Virgin Blue Plunges 22%, Stocks Down 2%

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

ANZ launches an internal inquiry to review its securities lending business and its relationship with the collapsed Opes prime broker. Virgin Blue plunged 22% to a record low after its controlling shareholder Toll Holdings Ltd decided not to sell its stake on lack of investor interest. Virgin Blue last week slashed its net income forecast to less than $140 million for the year ending in June 30, down from $216 million a year earlier. Of the ASX 200 index stocks, Toll Holdings Ltd led decliners.

[R]3:00AM New York, 7:00PM Sydney - ASX 200 index fell 1.8% as financial and resource stocks led the decline. Virgin Blue plunges 22% to a new low.[/R]

Market Sentiments

ASX 200 index fell 1.8% or 96.9 to close at 5,342.40.

Market Driver

Australia and New Zealand bank''s chief executive Mike Smith will lead a review of ANZ''s involvement in securities lending business and its involvement with Opes Prime Group.

Senior ANZ executives David Hisco, Managing Director Esanda and Chris Page, Head of Risk Asia Pacific will assist Smith and David Crawford, one of Australia''s most experienced company directors with experience in company liquidation and restructuring.

The review, which has the endorsement and support of the ANZ Board, will examine the oversight and control of ANZ''s involvement in securities lending business and management of ANZ''s client relationships including with the Opes Prime Group.

ANZ, Merrill Lynch & Co. and Dresdner Kleinwort took A$1.59 billion of stocks from the share portfolios of now defunct Opes Prime clients last month to recoup loans to the brokerage firm.

ANZ shares have dropped 13 percent since April 7, when the bank said it set aside $975 million for bad debts, predicting rising defaults as higher interest rates curb economic growth. ANZ share fell 2.3%.

Gainers & losers

Of the ASX 200 index stocks, Pan Australia Resource Ltd led gainers with a rise of 9.3% followed by increases in Incitec Pivot LT of 4.5%, in Felix Resources of 3.5%, in AGL Energy Ltd of 3.2% and in Independence Group of 3%.

Of the ASX 200 index stocks, Toll Holdings Ltd led decliners with a fall of 15.1% followed by losses in Sino Gold Mining of 12.2%, in Spotless Group of 11.5%, in Asciano Group of 9.1% and in Austar United of 8.9%.

Leighton wins $344 million contract

Leighton Contractors Pty Limited''s wholly owned subsidiary, HWE Mining has been awarded a $344 million contract to provide mine development services at Rio Tinto''s Mesa A iron ore operation, located 50 km from Pannawonica in Western Australia''s Pilbara region.

The project is the first major contract to be awarded by Rio Tinto to HWE Mining. It will see HWE Mining design and construct the ore handling and train loading plant, as well as associated mine infrastructure. In addition, HWE Mining will carry out pre-strip work to establish the Mesa A operation by late 2009.

On completion of the mine development program in late 2009, the Mesa A mine will be operated by Rio Tinto and is expected to produce 25 million tons of iron ore per year.

Leighton Contractors is one of Australia''s leading construction, mining, services and telecommunications groups with over $8 billion of work in hand, employing more than 7,500 people across Australia and New Zealand.

Leighton share fell 1.1%.

Kagara dismiss reports of Lounge Lizard nickel sulphide''s impending sale

Zinc explorer and miner Kagara Ltd today downplayed the media reports that it intends to sell its Lounge Lizard nickel sulphide deposits located at Forrestania in the immediate future.

""In response to press reports circulating at present, Kagara wishes to advise shareholders that the Lounge Lizard nickel sulphide deposit at Forrestania is not for sale and no statement to that effect has been made either privately or publicly by myself.
Executive chairman Kim Robinson said, ""Nickel is not a core commodity and that one option for funding a future development of the large Admiral Bay zinc-lead-silver-barite deposit in the Canning Basin of Western Australia would be to sell Lounge Lizard at a point when its value has been fully evaluated by an ongoing diamond drilling program.""

Other options for funding Admiral Bay would be debt or introducing a joint venture partner and contrary to some reports in the media. We are not holding talks but have been approached by various companies including BHP Billiton, Teck Cominco, Sumitomo Metals, Xstrata, Glencore,
Korea Zinc and Vedanta Resources.

The company reiterated fiscal 2008 production target of 40,000 tons of zinc and 27,000 tons of copper. The West Australian miner said last month it would lose about 3,000 ton of copper production due to heavy rains.

Kagara share rose 0.9%.

Queensland under investigation for insider trading

The Australian Securities and Investment Commission began investigations in an alleged case of insider trading at Queensland Gas Company involving company secretary Mukesh Panchal. He is alleged to have purchased stocks worth more than $1.3 million ahead of $8 billion joint venture with the UK-based BG Group.

Mr Panchal, who has been relieved of his duties, is alleged withheld the information from the Australian Stock Exchange.

Queensland Gas share was up 0.8%.

Stokes to back an engineer and professor for West Australian newspaper board

Kerry Stokes has elected to back an engineer and university professor to sit on The West Australian newspaper''s reconstituted board.

This was after an analyst commissioned by Mr Stokes'' Channel 7 to shortlist candidates for the post had settled for Margaret Seares from the University of Western Australia and former Vodaphone director Peter Abery.

Stokes owns 20% of the newspaper through Channel 7 and the composition of the new board would be based on its votes along with that of 30,000 retail shareholders when an extraordinary meeting is held next week.

Stokes and his business colleague Peter Gammell are also in line for seats on the board. Former Age newspaper editor Steve Harris and technology company Cisco director Aiden Montegue are contesting for the board seats as well.

Jetstar to enter Vietnam market

Qantas Group airline Jetstar entered into a partnership with Vietnam''s second largest carrier Vietnam''s Pacific Airlines.

Pacific Airlines is set to become Vietnam''s first low cost airline by the end of May and would operate as ''Jetstar Pacific''. The Qantas Group is set to increase its shareholding in Pacific Airlines to 30% by 2010 from the 18% it acquired in July 2007. The joint venture has already received regulatory approvals from Vietnam and Australia.

Qantas'' share fell 4.7%.

Australian Worldwide Exploration in talks to acquire Arc Energy

Australian Worldwide Exploration Ltd fell 6.4% at the close of trade after entering talks to take over rival Arc Energy Ltd.

A merger would give Australian Worldwide and Arc Energy 57.5% of Cliff Head in Western Australia, as well as 42.5% of BassGas off the southern coast, matching Origin Energy Ltd''s stake in the gas project.

Australian Worldwide is considering buying its smaller rival for $500 million, the Sydney Morning Herald newspaper reported.

The companies are discussing a cash and stock valued at A$1.58 for each Arc Energy share, creating a company with a market value of more than A$2 billion, the Sydney Morning Herald reported.

Virgin shares fall as Toll pulls plug on share sell off

Virgin Blue plunged 22% to a record low after its controlling shareholder Toll Holdings Ltd decided not to sell its stake on lack of investors’ interest.

Virgin Blue last week slashed its net income forecast to less than $140 million for the year ending in June 30, down from $216 million a year earlier.