BHP Miners Return in Colombia, Just Rejects Bid

123jump.com Staff
01 Apr, 2008
New York City

Mine workers at BHP mine in Colombia return after a month long strike but it may take one month to reach normal production. The mine will lose nearly 20% of its production in the current fiscal year. Roc Oil Company''s share fell 14% today after disclosing that a well drilled in the area may fail to produce oil. Iron ore miner Midwest Corp blamed its operating loss in the fiscal 2007 year on costs incurred in defending a failed $900 million takeover bid by Murchison.

[R]3:00AM New York, 7:00PM Sydney – Colombian mine workers return after a strike at BHP nickel mine. Allco Group confirmed debt extension.[/R]

Market Sentiments

ASX 200 index gained 0.1% or 5.5 to close at 5,361.20.

The Preliminary market turnover was 1.29 billion shares worth $4.72 billion, with 517 stock up, 639 down and 323 unchanged. The most traded stock was Junior explorer Admiralty Resources with 42.51 million shares worth $8.11 million.

Market Driver

Allco Group managed, Rubicon Japan Trust today said that National Australia Bank Ltd has confirmed the extension of a $60 million loan facility to April 30, 2009.

The extension was on condition that the property trust meets a series of conditions, including selling off assets to reduce the loan over the coming year. Rubicon revealed it was still negotiating on loan in Japanese yen to Shinsei and Credit Suisse.

Rubicon in a press release noted, ""As foreshadowed in the RJT accounts for the year ended 31 December 2007, 4.9 billion yen is required to be repaid to Shinsei on May 6th, 2008 and 0.7 billion yen is required to be repaid to Credit Suisse on May 1, 2008.

Should both the required debt repayment dates of JPY4.9bn due to Shinsei on 6 May 2008 and JPY0.7bn due to Credit Suisse on 1 May 2008 not be extended, this would lead to an event of default.

Shinsei and Credit Suisse have been requested to extend their repayment dates to allow sufficient time for an orderly completion of the asset sales program.”

NAB had provided a revolving $60 million loan facility to RJT, which is secured by equity interests worth approximately $400 million. Two weeks ago, Rubicon Asset Management, which was bought by Allco last year, said it had cancelled a five cent per unit interim distribution due to be paid in order to help meet a $18.8 million margin call from NAB.

Units in RJT, whose portfolio of 22 properties was worth $1.18 billion at December 31, surged 11.1% after the news broke out and NAB fell 3.4%. Commonwealth Bank rose 0.7%, ANZ fell 0.6% and Westpac shed 1.5%. St George added 0.2% after announcing that director John Curtis became the bank''s chairman today.

Gainers and losers

Of the ASX 200 index stocks, Sundance Resource led the gainers with a rise of 14% followed by increases in ABC Learning of 13.2%, in Emeco Holdings L of 11.8%, in Challenger Finance of 10.4% and in Sunland Group of 7.3%.

Of the ASX 200 index stocks, Roc Oil Company led the decliners with a fall of 13.8% followed by losses in Allco Finance Group of 9.5%, in Mincor Resources of 5.6%, in AWB Ltd of 5.5% and in Zinifex Ltd of 4.9%.

Just''s chairman turns down Premier''s offer

Just Group Ltd''s chairman, Dr Ian Pollard today rebuffed offers to join the board of Solomon Lew''s Premier Investments Ltd if it''s $900 million takeover bid for just succeeds.

Just Group said Dr Pollard had indicated that he does not intend to join Premier''s board in the interest of preserving the independence of Just Group''s process for reviewing Premier''s offer.

Just Group reiterated its advice to shareholders to take no action to the offer, saying it would issue its formal response and recommendation after it received the offer documents.

Just Group also disclosed that adjusted earnings per share for the first half of fiscal 2008 were up 19.6%.

Premier announced its bid on Monday $2.20 in cash, including the 10.5-cent interim dividend declared by Just Group last month, and 0.25 Premier shares for each Just Group share.

The offer is not subject to any regulatory approval or financing conditions. The Just Group includes the Just Jeans, Portmans, Jacqui E and Jay Jays retail chains. Premier already holds a 23% stake in the Just Group.

Premier share was up 5.6%.

Roc Oil stock falls

Roc Oil Company''s share fell 14% today after disclosing that a well drilled in the area may fail to produce oil. The oil company is exploring Western Australia''s Dunsborough field. Its partners Venture partner Arc Energy Ltd fell 12% and Australian Worldwide shed 2.8%.

Roc Oil advised today that the Dunsborough-2 appraisal well in WA-286-P in the offshore Perth Basin, Western Australia has reached a Total Depth of 1,680 mBRT.

In the press release on its Web site it the company said, ""The preliminary results of the initial logging indicate that the previously reported oil in core may be residual (non-producible) oil saturations.

However, pressure data and fluid samples need to be fully analysed in order to allow a definitive interpretation to be made. This should happen within the next 24 hours.”

Results from the Dunsborough-1 discovery well, drilled last year, indicated the field may have between 20 million and 40 million barrels of oil in place but all of it many not be recoverable.

The field lies about 50 kilometers (31 miles) northwest of the producing Cliff Head oil field, owned by the same companies.

Chief executive John Doran said that estimated range ``needs to be re-examined'''' given the latest well result. He added that the recoverable volume would be lower. Roc owns 37.5% of the well, while Arc owns 30%, Australian Worldwide 27.5% and Itochu Corp 5%.

