press digest-australian business news - april 18

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    PRESS DIGEST-Australian Business News - April 18
    06:50, Monday, 18 April 2005

    (Compiled for Reuters by Media Monitors)

    Private equity investors, Catalyst Investment Management and
    Advent Management Group, are reported to be preparing a 'dual
    track' sale process for their Taverner Hotel Group, which has a
    portfolio of 30 hotels generating more than A$250 million in
    annual sales. The process is expected to lead to an initial
    public offering if it does not flush out a strategic buyer such
    as the Coles Myer retail group. Page 13.
    -- Prime Infrastructure will dilute its exposure to the
    contentious Dalrymple Bay coal terminal in Queensland to less
    than 20 per cent of its earnings if it succeeds with a A$600
    million takeover, announced on Friday, for British gas
    distributor, International Energy Group . Page 13.
    -- Leighton Holdings chief executive, Wal King, has
    watered down his company's potential interest in the A$1.85
    billion Pilbara iron-ore development promoted by Fortescue Metals
    Group . We have no intention of bogging ourselves down in
    a project that is controversial, and where we do not have
    certainty about payment and a more than reasonable expectation
    that we are going to earn profit for our shareholders,' Mr King
    said. Page 13.

    -- Research by Macquarie Securities shows that St George
    and Westpac are the banks most exposed by the
    Australian Tax Office (ATO) clampdown on the way hybrid
    securities issued by banks are taxed. The Macquarie research
    report said it appeared that St George Bank had potential
    liabilities amounting to eight per cent of adjusted common
    equity, while Westpac's liabilities amounted to seven per cent.
    Page 52.

    -- Federal Assistant Treasurer, Mal Brough, is refusing to
    back down on his decision to allow retirement savings accounts
    (RSAs) to be used as default funds when employees become free to
    choose their superannuation fund from July 1. Unlike other
    default funds, RSAs - mostly run by banks - are not required to
    offer minimum insurance cover to members. 'I think it's just
    terrible public policy. It just doesn't make any sense,'
    Australian Industry Group chief executive, Heather Ridout, said
    yesterday. Page 52.


    Most analysts are expecting a nervous market on the Australian
    Stock Exchange (ASX) today in the wake of last week's performance
    on Wall Street, which experienced the biggest weekly fall in two
    years. The All Ordinaries Index on the ASX fell 70
    points to 3993.2 on Friday but analysts said yesterday that, with
    company profits and commodity exports still strong, the local
    market should be spared the worst of the fall-out from Wall
    Street. Page 25.

    -- Federal Finance Minister, Nick Minchin, and senior Finance
    Department officials will travel to the United States (US) today
    to begin an assessment of international interest in the sale of
    the Government's remaining 51.8 per cent shareholding in Telstra.
    Senator Minchin will be briefed in New York on the possibility
    of using a Google-style auction for the sale to reduce broking
    and banking costs. Page 25.

    -- Economists warned yesterday that Australian consumers had
    yet to feel the full effects of higher oil prices, especially
    with products requiring plastic packaging. Investment bank,
    CSFB, warned last week that failure to recover higher costs of
    resin used to make plastic bottles was likely to result in margin
    pressure. Allison Watkins, chief executive of fruit juice maker,
    Berri, said packaging costs could have 'a multi-million dollar'
    effect on the business but it could be six to 12 months before
    the impact was clear. Page 25.

    -- Prime Infrastructure says it can finance its acquisition
    of London-listed International Energy Group (IEG) without calling
    on shareholders for funds. Prime announced on Friday night that
    it had been successful in a competitive bid for IEG, agreeing to
    pay A$498 million. Prime managing director, Chris Chapman, said
    yesterday the deal would be funded initially by debt from Bank of
    Scotland and Dresdner Kleinwort Wasserstein, with bridging
    finance from Babcock & Brown . Page 27.

    -- Breakfast cereal producer, Sanitarium, has threatened
    legal action against six companies, five in Australia and one in
    the United States, over use of the word 'granola' to describe a
    particular type of toasted muesli. Sanitarium, with strong links
    to the Seventh Day Adventist Church, says it has been producing
    granola since 1898 and has owned the granola trademark since
    1921. Companies warned-off include the David Jones
    department store group. Page 27.


