DataRoom AM: Leighton hangs tough

Leighton refuses to give up hope on a deal for its properties division, while a fall in copper prices lowers expectations Glencore will launch a fresh bid for Rio Tinto.

Leighton may have lost the two favoured suitors for its properties division, but the engineering and construction group has not given up on a deal just yet. Elsewhere, a mega-merger between Rio Tinto and Glencore may soon be dropped in the too-hard basket, Whitehaven Coal hunts a major debt refinancing deal and a $1 billion insurer is added to the IPO pipeline.

Stockland’s recent exit from what appeared a one-horse race for control of Leighton Properties has not seen the auction process binned altogether as The Australian Financial Review reports talks on a deal remain “fluid”. Stockland followed former frontrunner Singapore’s City Developments out of the battle just before Christmas and it now appears Leighton is pinning its hopes on an offshore suitor swooping on the $200 million-$500m business in coming months.

As reported in this column earlier this week, however, Leighton’s confidence in a property divestment is not as high as it once was, with its engineering service subsidiary Thiess potentially the key to the firm reaching its goal of $3bn in asset sales.

Meanwhile, the recent rout in the copper price is cooling expectations of a fresh bid for Rio Tinto from acquisitive Swiss heavyweight Glencore as the latter’s stock gets pummelled. It leaves Glencore’s ability to negotiate a scrip deal on shaky ground and a $150bn agreement is a forlorn hope this year unless Glencore’s stock can recover sharply in the next few months.

Sticking with resources, Whitehaven Coal is seen almost ready to kick-start negotiations with lenders over a refinancing of its $1.2bn debt facility, which falls due at the end of next year. According to the AFR, the impressive progress of its Maules Creek development has the firm confident it can refinance the whole facility, with current lenders Commonwealth BankNational Australia Bank and Macquarie Group expected to play a role in a revised loan agreement.

Also in the coal sector, Cockatoo Coal is rumoured to be facing a major risk to funding of its $300m Bowen Basin expansion project. The AFR reports that a loan from ANZ Bank is in doubt as coal prices languish at low levels and although talks are continuing, a deal seems unlikely.

Cockatoo’s stock has been suspended for two months on the ASX pending a financing update.

In the IPO market, a South African-owned group could provide one of the biggest local floats for 2015 as Hollard Insurance mulls the listing of its Australian operations. The insurer owns several brands including Guardian and Real Insurance and may be able to reap a valuation of over $1bn for its local assets.

Fellow IPO aspirant Pepperstone is also progressing plans to hit ASX boards, chasing meetings with fund managers to sell the growth prospects of the company. The $500m online currency broker is working with UBS and Citi on the float, which has already been delayed due to issues relating to its ability to trade in the lucrative Japanese market.

Finally, local infrastructure investor IFM has made its first foray into Mexico via a $700m-plus toll road deal, while NZ-based Martin Aircraft is expected to finally join the ASX in late February after securing China’s KuangChi Science as a cornerstone investor in a $25m float.