THE DISTILLERY: BoQ sunshine

Rather than the bubble and squeak of yesterday, this morning's fare is more like a serve of cereal with light yoghurt, nourishing, but without leaving you feeling overburdened with knowledge or angst. Our jotters rove across the business breakfast table, looking at Leighton, Fortescue, Ford's sackings, OZ Minerals. There was very little pre-release commentary on the quarterly and monthly economic data out in China later today. Nor was there any look at the way inflation and monetary policy have moved into the limelight elsewhere in Asia this week. No one is looking. So put down that cup, raise your spoon and it's off we go. Don't stop for the toast, okay?
 
The Financial Review's Chanticleer returned to the Leighton mess this morning after the company's shares fell (predictably) after trading resumed yesterday: "Given the collective responsibility for the mess that Leighton Holdings now finds itself in, it's probably time for someone to fall on their sword." Well, take your pick: Former chief executive Wal King, the man most responsible, has gone, David Stewart, the current chief isn't a cleanskin. David Mortimer, the chairman, has been around for a while. And elsewhere in the paper, there was a nomination: "Some of Leighton's investors want chairman David Mortimer to resign after the group's profit warning earlier this week." These are no doubt the same investors who didn't bat an eyelid when the results were coming in and King was being paid millions of dollars a year.
 
The paper (and others) also reported: "Shares in Leighton Holdings slumped 13 per cent to their lowest level in 1½ years after it announced earlier in the week a $757 million new share sale and said it would report a full year loss." Seeing how small investors will be putting in more than local institutions did, Leighton is not over the hump yet. 

Malcolm Maiden wrote in the Fairfax broadsheets this morning: "The local arms of General Motors and Ford chose different strategic paths during the global financial crisis, and Ford's future here as a vehicle manufacturer is less secure as a result. Yesterday's announcement that Ford will cut local vehicle production by 20 per cent and shed 240 jobs keeps the wolf from the door, and the fact that unions sat on the news after being told last week shows they believe this is a necessary move. Ford manufacturers only large cars here: the Falcon, Falcon ute and the Territory. It sold fewer than 30,000 Falcons and only 50,000 locally made vehicles last year, half as many as six years ago. Just over a million new cars were sold in Australia last year, 95,000 of them by Ford and almost 133,000 by Holden. But only 146,314 of them were built here, and large car sales have fallen further this year." This story has been gathering pace for several months now. Ford already cut working days last month in Melbourne.

The AFR picked up on an interesting trend this morning: "The wave of capital raisings sweeping the small and mid-cap sectors at the moment could well be seen as a slew of executives acting to shore up their balance sheets ahead of a choppy and uncertain time for markets." Now that they mention it, there have been quite a few raisings. 

In Melbourne, The Herald Sun reports: "Mining company OZ Minerals has provided its first formal estimate of the massive Carrapateena project it has bought in South Australia's far north. It is a copper-gold deposit potentially worth more than $30 billion at today's prices. The size of the deposit would make it bigger than the company's flagship Prominent Hill operation and position it as SA's second biggest mine. The estimate of an inferred resource is only an educated guess but is the earliest properly calculated estimate using the mining industry's agreed standards." But the Fairfax broadsheets report disappointing news elsewhere: "OZ Minerals is reviewing its Cambodian gold exploration program, which has failed to find the two million-ounce resource base that could have become a starter project there. The latest drilling at the Mesam prospect has failed to excite. Mesam is adjacent to the Okvau deposit, which OZ last year ranked as a 605,000-ounce gold find."

The AFR also reports: "Fortescue Metals Group is considering a listing of its magnetite iron ore resources on the Hong Kong Stock Exchange to attract capital needed for the development of its Pilbara deposits, CEO Andrew Forrest says." Easier rules up there, it's why a lot of resource companies, such as Glencore, are listing in Hong Kong.  And The Australian reported this morning: "Fortescue Metals chairman Andrew Forrest has defended rising quarterly costs unveiled this week, blaming severe Pilbara flooding, the strong Australian dollar and increasing costs for labour and energy across the industry. But Forrest also sounded a bullish note on the Chinese government's economic management and said that this, coupled with the burgeoning demand from other parts of Asia and the Middle East, would underpin strong global appetite for iron ore for decades to come."

The Australian's John Durie looked at yesterday's Bank of Queensland result and management changes: "David Liddy won't leave BoQ on the high he had planned, but likely successor Ram Kangatharan has a strong base to work with. Liddy used today's earnings release to confirm expectations he would leave the bank at year's end, after ten years in which shareholder returns have increased by 145 per cent against the 118 per cent by the market. Granted the big three have performed better over the period, led by CBA at 221 per cent, but in an era in which differentiation is the key selling point, Liddy's push to owner-operated branches was both inspirational and ahead of its time. While forecasting a bounce back from the flood-induced downturn, Liddy told the market the full-year profit would be at the low end of the forecast range between $175 million and $195 million, which will put it flat with $176.9 million reported last year."
 
