BREAKFAST DEALS: Unusual Origin
Origin Energy
The first half of Origin Energy's $2.3 billion capital raising is expected to go off without a hitch despite shaky equity markets, with institutional investors reportedly throwing their support behind the largest capital raising of the year to date. The energy retailer has launched a fully underwritten one for five pro rata renounceable entitlement offer of new shares at 13 dollars a share. That's a steep 17 per cent discount to Origin's last closing price but the market should take heart from the fact that this is an equity raising with a difference. The company has its advisor Merrill Lynch to thank for a novel structure – Prorata Accelerated Institutional, Tradeable Retail Offer (PAITREO) – that allows retail shareholders to trade their renounceable rights to their new shares on the exchange a day after the institutional offer closes. That's a departure from the usual modus operandi that makes small investors wait till the end of the offer period before they can cash in their rights. So PAITREO is going to level the playing field here, providing retail shareholders with upfront liquidity and ensure that they are not left playing second fiddle to institutional investors. This new retail-friendly way of doing things may be what prompted Origin to announce the raising on a day when the local market was hammered by the crisis unfolding in Japan. Origin was always expected to tap the market at some point in time but many expected the move to come once it had finalised a definitive sales agreement with China's Sinopec for gas from its Australia Pacific LNG project. Origin and its partner Conoco Phillips agreed to sell a combined 15 per cent stake in the project to Sinopec in February and another capital raising, possibly a smaller than this one, could be on its way once the sales deal with Sinopec – for up to 4.3 million tonnes per annum of LNG for 20 years – is officially sealed. Given the kudos Origin and Merrill Lynch are receiving for giving retail shareholders a fair go, and the power retailer's solid position in the market, the second capital raising probably shouldn't pose too many problems even if global market conditions remain volatile for a little while. The $2.3 billion entitlement offer is fully underwritten by JP Morgan Australia, Macquarie Capital and Merrill Lynch Australia, which will all grab a piece of the $63 million in fees on offer. Clayton UTZ acted as legal advisor to Origin while Mallesons Stephen Jacques is advising the underwriters.
Woodside Petroleum
Staying in the energy sector, with Woodside Petroleum's current boss Don Voelte reportedly eyeing an early exit, there has been some chatter that the tough-talking Nebraskan is likely to be replaced by a home grown heir rather than external talent. Voelte decided to hang up his boots in October last year after a seven-year stint and so far the executive vice president of Woodside's North West Shelf business, Kevin Gallagher, and the executive vice president of the Pluto project, Lucio Della Martina, have been touted as the lead contenders. On that front, The Australian reports that Gallagher may be winning the race to the top job at Woodside but external candidates are not completely out of the picture. The issue for Woodside is that it needs to give the market some news on the matter sooner rather than later as investors continue to guess about what the company's major shareholder Royal Dutch Shell may do with its 24 per cent stake.
Singapore Exchange, ASX Ltd
Singapore Exchange's $8.4 billion tilt at the local bourse operator, ASX Ltd, may have to contend with further roadblocks in Canberra, with senior Coalition figures now questioning the merit of the deal. So far the biggest noise on the issue has come from the Greens and the independents, especially Bob Katter, but it was former Liberal leader and current shadow communication minister Malcolm Turnbull who provoked the latest concerns yesterday, telling the Dow Jones Newswires that the SGX-ASX deal would face significant scrutiny because it wasn't a merger of equals. Turnbull added the Coalition hasn't decided whether to support SGX's bid and The Australian Financial Review picked up on the theme this morning reporting that a number of Coalition frontbenchers remained unconvinced and were disappointed by the ASX and SGX's lobbying effort so far. SGX boss Magnus Bocker made it a point to not go to Canberra in his last visit and that has evidently put a few noses out of joint amid Liberal ranks.
