Thursday February 19, 08:20 PM
PRESS DIGEST-Australian Business News - Feb 20
Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.
THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)
-- China's Hunan Valin Iron and Steel has lodged an application with the Foreign Investment Review Board for approval of an expected investment in Australian iron-ore miner Fortescue Metals Group. Valin yesterday confirmed it was in talks with Fortescue, with speculation it may invest up to A$3 billion in the company. Talks between the two companies are thought to have been underway for some time, although Valin general manager Li Jianguo yesterday said there are concerns about Fortescue's high debt levels. Page 42.
--Embattled Australian miner OZ Minerals is believed to be close to agreeing to the sale of two projects, which should allow the company to receive an extension from its lenders. The extension would allow OZ to put a proposed A$3.7 billion takeover deal from China's Minmetals to shareholders in May. The two projects, the Martabe gold project in Indonesia and the Golden Grove mine in Western Australia, are expected to provide OZ with more than A$425 million. Page 42.
--Australian gold miner Lihir Gold (Munich: 897459 - news) yesterday announced its full-year results, with a 54 percent increase in underlying profit to A$184.9 million. However, chief executive Arthur Hood said the company will not pay a dividend this year, as 'we have a massive investment program over the next three to four years that we need to fund.' Mr Hood said Lihir was in a good position to fund its growth projects in Papua New Guinea and West Africa, but he did not rule out a later capital raising. Page 43.
--Australian scrap metal recycler Sims Metal Management yesterday released its first-half results, reporting a net loss of A$79.3 million, which includes a A$173 million write-down from its recently acquired business in the United States (US). Sims did not provide full-year guidance, however analysts expect the company will return to profit in the second-half, with a consensus figure of around A$172 million net profit for the year.
Sims said it is aiming to achieve savings of A$40 million a month from cost cutting measures. Page 43.
THE AUSTRALIAN (www.theaustralian.news.com.au)
-- Australia's largest superannuation provider, AMP, yesterday reported its results for calendar 2008, with a 41 percent fall in net profit to A$580 million. AMP also cut its dividend payment by 14 percent to A38 cents from A44 cents in 2007. Chief executive Craig Dunn said that although net inflows last month had been higher than last year, 'one hot day doesn't make a summer,' and he expects this year to feature further market volatility. Mr Dunn said AMP would look for opportunities to strengthen its position in the long term. Page 17.
--Engineering (Milan: ENG.MI - news) and construction company Clough yesterday reported its first-half results, with a 29.9 percent fall in net profit to A$23.8 million. Chief executive John Smith said the company was continuing a restructure to focus more on the oil and gas sector, which provided the majority of Clough's A$331 million in revenue during the past six months. Clough this week said it will sell its 82 percent stake in Indonesian contractor Petrosea as part of the restructure. Page 18.
--Australian oil and gas company Santos yesterday reported a 359 percent increase in net profit for the 2008 year to A$1.7 billion, as the company benefited from a weaker Australian dollar, higher oil prices and the sale of coal-seam gas assets to Indonesia's Petronas. Although the majority of the increased profit was due to the A$1.2 billion sale of its Gladstone (LSE: GLD.L - news) liquefied natural gas project, underlying profit also increased by 42 percent. Despite the record profit, the company said it was cutting capital expenditure due to economic uncertainty. Page 18.
--Australian listed property trust ING Office Fund yesterday revealed its first-half results, including a net loss of A$445.7 million for the period, due to falling asset values and losses on financial instruments. Despite the headline loss, the fund reported an 11.6 percent increase in net operating income to A$72.2 million. Chief executive Tino Tanfara said the trust would be able to absorb any further declines in asset values, with no debt maturing until 2010 and access to an undrawn facility of A$580 million. Page 19.
THE SYDNEY MORNING HERALD (www.smh.com.au)
--Gold Coast property financier City Pacific has gained an extension from the Commonwealth Bank of Australia (Munich: 882695 - news) on A$203.5 million of debt. The debt is now due in February 2010, with City Pacific's chief executive, John Ellis, calling the bank's decision 'a vote of confidence in our ability to move forward.' The company also says it intends to restart distribution payments to unit holders in its First Mortgage Fund, almost a year after redemptions from the $900 million fund were suspended. Page 22.
--Gerry Harvey, executive chairman and figurehead of retailer Harvey Norman, yesterday said he does not intend to reduce his role at the company. Mr Harvey was asked whether he would step back and allow Harvey Norman's managing director Katie Page, also Mr Harvey's wife, to take a more prominent role, after Ms Page made a rare appearance in the media. Mr Harvey said 'at some stage I'm going to die I've been OK for 10 years.
I've got no health problems.' Page 22.
--Australian and New Zealand bondholders in troubled asset manager Babcock & Brown have been offered A0.1 cents for each A$100 note, which would return to bondholders just A$640,000 from the more than A$600 million originally provided by investors. The offer is part of a restructuring plan which will be put to bondholders next month. If the offer is rejected by bondholders, B&B will be placed in voluntary administration, and bondholders will receive nothing. Page 23.
--Australian media company Ten Network may be forced to sell assets, cut dividends, or find a new cornerstone investor, after the failure of an attempted A$90 million share sale this week. Analysts believe the company may be close to breaching banking covenants on its A$620 million of debt after downgrading earnings estimates this week. Ten's shares fell 14 percent to A80 cents a share yesterday, with analysts saying any equity raising priced above A50 cents would be unlikely to succeed.
Page 23.
THE AGE (www.theage.com.au)
--Ratings agency Moody's Investor Services' forecast of a 0.4 percent contraction in the Australian economy this year has prompted it to review the credit ratings of the nation's banks.
A Commonwealth Bank of Australia spokesman said the review was normal and the bank was 'not reading anything into' it. However, JPMorgan economist Stephen Walters expressed concern that a downgrade could lead to a perception of the banks as risky creditors. Australia's four major banks are among only a dozen worldwide with a AA (5GZ.SI - news) rating. Page B1.
--Troubled toy wholesaler Funtastic yesterday launched a A$22 million capital raising and purchased former director Nir Pizmony's toy manufacturing business NSR through a A$10 million share issue. Funtastic chairman Graeme Yeomans said the capital raising and NSR acquisition would 'enable the company to build on its key strategic platform of returning toys to acceptable margins.' Mr Pizmony was involved in an Archer Capital-led consortium last year that considered a A$132 million takeover of Funtastic. Page B1.
--Australian toll-road operator Macquarie Infrastructure Group has rejected concerns that Indiana Toll Road (ITR), which MIG co-owns with Spain's Cintra (Madrid: CIN.MC - news) , may default on its US$4.1 billion debt facility. The concerns have arisen following a 14.8 percent fall in traffic volumes on the United States road during the past six months, which forced ITR to use US$77.5 million in 'stabilisation reserves' to cover debt payments. MIG yesterday reported a loss of A$1.68 billion for the December half-year. Page B2.
--Federal Trade Minister Simon Crean yesterday said the controversy over recent proposals involving Chinese companies investing in Australian resource companies has highlighted the need for a free trade agreement (FTA) between the two countries.
Mr Crean said an FTA would require concessions from both sides, saying, 'this is a two-way street.' A proposal for a A$30 billion alliance between Australian resource company Rio Tinto (LSE: RIO.L - news) and China's Chinalco has generated concerns about jobs and transparency. Page B3. --
Keywords: DIGEST AUSTRALIA BUSINESS
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