Midwest blames loss on defense of Murchison bid

Iron ore miner Midwest Corporation Ltd has blamed its operating loss in the 2007 financial year which run into millions on costs incurred in defending a failed $900 million takeover bid by rival Murchison Metals Ltd.

Midwest announced a reduced net profit of $7.15 million as a direct result of Murchison''s offer while its 2007 net profit after tax would have been $750,000 withstanding takeover related costs.

Midwest received a second hostile takeover bid of a $1.19 billion from Sinosteel Corporation. The latest offer is the first hostile takeover bid by a Chinese firm for an Australian company.

Midwest chief executive Bryan Oliver said the takeover expenses were unavoidable. ""While takeover costs undermined an otherwise profitable 2007, the alternative would have been to give away the company cheaply,"" Oliver said.

""Midwest shares are now trading at a premium to the original Murchison stock offer value, and since the offer was tabled Midwest''s shares have increased in value.

As part of this takeover defence, Midwest appointed various advisers including independent technical consultants, investment banking, legal, tax, accounting and public relations, which cost $7.75 million.

Midwest said it defended itself from Murchison''s stock bid, which lapsed on February 5 due to few acceptances, because the offer significantly undervalued the potential of its five key projects.

Midwest''s board is contemplating Sinosteel''s bidder''s statement, issued Monday, and has advised its shareholders to take no action. The offer has Foreign Investment Board approval but is conditional upon Chinese Government approval, which Sinosteel is likely to receive.

Sinosteel issues bidder statement for Midwest takeover

The largest iron ore trading company in China, state-owned Sinosteel Corporation, today issued its bidder''s statement for its $1.19 billion takeover bid for iron ore miner Midwest Corporation.

Sinosteel urged Midwest shareholders to consider the all-cash offer against several risks that they could face if the offer was not successful, in a statement released today.

The move is in direct disregard of Midwest''s call on March 19 to raise the $5.60-a-share bid to at least $7 a share, valuing Midwest at $1.49 billion.

Midwest is yet to issue a formal recommendation to its shareholders but advised them on March 14 to take no action until it had an opportunity to consider the offer.

Midwest said the current offer undervalued the strategic and intrinsic value of its five projects in Western Australia.

Midwest''s shares have closed higher than the bid price since March 19 when chief executive Bryan Oliver told a media teleconference that Sinosteel''s bid was timed to avoid paying a fair value for the target''s projects. Midwest share rose 1.7%.

BHP Colombian mine workers return

Mining giant, BHP Billiton Ltd announced that its Cerro Matoso nickel mine in Colombia might need about a month or more before returning to full production following a month-long strike, which has since ended.

Its spokeswoman said a force majeure it announced last week was still in place and work was progressively returning to normal.

She said that it was too early to measure the current production levels at the mine as workers were only returning to work. Unionized workers at the mine accepted a company offer on Sunday to end the four-week strike over wages and the use of outside contract workers.

The strike supported international nickel prices by fuelling concerns that world supplies would suffer. Cerro Matoso accounts for around 4% of the global supply of the metal, which is used in steel making.

The mine in the northern province of Cordoba produced about 51,000 tons of nickel in the 12 months ended June 30. BHP declared force majeure on Friday and said it was working with customers to keep them informed for the duration of the declaration. Its share rose 2.4%.

WorleyParsons acquires Incitec

Australia''s biggest engineering company, WorleyParsons today announced the acquisition of INTEC Engineering, a leading international offshore deepwater Hydrocarbons engineering and project services company, from Heerema Group for $108.5 million.

WorleyParsons said in a statement that the acquisition price represents a multiple of 9.5 times pro forma earnings before interest tax depreciation and amortization of INTEC for the twelve months ended 31 December 2007.

It added that the acquisition was scheduled to complete on 16th April 2008 and is expected to be accretive to earnings. The acquisition will be debt funded.

Headquartered in Houston, INTEC has over 500 professional staff with offices in London, Delft, Rio de Janeiro, Kuala Lumpur, Perth and Lagos.

WorleyParsons and INTEC have worked together under a strategic alliance on several projects in recent years and have an agreement to offer offshore oil and gas customers in the Asia-Pacific region a comprehensive solution for large scale integrated deepwater facilities, subsea and marine systems projects.

WorleyParsons chief executive, Mr John Grill said: ""The world''s remaining oil reserves are increasingly found in difficult to access areas, forcing our clients to look further afield in their search for new reserves.

The acquisition of INTEC completes the missing link in our hydrocarbons business which we have been seeking to fill for several years and strategically positions the company to service our clients operating in deepwater locations. As such we would expect the realization of revenue synergies and additional opportunities to follow in due course.""

WorleyParsons'' share rose 5.4% and Incitec fell 0.9%.

FKP''s share buoyed by debt refinancing

Retirement village operator, FKP Property''s share rose 7% after the company disclosed that it had managed to refinance its debt. FKP said it borrowed $375 million, helping the Brisbane-based company reduce the amount of debt maturing in the coming year.

The company led a recovery in Australian property stocks from their worst quarter since 2000. FKP Property surged 14%.

FKP fell sharply in the last six months of trading after property and investment companies declined on the troubles of Allco Finance and Centro Group. Investors also shunned the stocks on concerns property values may fall. Centro fell 3.3% and Allco Finance Group Ltd shed 9.5%.