DataRoom AM: Woodside limbo

Royal Dutch Shell looks set to hold on to Woodside for a while longer, while Padbury Mining’s credibility takes a hit.

The shadow of Royal Dutch Shell’s large stake in Woodside Petroleum hanging over the Australian firm’s stock appears likely to hang around for a while yet as the energy giant seemingly puts a sale on the backburner. However, there could be a bit more action with Shell’s Queensland assets in the near-term.

Elsewhere, Padbury Mining’s credibility takes an almighty blow, the NSW government achieves an eye-watering sale price for the Port of Newcastle and Gina Rinehart receives a setback in court.

Royal Dutch Shell has hinted its near 24 per cent stake in Woodside Petroleum will not be sold anytime soon. Investment banks have been lining up to arrange a block trade worth over $7.5 billion, but despite hopes of an imminent sale, Shell said last night it was in “no particular hurry” to divest the remnants of a failed takeover bid.

Upon announcing a strong quarterly result, the energy giant also flagged a potential alliance with a rival for its Arrow LNG project in Queensland. The stalled Arrow development will be beaten to the market by projects from BG Group, Origin Energy and Santos, but Shell sees this as an opportunity to monetise its assets without having to spend big on infrastructure. As a result it is in advanced discussions with at least one party on a “mutually beneficial” alliance, with BG Group -- which has the most developed project -- the best bet for an asset sharing deal.

Everyone had their doubts about mining minnow Padbury Mining being able to follow through on a bold pronouncement to build the long-stalled $6.5bn Oakajee port and rail project in WA -- and it’s now clear those doubts were well founded.

Just over a fortnight after spruiking a mammoth agreement to revive the project, the iron ore junior has seen the financing deal with an entity run by controversial businessman Roland Frank Bleyer torched. The company, which was worth just $70 million prior to the funding announcement, says it intends to press forward with other Oakajee opportunities but investor faith may have been exhausted.

Padbury shares jumped as much as 150 per cent from 2c to 5c upon the April 11 announcement before swiftly dipping back to 3.3c ahead of a trading suspension that has yet to end. ASIC will likely have a few questions to ask.

Also in WA mining, the Supreme Court of WA has told Gina Rinehart’s Hancock Prospecting it must offload a 25 per cent stake in the Rhodes Ridge iron ore mine to Wright Prospecting as the judge ruled an agreement between Lang Hancock and Peter Wright must be honoured.

In infrastructure, the hotly contested auction for the Port of Newcastle has been won -- in a minor surprise -- by a consortium that included Hastings Funds Management and China Merchants Group through a staggering $1.75bn bid.

When the asset first went on the block most analysts were talking about a sale price of around $700m. This was later revised to about $1bn and the wide gap between expected and actual price backs last night’s comments from private equity firm The Carlyle Group that it’s a seller’s market. It also highlights the high value investors put on scarce Australian infrastructure assets ahead of what could be a privatisation spree by governments across the country.

In property, Blackstone has paid $826m for assets formerly held by Mirvac Group. The deal sees the US private equity giant claim 50 per cent of Westpac Place in Sydney’s CBD as well as seven non-core Mirvac assets.

Elsewhere, a revised bid from Wilmar International and its joint venture partner First Pacific for Goodman Fielder is imminent, according to The Australian Financial Review. However, a fresh offer may be just a few cents higher than its current offer of 65c, leaving a new bid likely in line with Goodman’s closing price yesterday of 67.5c.

Finally, Pattersons Securities is testing the interest of fund managers in a $30m capital raising for rare earths miner Lynas, according to the AFR. Lynas entered a trading halt yesterday.

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