Australia: Centennial Coal, CSR Ltd in Focus

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
05 Jul, 2010
New York City

Stocks traded lower in Australia. Thai Banpu agreed to pay A$2 billion for Centennial Coal Co. Singapore-based Temasek may take a stake in Jupiter Mines

[R]6:00 PM Sydney, Australia – Stocks traded lower in Australia. Thai Banpu agreed to pay A$2 billion for Centennial Coal Co. Singapore-based Temasek may take a stake in Jupiter Mines’ manganese ore project in South Africa and Wilmar International outbids China’s Bright Foods Group for the sugar unit of CSR Ltd.[/R]

Stocks in Australia opened higher but steadily declined in trading to close lower by 17 points. The ASX 200 Index fell 0.39% or 16.60 to close at 4,222.10.

The Reserve Bank of Australia is scheduled to meet at 2:30 p.m. tomorrow to determine interest rates and discuss the health of the economy.

Australia’s budget is not at risk because of lower revenue forecast after the government revised the resource profit tax, Treasury Secretary Ken Henry said while addressing a senate committee hearing in Canberra today.

While the Minerals Resources Rent Tax will generate lower income for the government that the previous one, it will not put any pressure on budget that has been predicted to return to surplus in 2012-13, said Henry.

Jupiter Mines Ltd, the Australian company developing manganese and iron ore mines in South Africa, said that Temasek Holdings Pte, a Singapore-based investment company is interested in its project in South Africa.

The Perth-based Jupiter may take 18 months to develop the Tshipi manganese mines in South Africa.

“We are seeking to raise between A$70 million to A$100 million in a share sale and Temasek may be interested in a stake,” said Chairman Brian Gilbertson reporters in Perth today.

Banpu Pcl, Thailand’s biggest coal producer has agreed to buy 80% of Australia’s Centennial Coal Co it doesn’t own already for A$2 billion to get control over 10 mines in Australia and power station customers in Japan and Europe.

In this biggest overseas takeover by Thailand, Banpu will pay A$6.20 a share in cash, at a premium of 40% to Centennial’s closing price on July 2, Sydney-based Centennial said in a statement today.

Singapore-based Wilmar International Ltd, the world’s largest palm oil trader, has agreed to buy the sugar unit of Australia’s CSR Ltd for $1.75 billion beating China’s Bright Food Group’s bid.

The offer includes A$1.35 billion in cash and A$403 million in assumed net debt. Buying the sugar unit will give Wilmar mills that produce 45% of raw sugar in Australia that account for about 4% of global tarde.

“The purchase will help the company to expand in Indonesia and other Asian nations,” said Wilmar’s CEO Kuok Khoon Hong.

ASX Movers

Centennial Coal Company Limited led gainers in the S&P ASX 200 index with a rise of 32.5% followed by Elders Limited 10.5%, Energy World Corporation Limited 5.1% and Macarthur Coal Limited 4.7%.

Australian Worldwide Exploration Limited led decliners in the S&P ASX 200 index with a loss of 6.6% followed by Prime Infrastructure Group 5.4%, Transfield Services Limited 4.7%, Biota Holdings Limited 4.7% and ING Industrial Fund 4.0%.

Other Movers

BHP Billiton plc, the mining company, fell 0.2% to A$36.99.

Centennial Coal Company Limited surged 32.5% to A$5.86 after the company agreed to a $2 billion takeover offer from Thailand''s Banpu Public Co Ltd, giving the top Thai coal group an entry in Australia.

CSR Limited rose 3.2% to A$1.75 after the building-products maker said Wilmar, the palm oil trader, agreed to buy CSR’s sugar unit for A$1.75 billion, higher than offer from China based Bright Food Group Co.

Elders Limited climbed 9.2% to A$0.41 after the wool broker’s chief executive Malcolm Jackman said a decline in volumes in the third quarter and pricing issues led to the earnings downgrade that has seen the company''s share price tumble in recent weeks.

Santos Ltd rose 1.5% to A$12.41.

Sigma Pharmaceuticals Limited fell 3.7% to A$0.39.

Whitehaven Coal Limited rose 4.8% to A$4.74 after the company was upgraded “buy” in new coverage at Mainfirst.