven Coal, potentially offering protection against any opportunistic takeover offers.

Respected hedge fund player Raymond Zage, chief executive of Noonday Asset Management Asia, was announced as a board appointee yesterday as Whitehaven informed investors it had reversed to a loss in the 2013 financial year.

Zage, through Noonday, supported Tinkler when he needed cash in 2010 for the now-Whitehaven owned Maules Creek coal mine and then bought out Tinkler’s stake in Whitehaven after the latter’s distressed financial state became apparent.

The decision to add Zage to the board has firmly dampened talk of a selldown of Noonday’s 17 per cent position in the coal miner, which had long been considered a possibility. More to the point, having a major shareholder swimming in the same direction further boosts its defences against any lowball takeover offers, as noted by The Australian.

While many know Zage in Australia for his Tinkler-related investments, few would know of his strong M&A background, having served as vice president of the investment banking division of Goldman Sachs in Singapore where he was responsible for mergers & acquisitions. Before this, Zage had cut his teeth working on banking M&A in Goldman’s New York and London offices.

Given his apparent liking for the Maules Creek asset and M&A background, it appears Whitehaven has a very firm ally in its largest shareholder should a bargain basement offer eventuate.

Billabong International

While the value of the Billabong brand was reduced to $0 in the company’s accounts yesterday we also learnt that the company’s desire to get financing wrapped up was likely to lead it toward sticking with Altamont Capital over the last minute deal sought by Oaktree Capital and Centerbridge Partners.

“Financial stability is critical to rebuilding Billabong,” the surfwear retailer’s chairman Ian Pollard told shareholders. “Liquidity has been secured and we are within weeks of finalising our long term funding arrangements.”

If that wasn’t enough of a hint that Billabong will plump for Altamont, Pollard went a little bit further with his closing remarks in a press statement accompanying the results:

“We are soon to transition to a new capital structure and a new CEO who will be leading ongoing reform and rebuilding over the next 24 months.”

The CEO to which he refers is former Nike executive Scott Olivet, who has made it clear he will not take the reins should Oaktree and Centerbridge get their way.

Although Pollard did admit it could be months until Olivet starts should the private equity battle roll on, according to Fairfax Media.

The last thing Billabong needs is to be without a CEO for months at a time and investors reacted accordingly, sending its stock down more than five per cent.

Centuria Property Trust

At the publishing time of yesterday’s Breakfast Deals the proposed public listing of Centuria Property Trust appeared set for the backburner; now it has been confirmed.

ASX-listed Centuria Capital officially walked away from pursuing the $215.3 million float yesterday morning after institutional demand was weaker than hoped.

If listed, Centuria Property Trust - whose flagship asset is the Northpoint Tower in Sydney – was to have been run by Nick Collishaw, who heads up Centuria Capital’s property division and now has been granted a seat on its board.

The company said it still remains keen to create a listed real estate funds management platform under Collishaw.

Nothing doing for now, however, with the decision to abort yet another dampener for the weak Australian IPO market.

The news is also a disappointment for CIMB, Macquarie and RBS Morgans, joint lead managers of the planned float.

Seven Group, Prime Media

Seven Group boss Don Voelte has been unusually blunt about the possibility of taking out regional affiliate Prime Media amid expectations of industry-wide consolidation. He said no, at least for the moment.

“We're pretty happy with our shareholding right now,” Voelte told The Australian. “We hold it for other strategic reasons.”

If the next government abolishes the 70 per cent reach rule, it’s widely expected the metropolitan networks will partner up with each other. It’s just a matter of who takes whom.

Given that Seven billionaire Kerry Stokes owns an 11 per cent stake in Prime, it’s conceivable to see that he believes he holds the cards in that play and doesn’t feel the need to fill the market with ideas.

Then there are the potential concerns of the shareholders on his register.

Wrapping Up

McMillan Shakespeare may have scrapped its dividend for this year yesterday, but it still has some happy (former) shareholders with healthy bank balances. Fund managers Tim Carleton and ­Matthew Parker of Auscap Asset ­Management have profited from the company’s share price surge in correlation with a lift in support for the Coalition, according to The Australian Financial Review. The two fund managers reportedly bought in at just over $8 before selling out around $12 within a month. A nice little trade indeed.

Moving to the oil and gas sector, and Karoon Gas is looking for a partner to help meet the cost of drilling its Grace exploration well, according to the AFR. The deal could be made attractive should it be bundled with a stake in the Poseidon gas project, but the AFR suggests the field of suitors will be small.

Finally, AMP Capital has tapped European and Asian investors in raising $US300 million ($A335 million) for its AMP Capital Infrastructure Debt Fund II, according to the Wall Street Journal. The fund focuses on debt linked to gas, electricity, water and transportation infrastructure in Australia, Europe and North America.

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