No one knows just how Europe’s debt crisis and China’s slumping property market will ultimately impact the Australian economy, but it’s already having an impact on equity markets. TRUenergy’s Hong Kong owner is reportedly starting to think its planned float of the electricity retailer should be pushed into 2013, partially due to market volatility. It’s not all bad news, though, with Jim’s Group – the company behind the unmistakably Australian franchise Jim’s Mowing – looking at its own IPO. Meanwhile, Nexus Energy has managed to do a deal with Shell that doesn’t see a dollar exchange hands (at least for the moment), Paperlinx hybrid holders have had a good day at the expense of the company’s shareholders and Warrnambool Cheese & Butter has signed an exclusive deal with Coles.
TRUenergy, CLP Holdings
Less than a month into 2012 and already a proposed float is looking shakier thanks in no small way to turbulent equity markets. Hong Kong-based CLP Holdings was said to be seriously looking at a $3 billion-plus float of its Australian electricity retailer TRUenergy this year, with reports indicating that Rothschild had been tapped for corporate advice on the matter. But it appears some problems are emerging.
The Australian understands that CLP is unwilling to go for an IPO until its IT systems upgrade, which has recently suffered some delays, is completed and the system works without issue for a few months – and equity markets calm down. The paper says competition for funds with New Zealand’s Mighty River Power, Meridian Energy, Genesis Power and Solid Energy is also weighing on CLP’s mind. A fourth-quarter float remains a possibility, but now the Hong Kong firm has begun thinking about 2013.
Speaking of Mighty River Power, the New Zealand government said overnight that it is "not advising any respondents as to whether they are preferred JLMs (joint lead managers) for the transaction” so far, The Australian Financial Review reports. Macquarie is in the hunt for one of the spots.
The company behind the iconic Australian franchise Jim’s Mowing, Jim’s Group, is poised to tackle a new landscape – the Australian stock market. Jim’s Group, which currently has a value of around $50 million, is planning to list by the end of this year. A statement from the company indicates the reason behind the move is financing for its franchises. "There is actually a huge demand for franchises, but we lose hundreds of sales a year for lack of finance. We also aim to make Jim's Insurance a major force in the market, and to help drive overseas expansion.”
Nexus Energy, Royal Dutch Shell, Osaka Gas
Nexus Energy chairman Michael Fowler has finally been able to unveil the deal with Royal Dutch Shell over the Crux field in the Timor Sea that was well flagged to the market in the press. Nexus shares will emerge from a trading halt this morning to face this reality.
Nexus will no longer develop Crux; instead, Shell will operate and majority-own the project for no cash down. In exchange, Nexus will get a 17 per cent stake in the project, down from 85 per cent, while minority partner Osaka Gas will see its stake reduced from 15 per cent to 3 per cent. Shell gets the rest. However, Nexus has a 12-month option to sell 2 per cent of its stake to Shell for $75 million, which means its stake is theoretically worth $637 million – its market cap currently sits at $318.4 million.
Paperlinx hybrid holders have reportedly been given a reprieve after the trustee ruled they should be able to convert their hybrids into equity, throwing an apparent approach from a private equity firm into question. According to media reports, the owners of the hybrids, known as Paperlinx SPS, would dilute shareholders down significantly if a takeover offer was brought to bear. The offer from private equity has been put at $117 million, with $55 million going to shareholders at 9 cents a share and $62 million going to hybrid holders at $21.85 each. The trouble is, the hybrid issue price was $100, hence the tension.
CHAMP Private Equity, Accolade Wines, Shanghai CWC Wine Trading
Accolade Wine, controlled by CHAMP Private Equity, has moved to capitalise on growing Chinese demand for crushed Australian grapes by snapping up a majority stake in Shanghai CWC Wine Trading. Accolade, responsible for brands such as Hardys and Banrock Station, didn’t tell the market how much the deal was worth, although The Australian understands that it was less than $10 million. "We already have an established relationship with the business which has been distributing Accolade Wines’ products in China and Mongolia for many years, but we will now be in a position to extend our presence in the market,” CEO Troy Christensen said. China is seeking to develop significant domestic supply but at the moment has to fill the deficit with wine from Australia.
Warrnambool Cheese & Butter, Wesfarmers
Almost a year after throwing dairy farmers into a panic by slashing milk prices to $1 a litre, Wesfarmers’ supermarket division Coles has signed an agreement with Warrnambool Cheese & Butter for an exclusive line of dairy products. The new brand, called Great Ocean Road, will be available only in Coles stores and will include a range of cheeses to be sold around the country and a full range of milk to be distributed in Victoria only. Warrnambool said the five-year agreement would cover an additional 50 million litres of milk from local farmers annually.
Administrators presiding over the delayed sale of Griffin Coal’s Bluewaters power stations in Western Australia could reportedly be in the can by March. According to Dow Jones Newswires, Kordamentha thinks the sale to Kansai Electric Power and Simotomo, both from Japan, is not long away.
Still in resources, liquid natural gas companies should stand up and pay attention, because News Limited brings word from Thai company PTT Exploration and Production that it intends to acquire a stake in an Australian project by June. Meanwhile, GBM Resources has picked up an exploration permit covering the North West Mineral Province in Queensland from Newcrest Operations Limited.
Finally, a syndicate of banks, led by Suncorp-Metway, has moved in on two companies in the debt-laden DFO Group, Fairfax reports.