National Australia Bank
National Australia Bank's UK boss, Lynne Peacock, is set to depart in July after a seven year stint running the lender's Clydesdale and Yorkshire banks. Peacock will make way for David Thorburn, who joined NAB's European business three years ago after joining Clydesdale in 1978 as a graduate trainee. Curiously, the news of Peacock's departure comes just days after the UK's Sunday Times reported that she had made buying Lloyds Banking Group's 600 branches 'a top priority'. Peacock had a few things to add to those comments overnight, telling Reuters that she wasn't surprised by the fact that NAB was seen as a strong contender for the branches and while acquisitions were always on the agenda the primary focus is on organic growth. That certainly takes a bit of the heat out of talk of an impending move by NAB and The Australian Financial Review points out that the mood in the lender's Australian operations is decidedly low-key when it comes to any move in the UK market. The paper adds that the lender may look to find a joint venture partner to launch a combined bid for the branches, combine its existing businesses into the joint venture and then sell out at an opportune time. NAB also announced the resignation of its deputy chief executive Michael Ullmer, who will leave the bank at the end of August. NAB said Ullmer would not be replaced.
BC Iron, Regent Pacific, Consolidated Minerals
BC Iron's Hong Kong-based suitor Regent Pacific has dropped its $345 million bid for the iron ore miner, citing opposition from the target's major shareholder Consolidated Minerals (ConsMin). Rumblings of a ConsMin roadblock came to light in February when US-based Business Insider website highlighted doubts within the senior ranks of ConsMin about the merits of the deal and said that ConsMin boss, Ukrainian billionaire Gennadiy Bogolyubov, is flatly opposed to the Regent Pacific offer. BC was quick to label the report misleading and highly speculative but that's not the view Regent Pacific has taken. ConsMin vote is crucial to the success or failure of Regent Pacific's $3.30 a share offer and the
Wrapping up
After all the conjecture about a shareholder backlash, a beleaguered Alinta Energy seems to have passed on to its lenders with remarkable ease. Alinta's lenders, led by TPG Capital, have secured control of the group's assets after its $2.1 billion debt-for-equity swap agreement was approved by creditors and unit holders at two separate meetings yesterday. The creditors' meeting was a always a formality but Alinta's shareholders obviously backed the certainty of getting 10 cents in the dollar rather risk getting less if the whole thing fell over. That's not to say there isn't anger among them about the fact that the deal really benefits the lenders and hedge funds who came in to pick at the utility's bones once it keeled over. However, 10 cents a share is still a lot better than nothing. The banner of dissent against the debt-for-equity was primarily unfurled by New York hedge fund Coastal Capital International and Sydney-based Bronte Capital but The Australian reports that both abstained from voting on the deal altogether. In other news, agrichemicals maker Nufarm has signed an agreement with its Japanese stakeholder Sumitomo to develop a new portfolio of crop protection products. Nufarm said that the new agreement will help both companies to identify new opportunities to address changing customer demands. Meanwhile, private equity giant Carlyle Group looks to be betting big on continued Asian shipping demand with the company on a spending spree to buy container ships and tankers. Carlyle has forged a joint venture with some of the biggest players in the Asian shipping scene – Seaspan Corp and Tiger Group Investments – and will spend as much as $US5 billion. The Tiger Group is an Asian based private investment firm, focused primarily on the maritime sector, while Seaspan is one of the world's biggest international charterers of container ships and boasts American infrastructure tycoon Dennis Washington as one of its major shareholders. The new entity will be led by Seaspan's current chief executive Gerry Wang and Tiger Group chairman Graham Porter. Staying in the infrastructure space, Leighton Holdings' Middle Eastern joint venture, Al Habtoor Leighton Group has won a $2.2 billion contract to build a hospital in Abu Dhabi. HLG will work alongside South Africa's Murray & Roberts to start the construction of the 739-bed general hospital. The project is due to be completed in 2014. In the property sector, Stockland has made its first land acquisition in New South Wales since 2007, buying a 40 Hectare residential development site in Maitland, NSW for $22 million from the Terrace Tower Group. Elsewhere, Foster's Group has appointed former Woolworths staffer Mark Fleming as the chief financial officer of its wine business, Treasury Wine Estates. Fleming was working as the general manager of finance for Woolworths' supermarkets and has worked previously with UBS, Goldman Sachs and Bankers Trust.
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