This morning Durie wrote: "Liddy deserves plaudits for lifting a bank from oblivion into the top 100 companies on the bourse by creating a genuinely different owner-operated model. Westpac's Gail Kelly can bang on about her regional brands, but her recycled Bank of Melbourne competes not so much against Bank of Queensland and the rest but the local branch operators. Liddy built his empire in part by a string of smaller acquisitions, but failed to convince Rob Johanson at Bendigo Bank to join with him to create a regional powerhouse."
 
And the paper's Tim Boreham also looked at the result: "Depending on the degree to which management can be blamed for natural disaster-related loan impairments, Bank of Queensland today turned in an interim result that was either highly unacceptable, or highly creditable given the strained circumstances of its home state. The bank reported a 41 per cent decline in cash profit to $57.6 million, but without an 160 per cent uptick in the bad debt charge the result would have been up 18 per cent, with CEO David Liddy afforded a ticket tape reception down Queen Street after what – as we've just learnt – was his penultimate profit presentation. Liddy concedes today was hardly an ideal time for the board to announce his departure (at the end of the year), given the result was not up to normal standards. Not surprisingly, he stresses the "one-off" nature of the impairment charge, which included $45 million of flood-related writeoffs."
 
Has Fairfax's Adele Ferguson found a new growth industry for the legal profession? "Less than two months after the spectacular collapse of listed toll road operator RiverCity Motorways, its traffic modelling forecaster Aecom faces a $700 million class action. Litigation funder IMF will bankroll the class action and alleges that Aecom's statements in the PDS were misleading and deceptive and failed to provide investors with full information about another set of traffic figures it compiled on the project 18 months earlier. The case will be a landmark as it is the first time a traffic forecaster has become the target of a class action. It could also open up a can of worms as the spotlight turns to other traffic forecasters, particularly given the poor track record of such forecasting in toll road projects in the past decade." Cross City and Lane Cove Tunnels in Sydney, anyone?
 
The Australian's Nabila Ahmed says there's a reason the Foxtel-Austar talks have gone quiet: "Foxtel pays Telstra between $70 million and $80 million a year for use of its HFC cable. More than half of Foxtel's subscribers receive the service via Telstra cables but Foxtel chief executive Kim Williams has previously raised the prospect of switching all of his customers to satellite. Under Foxtel's partnership deal with Telstra, the pay-TV operator must provide its service via cable, if available. But the HFC will be decommissioned under the national broadband network, so, without Foxtel as a customer, that side of Telstra's business becomes obsolete. It's understood Telstra has been pushing Foxtel to strike an agreement to keep it on the HFC cable, basically using the Austar deal as a bargaining chip to renegotiate."
 
And The Australian's Bryan Frith says: "Ukrainian billionaire Gennady Bogolyubov is on the warpath again – this time in relation to a planned, massively dilutionary issue of shares and employee options by manganese miner OM Holdings, which could more than halve the percentage holdings of existing shareholders. Bogolyubov's Consolidated Minerals, which owns 11.4 per cent of OMH, says it is preparing legal action to block the issue and intends to requisition a meeting of shareholders seek changes to the board for "better governance and transparency".
 
And in an example of overkill on this story, The Australian's Matthew Stevens also wrote virtually the same thing this morning: "Gennadiy Bogolyubov, the Ukrainian billionaire who paid $1.3 billion for Consolidated Minerals, has launched a brutal assault on the "poor corporate governance" of fellow Australian manganese producer OM Holdings in announcing that he will contest the company's plans to raise up to $500 million through a secondary listing in Hong Kong. Bogolyubov speaks for 11.4 per cent of OM Holdings and his confirmation of open warfare comes after four months of very private conflict."
 
And, finally Fairfax's Elizabeth Knight writes: "In only two weeks, British Culture Secretary Jeremy Hunt will deliver a career-making decision on whether to allow Rupert Murdoch's News International to mop up control of the country's dominant satellite broadcaster, BSkyB. Whichever way he goes, there will be an outcry. The outcome will be widely scrutinised for political bias, the criteria used and fairness – to name just a few. As Hunt applies the finishing touches to his decision, the public receives a daily dose of updates on the scandalous illegal hacking of mobile phones by the company's tabloid News of the World. This controversy came to a head this week when the News of the World publicly apologised to victims of its phone-tapping operation."