Kathmandu and advisers likely to fashion their $400m float after Myer

Perhaps in light of the fact that Goldman Sachs JBWere and Macquarie Capital are managing both floats (with help from Credit Suisse on the Myer gig), the similarities aren't surprising.

As with Myer, the Kathmandu prospectus will contain a pricing range, with the final price to be set by an institutional book-build.

The ultimate number of shares on offer will also remain unknown.

Kathmandu's owners, Goldmans Sachs JBWere and Quadrant Capital, have followed the lead of Myer's owners, TPG and Blum Capital, and left open the possibility of selling all of their holding or keeping a stake as high as 20 per cent, depending on the institutional book-build.

The final price of the Kathmandu shares will not be set until the book-build next month, which means the Myer book-build on October 30 will be examined closely. Myer is offering its shares with an earnings multiple range between 14.3 and 17.3.

Kathmandu had initially talked about a lower range, with an earnings multiple of around 12 to 14.4 in its visits to institutions covering small-caps in Sydney and Melbourne, but it is said to be more likely that the final range will be 13 to 15.

Myer starts trading on November 2, and Kathmandu is expected to do so in both Australia and New Zealand in mid-November.

The name is bond

IT WILL be interesting to see whether a proposed relaxation of the disclosure surrounding bond issues to retail investors will lead to a huge increase in such issuances.

Australian retail investors have traditionally held a much higher proportion of equities in their portfolios than fixed income products, whereas in countries like Germany and New Zealand, bonds are more popular.

Although there have been more corporate bonds issued than usual this year, Australian companies have traditionally tended to favour banking facilities at a higher rate than their overseas rivals.

The credit crunch made it more difficult to refinance facilities earlier this year, but debt market specialists say bank facility margins have contracted noticeably in recent weeks amid aggressive competition from lenders willing to re-enter the market now that recapitalisations are largely complete.

Experts say the retail bond market will be the most open to companies with "household names", as evidenced by issues from Tabcorp and AMP this year, and to the banks.

But some are sceptical that companies will look to the retail bond market very often, even if the disclosure rules are lightened.

"The issuers that are best suited are the issuers that don't need to [use the retail market]," one industry participant said, noting they would find better rates from bank debt or overseas bond markets.

Another debt specialist was more optimistic about the emergence of a strong retail bond market, but cautioned there would not be $20 billion of issues overnight.

Extracting support

IN LIGHT of the high quality of Extract Resources' Rossing South uranium project in Namibia adjoining Rio Tinto's Rossing mine the level of interest in the $2.4 billion company isn't surprising.

But Extract has made clear that, while it is interested in strategic partnerships to help develop the $US704 million mine, which could produce 6800 tonnes of uranium a year, it is not looking to be taken over.

Extract has a very concentrated register. London's Kalahari Minerals, now effectively a holding company, owns a 40.9 per cent stake, while Rio Tinto owns 15.1 per cent and London's Polo Resources owns 10 per cent.

There are suggestions that as part of the search for a strategic partner, led by Rothschild, the parties that have signed confidentiality agreements have also agreed to standstill arrangements preventing them from buying Extract shares.

Rio is believed to be among those interested in a partnership, because there are obvious cost savings available due to the close proximity of Rossing South to the Rossing operation. The Rossing South ore has a higher grade than the material Rio is currently processing.

Extract will have plenty of uranium to sell once Rossing South enters production in 2013, so its primary concern in a joint venture is being able to place the material with customers rather than raising the funding for construction.

In recent months, uranium miners Uranium One and Denison Mines have partnered with a Japanese consortium and Korea Electric Power respectively for funding and offtake partnerships.

Extract's potential product is already said to have attracted interest from uranium buyers in China, India, Korea and Japan, so miners may not be the only ones taking part in the search for a partner.

Extract is targeting a resource of at least 227,000 tonnes, which would make it the second-largest uranium deposit in the world behind BHP Billiton's Olympic Dam.

jfreed@fairfaxmedia.com.au