    Australian Securities and Investments Commission chairman,
    Jeffrey Lucy, said yesterday the Commission was preparing more
    briefs for criminal prosecutions as a result of the royal
    commission into the A$5.3 billion collapse of HIH Insurance in
    2001. Mr Lucy's statement follows the jailing last week of
    former HIH directors, Ray Williams and Rodney Adler. Page 32.

    -- The shareprice of wine producer, Southcorp ,
    closed A5 cents lower at A$4.18 on Friday, the lowest level since
    Foster's Group , the global beverages company, launched a
    hostile takeover bid in mid-January at A$4.14 a share. Two
    broker reports during the week forecast difficult years ahead for
    the wine industry in Australia and said Southcorp's sales
    projections were too optimistic. Southcorp said its business
    remained 'on track.' Page 32.

    -- Ramsay Health Care chief executive, Pat Grier,
    said yesterday that Ramsay may have to sell 'one or two more
    hospitals' to secure approval from the Australian Competition and
    Consumer Commission (ACCC) for its A$1.4 billion buy-out of
    Affinity Health. Ramsay has already agreed to sell back to
    Affinity's owners 14 of the 53 hospitals involved in the buy-out.
    Page 33.

    -- Food and beverage companies, Coca-Cola Amatil (CCA)
    and San Miguel , are reported to have withdrawn
    from the trade sale process for New Zealand (NZ) Dairy Foods,
    owned by NZ entrepreneur, Graeme Hart. CCA recently took over
    fruit processor, SPC Ardmona, for A$560 million and San Miguel
    paid A$1.9 billion to win a takeover battle for Australian dairy
    group, National Foods . Mr Hart is expected to keep NZ
    Dairy Foods unless he can generate an offer of A$650 million.

    Page 33.

    -- Online job-listing company, Seek , sold 77 million
    shares at A$2.10 each in an institutional book-build that closed
    on Friday. The sales represented 28 per cent of the
    Melbourne-based company, which lists on the Australian Stock
    Exchange today. The shares had been offered at a range between
    A$1.80 and A$2.20 and much of the float proceeds will be used to
    buy shares from existing shareholders. Page 34.

    -- THE AGE (

    A damages suit claiming A$400 million from United States
    investment company, Berkshire Hathaway Inc has been
    foreshadowed in documents lodged with a New York court by the
    liquidator of HIH Insurance, Tony McGrath. The claim relates to
    reinsurance contracts revealed during the royal commission into
    the A$5.3 billion collapse of HIH in 2001. Berkshire Hathaway is
    run by billionaire investor, Warren Buffett. Page 10.

    -- Studies by British market research group, Wine
    Intelligence, indicate a substantial gender gap among British
    drinkers of Australian wine. The firm said an online survey of
    1184 British consumers in November found that 59 per cent of
    respondents were women but only 53 per cent of Australian wine
    consumers were female. The research also indicated that
    Australian wine failed to attract interest in consumers under the
    age of 25. Page 11.

    -- The steep rise in the cost base of the resources industry
    is forcing more and more gold development projects to be placed
    on hold. The latest, announced last week, is Tanami Gold's
    Coyote project in the far north of Western Australia.
    Industry sources say that costs for gold developments have been
    forced up by the levels of activity in other minerals but there
    has been no comparable increase in the price of gold. Page 11.

    -- The Australian Securities and Investments Commission is
    today expected to approve the public disclosure document for the
    A$487 million float of JF US Industrial Trust, due to list on the
    Australian Stock Exchange on May 19. Following approval, copies
    of the document will be sent to institutions and retail clients
    of Ord Minnett, Grange Securities, Commonwealth Securities and
    the 48,000 unit holders of the combined Mirvac and James Fielding
    groups. Page 11.

    -- Melbourne real estate agents reported a 70 per cent
    clearance rate at weekend auctions and forecast a movement of
    investment funds into property with the slump in the sharemarket.
    Greg Hocking, of Hocking Stuart Real Estate, said many investors
    had been 'sitting on the fence wondering where to go' and now
    their choices 'will be a bit clearer.' Mr Hocking said a more
    serious downturn in share prices would see a 'flight to quality
    real estate.' Page 12.

    Looking for more information from local sources?
    has 112 Australian sources including the Australian Financial

    ((Reuters Sydney Newsroom, 61-2 9373 1800,
    [email protected]))

    (c) Reuters Limited 2005
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