Australia and Asia Decline Sharply

123jump.com Staff
21 Jan, 2008
New York City

Australian stocks fell for the eleventh session in a row after Asian markets fell sharply. ASX 200 is now 18% lower from its peak in November 2007. Rio Tinto fell after news reports suggested that BHP is not likely to revise its offer. MFS stock was halted after it fell 70% and the company repalced its chief executive. Lachlan Murdoch and James Packer are in a deal to acquire Consolidated Media at implied price of $4.80 per share.

[R]3:00AM New York, 7:00PM Sydney - ASX 200 index declined 2.9% on a weakness in financial and mining stocks.[/R]

ASX 200 index lost 2.9% or 166.9 to close at 5,580.40.

At close, the preliminary market turnover statistics suggested that 1.118 billion shares worth $1.69 billion shares changed hands. Of the stocks trading on the ASE, 326 shares moved up, 1,018 stocks traded down, and 296 closed unchanged.

Gondwana Resources led the most active stocks list with 129.24 million shares worth $5.6 million changing hands.

Australia''s two biggest media families are in a partnership to form multibillion-dollar deal as Lachlan Murdoch seeks to join forces with James Packer.

Murdoch proposed to acquire 100% of the Consolidated Media through private vehicle Illyria Pty Ltd. The indicative and conditional proposal implies consideration of $4.80 for each Cons Media share, valuing the target at $3.31 billion.

Under the deal, Illyria and its equity partners would create a 50/50 joint venture with Cons Media''s major shareholder Consolidated Press Holdings Ltd as part of a consortium. Cons Media said Conspress has given its support to the proposal.

Final terms between Illyria and Conpress are not agreed. Cons Media said the offer comprises of fixed cash amount of $4.06 per share plus a variable cash amount to be determined.

Consolidated''s assets include the remaining 25% of PBL Media and 27% of Internet jobs portal Seek. It also owns 25% of Foxtel, giving it the same size stake in the country''s biggest pay television operator as News Corp. Telstra Corp. controls the remainder.

Property funds manager MFS today requested for trading to be halted in its shares after it appointed a new chief executive. MFS appointed Craig White as its new chief executive and the resignation of Michael King.

The MFS stock plunged 70% on Friday amid concerns over $550 million fund raising. The trading halt remains in place until MFS makes an announcement or the share market opens on Wednesday. MFS shares closed 68.87% per cent, lower at 99 cents on Friday, after falling as low as 71 cents.

After coming under pressure on Friday from investors, Mr King said that the proposed $550 million capital raising was the upper limit and acknowledged that the proposal was not well received. King also said MFS planned to repay $150 million in short-term debt, which is due in March 2008.

Property investor City Pacific had made an offer for the company''s financial services business, valued at about $1.3 billion, but withdrew it today after reviewing a demerger proposal announced by MFS on Friday. MFS is considering proposals for a majority interest in its Stella tourism business.

Takeover target, Rio Tinto Group, which has been fending off a hostile $108 billion bid from BHP Billiton Ltd, fell 7.9%, largest in ten years, after BHP failed to make a new offer.

Speculation had been rife on Friday that BHP would offer 3.5 shares and $16 ($14) cash for each share in London-based Rio at the weekend. Investors acted on the speculation, sending Rio shares up 4.5%.

London-based Times newspaper reported yesterday suggested that BHP might not make a new offer before the February 6th deadline set by the U.K.''s Takeover Panel, the London-based Times newspaper reported yesterday.

The Sunday Telegraph news report suggested that BHP was in ``advanced stages'''' to launch a 65 billion-pound ($127.1 billion) takeover bid for Rio. BHP and Rio Tinto declined to comment.

Fortescue Metals Group Ltd today lodged an application with Australia''s competition regulators seeking third party access to a rail line in Australia''s Robe River iron ore mining region owned by Rio Tinto Ltd. The company said in a statement that the access would open up a number of isolated iron ore deposits in the region to mining.

The application to the National Competition Council to open the Robe River railway comes two months after Fortescue, through its wholly-owned subsidiary Pilbara Infrastructure, lodged similar applications over another Rio rail line in the Hamersley region and BHP''s Goldsworthy line.

BHP has so far attempted unsuccessfully to highlight that the rail line was part of the production process and therefore proprietary. Fortescue wants BHP to give it access to BHP''s 426 kilometers (264 mile) Mt. Newman line.

The Mt. Newman and nearby Goldsworthy rail lines transport about 100 million tons of iron ore each year to Port Hedland on the Indian Ocean. Rio operates a rail network spanning about 1,300 kilometers in the Pilbara and is also against sharing it with other mining companies.

Xstrata Plc, Rio Tinto Group and BHP Billiton Ltd today announced that they have cut coal production at mines in Queensland state due to heavy rain and flooding that may cost the industry and state tens of millions of dollars in lost output and damage.

Xstrata''s coal unit spokesman James Rickards was quoted saying the Newlands open-cut mine had been ``significantly affected,'''' while the Collinsville mine has had ``some impact. Macarthur Coal Ltd. said output at the Coppabella and Moorvale mines is also reduced according to Xstrata spokesperson quoted in Bloomberg.

Rio Tinto shut down its underground Kestrel mine near Emerald on January 17 after rain cut the main road used by workers to travel to the mine, while the mine was not flooded.
BHP''s Melbourne-based spokeswoman Emma Meade said all the operations in the alliance between BHP Billiton and Mitsubishi Corporation had been affected by the rainfall across the Bowen Basin region.

Xstrata Nickel Australia Pty Limited, a wholly owned subsidiary of Xstrata plc (LSE: XTA, ZSE: XTA.S) announces an extension to its takeover offer for Jubilee Mines NL (ASX: JBM.AU) to 7:00pm (Sydney time) 15 February 2008 (unless further extended).

At the time of this announcement, XNA had received acceptances so that it has an interest in 47.57% of total issued shares. XNA intends to review its conditions to the offer by 31 January 2008.

The Australian dollar closed weaker today, shedding gains made over the weekend as weaker than expected inflation data and safe haven flows overshadowed hawkish comments by central bank governor Glenn Stevens. At the close, the dollar was trading at US$0.8741/44, down from Friday''s close of US$0.8761/67.

Of the ASX 200 index shares, Centro Retail Group with a rise of 5.1% followed by increases in Rio Tinto Limited of 4.6%, in Suncorp-Metway of 4.1%, in Westpac Banking of 3.4%, and in Commonwealth Bank of Australia of 3.2%.

Of the ASX 200 index stocks, MFS Limited led the decliners with a fall of 68.9% followed by losses in Paladin Energy of 7.7%, in AED Oil of 7.4%, in Beach Petroleum of 7.4% and in Challenger Finance of 7.3% .