Golden West Surges, Wesfarmers Refinances

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

Tax authorities in Australia have disputed $317 million in tax relief to BHP. The mining company intends to defend its position in the dispute involving a plant in Venezuela. Separately, Wesfarmers raised $710 million in the U.S. to refinance its short-term loans to acquire Coles Group. Portman, third largest iron ore exporter from Australia, acquired 10% stake in Golden West Resources to fend off an offer from Fairstar.

[R]3:00AM New York, 7:00PM Sydney – Opes Prime collapse continues to ripple through the market. Portman acquires 10% of Golden West. Wesfarmers raise refinance Coles group debt.[/R]

Market Sentiments

ASX 200 index gained 0.2% or 10.7 to close at 5,619.60.

The Preliminary market turnover was 2.19 billion shares worth $5.58 billion, with 691 stocks higher, 462 lower and 326 unchanged.

The most traded stock was Citadel Resources Group with 129.7 million shares worth $28.7 million.

Market Driver

BHP Billiton said that the Australian Taxation Office has issued assessments and is in dispute with taxes for the year 2001 to 2003. The dispute involves primary tax and interest of $316.9 million.

In a statement, BHP Billiton maintained that it is entitled to the tax relief claimed. The dispute is in respect of payments made pursuant to a plant completion guarantee, which had been granted by BHP in 1997 to third party financiers of the Orinoco Project in Venezuela.

""""The Taxation Office is still considering whether or not to apply any penalty. The Company is confident of its position. It intends to vigorously defend the assessment. """"The outcome of this dispute is unlikely to be known for some time. In the meantime BHP Billiton believes that the matter is adequately provided for in the accounts,"""" BHP said in the press release.

BHP share rose 1.3%.

Gainers and losers

Of the ASX 200 index stocks, Perpetual Ltd led the gainers with a rise of 6.9% followed by increases in Felix Resources of 6.7%, in Fortescue Metals of 6.6%, in Crown Ltd of 5.9% and in Macquarie of 5.4%.

Of the ASX 200 index stocks, Centro Retail Group led the decliners with a fall of 23.1% followed by losses in Centro Properties of 19.8%, in Allco Finance Group of 8.9%, in Mount Gibson Iron Ltd of 7.9% and in Valad Property of 7.7%.

Wesfarmers raises $710 million after successful bond pricing

Wesfarmers today said it was raising approximately $710 million (US$650 million) following the successful pricing of a bond issue in the United States to refinance its Coles Group acquisition. The bond offering is expected to close on April 10.

The placement consists of 5-year notes with a coupon of 6.998%, maturing in 2013. The retail giant said the notes would rank equally with Wesfarmers'' existing senior debt facilities and are expected to be rated BBB+ by Standard & Poor''s and Baa1 by Moody''s, in line with the company''s own rating.

""""The US$ proceeds have been fully hedged and will be converted into Australian Dollars. The notes will not be offered for sale in Australia and no shareholder approval is required for the issue of the notes.

Wesfarmers sold in a private-placement of bonds to help repay debt used to purchase Coles Group Ltd in November, including $4 billion of loans due in October.

Wesfarmers share was up 0.3%.

Portman acquires 10% of Golden West Resource

Golden West Resources Limited advised today that iron ore producer Portman Limited had acquired 11 million Golden West shares, representing approximately 10% of the Company''s issued capital for $9.5 million.

Golden West said in a statement Portman''s investment was a clear vote of confidence in the Company and its flagship Wiluna West Iron Ore Project, and it was looking forward to discussing how the two companies may work together.

Portman is Australia''s third largest exporter of iron ore, with a current market capitalization of $2.2 billion. It currently exports approximately 8 million tons of iron ore per annum from its Koolyanobbing operations in Western Australia through the Port of Esperance.

Portman is 80% owned by Cleveland-Cliffs Inc, an international mining company and is the largest producer of iron ore pellets in North America and a major supplier of metallurgical coal to the global steelmaking industry.

Golden West added that it would meet with Portman representatives to discuss its investment in the Company in the near future. Fairstar Resources Ltd is looking to buy Golden West.

Golden West share rose 59% while that of Fairstar added 3.3%.

Just engages Lonergan Edwards on Premier bid

Just Group Limited has engaged Lonergan Edwards as its independent expert to prepare a report on whether the unsolicited offer from Premier Investments Limited was fair and reasonable.

Just reiterated its advice to its shareholders not to take any action on the offer till it issues a formal response.

Solomon Lew through his entity Premier Investments Ltd made a $900 million takeover bid for Just Group earlier this week. The offer values Just at between $828 million and $898 million.

Just chairman Ian Pollard rebuffed Lew''s invitation to join the Premier board if it gains full control of the clothing retailer. Lew already controls 23.6% of Just through Premier and Metrepark Pvt Ltd, a private Lew family company.

Just stock fell 3.1%.

QBE''s share affected by short sellers

Australia''s biggest property and casualty insurer, QBE Insurance Group Ltd said short sellers who sold out after it posted slow profit growth in February affected its share.

Chairman John Cloney said at an annual shareholder meeting today that short sellers’ action led the stock decline of 30% three weeks after it announced its earnings on February 26.

QBE today affirmed its target for an increased full-year insurance profit margin of as much as 20%.

The company reported a profit of $1.93 billion for the year ended December 31, 30% higher from a year ago with the international operations accounting 70% of its earnings.

QBE stock rose 2.4%.

Emini''s ban extended

Collapsed stock broker Opes Prime, Laurie Emini''s travel bank was today extended to October 3, 2008 by the Federal Court of Australia judge, Justice Ray Finkelstein. The ban prohibits Emini from leaving Australia without the court''s consent.

Counsel for the Australian Securities and Investments Commission (ASIC), which is investigating the Opes Prime collapse, told reporters that Emini''s counsel had agreed to the extended travel restriction in his absence.

The court heard that Emini had already voluntarily surrendered two passports, one Australian and one Macedonian.