DataRoom AM: QBE sales tactics

QBE may soon resume the auction of its US insurance business, while Rio Tinto agrees to sell its Riversdale Mining assets for a pittance.

QBE Insurance is reigniting the auction of its US assets amid a broader push to right a sinking, or at least damaged, ship. But previous reports of muted interest ensure the prospects for a strong price are under a cloud.

Elsewhere, Rio Tinto confirms plans to sell all of its Riverdale Mining assets, a major local iron ore mine is prepped to go on market and Coopers Brewery delivers itself a valuation upgrade.

QBE is hoping to restart the auction of its US insurance business in September after recently bringing a halt to the process amid reports of muted interest. The insurer, which announced another profit downgrade earlier this week, will be hopeful of recouping all of the $1.2 billion it paid for Winterthur in 2007, but that might be a stretch if speculation of limited buyer activity is true. Among the list of prospective buyers are Hartford InsuranceChubb, AIGAllstate InsuranceACE and Zurich Insurance Group.

As reported in this column last week, Rio Tinto has made a move to sell all the assets related to its disastrous 2011 takeover of Riversdale Mining. The miner confirmed the $US50 million sale of Mozambique coal assets to India’s International Coal Ventures yesterday, with the sale price about half what was reported last week. Confirmation of the deal wraps up another tumultuous takeover tale for Rio, with the firm not only losing the better part of $US4 billion on the deal in just three years, but also two senior executives, including former chief Tom Albanese.

Meanwhile, a major local iron ore asset could be about to hit the auction block after hedge fund Casablanca Capital edged into a controlling position on the board of US-based Cliffs Natural Resources earlier this week. Casablanca is keen to refocus the firm’s attentions entirely on the US market, leaving the company’s flagship local asset, the Koolyanobbing iron ore mine in WA, up for grabs.

Koolyanobbing -- one of the largest iron ore mines not in the hands of BHPFortescue or Rio -- came under the control of Cliffs via its acquisition of Australian firm Portman in 2008. A divestment of the asset is not well timed, however, with the falling iron ore price hitting profits and likely keeping the sale price well below previous $1bn-plus valuations.

Also in resources, Lynas is reportedly in fierce negotiations with lenders as it seeks to find the cash required to make a $US35m loan repayment at the end of September. It is believed lenders are asking the rare earths miner to agree to tough conditions on any new loans, with Nomura’s distressed credit team -- which became heavily involved with Nexus Energy prior to its collapse -- at the forefront.

Elsewhere, gaming giant Tabcorp has secured ownership of ACTTAB from the ACT government for $105.5m, with the deal including an exclusive 50-year tote licence. The territory’s government announced plans to divest the asset late last year and news of a sale leaves WA with the only state-owned TAB in the nation.

In the local beer sector, Coopers Brewery’s latest share buyback plan has led to the firm valuing itself at $500m, according to The Australian Financial Review. The news offers the most significant valuation of the nation’s largest locally-owned brewer since its family shareholders shunned a $420m bid from Lion Nathan in 2005. The paper reported that the firm has not had any significant buyout approaches over the past few years, which is not surprising given the pushback met by Lion.

In energy, Horizon Oil’s largest shareholder has come out in support of plans to merge with Roc Oil, according to BloombergIMC Investments will vote for the deal at the August 7 shareholder meeting, though the deal could yet be scuppered by two rival bids for Roc by unnamed suitors.

Finally, law firm Allens has secured a position at the table for the sale of ‘poles and wires’ assets in New South Wales, while New Zealand-based Metro Glass had a mixed first day of trade, gaining over 5 per cent on the NZX and sinking a similar amount on the ASX (where it has a secondary listing).

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