BREAKFAST DEALS: Ten's outdoor auction
Suitors reportedly line up to make a bid for Ten's outdoor advertising unit, while Flinders shareholders wait on Russia's courts.
Ten Network, EYE Corp, APN News & Media
Ten Network chief executive James Warburton will be expecting a question or two about the sales process for the company’s outdoor advertising unit EYE Corp when he hands down his first set of results as the boss. Interested bidders, thought to be APN News & Media and oOh!media from home and France’s JCDecaux Group from away, have until April 17 to put their offers forward. Still, look out for Warburton to be pestered about how the sales process is going. UBS is running the party that has recently seen one onlooker bumping up their valuation of EYE Corp to $165 million.
That new valuation comes from Citi analyst Justin Diddums, who further argues that APN needs to win EYE Corp to justify the sale of a 50 per cent stake in its own outdoor advertising arm to Quadrant Private Equity. The joint venture, worth $200 million, with Quadrant comfortably received shareholder endorsement from the APN register yesterday. Ninety-three per cent of shareholders voted in favour of the proposal, indicating either a profound confidence that EYE Corp will be won, or that the sale of the stake isn’t that consequential.
Flinders Mines, Magnitogorsk Iron & Steel
Shareholders in Flinders Mines haven’t reacted favourably to news that a $554 million bid is still being held up by legal action in the homeland of its suitor, Magnitogorsk Iron & Steel (MMK). Flinders stock plunged 9.1 per cent yesterday to 22.5 cents, with 49 million shares changing hands, as the emerging iron ore miner told the market that the loan facility component of the scheme of arrangement with MMK would be delayed due to an increasingly bitter feud the Russia company is having with a minority shareholder. That leaves a sizeable gulf between the company’s current trading price and the 30 cents a share deal that Flinders shareholders have agreed to.
MMK, dominated by oligarch Victor Rashnikov, is battling minority shareholder Elena Egorova, who is so convinced that the Flinders bid is a bad idea that she’s taken the Russians to court. Flinders told the market that MMK had advised it of a motion in the Arbitration Court of Chelyabinsk Region of Russia to stop Egorova from holding up proceedings any longer, adding that the motion will "most likely” be heard by Friday. Presumably that’s Russian time, so shareholders that bought in much above 22.5 cents will have to wait until next week for any relief that could be coming their way.
Timber company Gunns is considering a new coat of paint for itself amid a prolonged trading halt and ongoing questions about its ability to manage debt. While management hasn’t made a firm decision yet, the Tasmanian-based Gunns is thinking about changing its name to Enpax Australia and relocating to the mainland. When last we heard, Gunns expects to update the market on April 26, having been in a trading halt since March 9 after investment talks with Richard Chandler Corporation collapsed, about an "equity offer”.
Changing the name to Enpax might help alleviate the company’s shattered public image, but the much needed financiers of its long-planned, $2.5 billion pulp mill for Bell Bay, will require a lot more persuasion.
Coalworks, Whitehaven Coal
Many have jumped on Coalworks amid anticipation that Whitehaven Coal will line the coal company up once the Aston Resources merger is bedded down, but that’s still looking pretty hypothetical at the moment. The Australian Financial Review reports comments from Coalworks chairman Wayne Mitchell indicating that Whitehaven hasn’t made contact with Coalworks. "We don’t know what the Whitehaven plans are,” Mitchell said, according to the newspaper.
Through the $5.1 billion merger with Aston Resources and tacked-on acquisition of Boardwalk Resources, Whitehaven will pick up a 17.3 per cent stake in Coalworks and the company’s stock has risen almost 50 per cent since the deal was announced as minds got racing. While it’s perfectly plausible that the lack of content is deliberate to minimise risks associated with the real deal, it really defines the phrase "market speculation”.
BrisConnections, Sydney Cross City Tunnel
In better news from the road infrastructure sector, BrisConnections is confident that traffic on the maligned project the day after construction is finished on June 30. Chairman Trevor Rowe said the company would start "ramping up” traffic on July 1, The Australian reports. The project has proved to be disastrous for almost all concerned with blowouts in the timetable and budget, with builders Leighton Holdings copping some well publicised pain from its shareholders.
Meanwhile, The Australian Financial Review reports that the owners of Sydney’s Cross City Tunnel have been given a one-month extension to cover a $60 million stamp duty bill. The newspaper says Royal Bank of Scotland, Eiser Infrastructure Partners and Leighton Holdings have been given until the beginning of May to cover the bill, having previously been hard-pressed to get the job done by March 31. It’s good news of a kind.
Alcoa, Rio Tinto
American aluminium giant Alcoa pleased the market greatly with its surprise rebound in first-quarter earnings, but the workers at its Port Henry smelter in Geelong won’t take a great comfort from the numbers. Chief executive Klaus Kleinfeld said the 530,000 tonnes that Alcoa has taken out of the market mightn’t be enough. ''I mean we continue to look at our Point Henry smelter in Australia, which is very high on the cost curve for a whole host of reasons.'' Those aren’t reassuring words, particularly when you consider how hard it is to offload aluminium assets in this market. Rio Tinto is attempting to cut itself free from a swag of aluminium plays, spun off into Pacific Aluminium, and the valuations aren’t heading north.
Foxtel, Austar United Communications, Telstra
Ripples are still being felt from the decision by the consumer watchdog not to stand in the way of the $2 billion merger between Foxtel and Austar United Communications. Australian Competition and Consumer Commission chairman Rod Sims has told The Australian Financial Review that the combined pay TV company could still be pursued over exclusive sports content if it was felt that it was unfairly blocking competitors. Needless to say rivals of Telstra, the 50 per cent Foxtel shareholder that will benefit handsomely from the deal through the distribution of its digital content to Austar customers, are not so impressed.
Meanwhile, Rio’s chief rival BHP Billiton isn’t having a much greater time, at least when it comes to its Norwich Park coal project in the Bowen Basin, part of the BHP Billiton Mitsubishi Alliance. While the miner has shut the site down in response to feuds with unions, BHP has also pumped $US708 million ($692.7 million) into the second phase of the Mad Dog oil field in the Gulf of Mexico. Still in energy, the parent company of TRUenergy, Hong Kong’s CLP Holdings, has hit a complication for its planned $4 billion float of the Australian power retailer – a sexual harassment scandal. Specifically, it’s been alleged by a former communications director that a former chief financial officer acted inappropriately towards her and senior executives, including current boss Richard McIondoe, mishandled the situation. Expect a number of stories putting these two events side by side.
Speaking of personnel and M&A, PaperlinX chief financial officer Tony Kennedy has announced his retirement at the end of the year after 22 years with the now embattled paper company, that’s still considered a takeover target despite a boardroom battle in no small way stemming from a rebuffed private equity offer.
Elsewhere, Illawarra Mutual Building Society (IMB) has tapped adviser Grant Samuel and legal firm Watson Mangioni to have a look at its complex structure. It’s been suggested that a sharemarket listing could be one of the solutions they come up with. Meanwhile, Lend Lease is believed to have appointed Goldman Sachs and Gresham Advisory Partners to see how the market feels about a sale of its $250 million aged care portfolio, The Australian Financial Review reports.
Finally, engineering giant WorleyParsons has picked up a five-year, $350 million contract with ExxonMobil for work on the Hebron oil and gas development off the Canadian coast, while Clough has won a $30 million contract with Chevron’s Wheatstone development through its AMEC joint venture.