DataRoom AM: Chasing Treasury Wine

The battle for Treasury Wine Estates looks to be moving up a gear as both suitors reportedly tap big banks for financing help, while the WA government considers a $2bn selloff.

The race for control of Treasury Wine Estates is about to get interesting as both of the winemaker’s suitors tap big name banks to assist with financing. And there are signs slow starter TPG has now assumed frontrunner status.

Elsewhere, Qantas Airways pursues greater foreign investment, the WA government makes a push to reclaim its triple-A debt rating and Nathan Tinkler’s planned coal return is in tatters.

TPG Capital is going full speed ahead with due diligence at Treasury Wine Estates, offering every indication it will launch a final bid next month. A report in The Australian Financial Review suggests TPG has recently held five days of meetings with TWE management, while also tapping a large group of banks to aid with financing. Another hint of a final bid on the horizon is speculation TPG is adamant current chief Michael Clarke is the right person to take TWE forward; a sign the private equity firm is happy with the winemaker’s direction after the aforementioned meetings.

TPG is tipped to meet with its banks -- which include JP MorganDeutsche BankMorgan StanleyCredit Agricole’s Calyon and HSBC -- in the next 10 days, while rival suitor KKR is also believed to be in discussions with financiers over a possible binding takeover proposal.

Meanwhile, government asset sales continue apace, with the WA government the latest to get in on the act via a potential $2 billion selloff. Among the projects up for sale are long-term leases for the port handling facilities at Port Hedland and Kwinana as well as Perth-based fruit and vegetable distributor Market City. The recent financial performance of the three assets may see the government struggle to recoup more than $1bn, though additional asset sales are on the agenda, with the state’s TAB a candidate for the auction block next year.

Also in infrastructure, the chances of an imminent sale at BrisConnections are falling as Macquarie Bank, which holds a 20 per cent stake, angles for a delay with the group’s new hedge fund lenders, according to the AFR. Hedge funds have been buying into BrisCon’s debt heavily in the past couple of weeks as ANZBNP Paribas and DZ Bank head for the exit. Societe Generale will do likewise today, with Macquarie a possible buyer of its debt to boost its position.

Qantas Airways may have surprised the market with heavy writedowns on its international fleet and a positive outlook for profit next year, but there was little shock in the form of its planned asset sales. The frequent flyer program will remain 100 per cent Qantas-owned as its growth prospects are considered crucial to the firm’s future, while progress is being made on the sale of terminal leases.

The one significant change was the announcement of a separation of its domestic and international arms, which will see the creation of a new entity for Qantas International and pave the way for greater foreign investment in the international arm.

Elsewhere, Nathan Tinkler can’t take a trick at the moment, with the $120m sale of his horse racing empire recently breaking down and eventually leading to the collapse of his plans to re-enter the local coal sector. Tinkler, through his firm Bentley Resources, had signed a $150m agreement to buy the Wilkie Creek coal mine from Peabody Energy in May, but the failure to meet financing deadlines has seen Peabody place the deal on the scrapheap.

Pacific Equity Partners has successfully rid itself of half of its stake in Veda at a 2 per cent discount to the firm’s previously traded price. The $580 million deal was carried out by Macquarie Capital after it outflanked rival banks on the block trade, largely due to a decision to not request an escrow period on the rest of PEP’s stock. According to the AFR, Deutsche Bank was the frontrunner on the deal on price, but was ignored after chasing a six-month escrow.

The Veda deal is the precursor to what could be plenty of action on recently listed ASX companies as escrow periods end at Nine Entertainment, Cover-More and Dick Smith, among others.

In property, Westfield’s local spinoff, Scentre Group, has refuted claims it is planning to exit its $2.6 billion portfolio in New Zealand. The comments come after reports suggested Scentre had hired UBS as its adviser on a possible sale. Indeed, a divestment would not marry with comments earlier this week from Scentre that it was weighing acquisitions in both Australia and NZ.

Finally, Blackthorn Resources has agreed to a $58.5 million merger with Intrepid Mines, with the latter to undertake a $110m share buyback ahead of the deal, while Retail Food Group has paid $31m to claim mobile coffee franchise Café 2U and the franchise rights for the La Porchetta pizza chain.

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