Australian Dollar and Stocks Fall

123jump.com Staff
10 Jun, 2008
New York City

Australian stocks dropped nearly 3% after the local dollar fell against the U.S. currency. The prospect of currency market intervention from the U.S. to defend the dollar dragged Australian currency lower. PT Bumi revised its offer higher for Herald Resources. The wine and beer maker Fosters rose after its CEO resigned and estimated earnings between $700 and $715 million. Queensland Gas bids for Roma.

[R]3:00AM New York, 7:00PM Sydney - ASX 200 index lost 2.8% as financials traded lower and Australian dollar declined.

Market Sentiments

ASX 200 index lost 2.8% or 154.6 to close at 5,437.50. The Preliminary market turnover was 2.06 billion shares worth $6.41 billion with 353 stocks up, 967 down and 340 unchanged. The most traded stock was Empire Oil & Gas with 154.44 million shares worth $4.22 million.

Australian dollar fell after the Secretary of U.S. Treasury Hank Paulson indicated that currency market intervention should be ruled to out to defend the dollar. Australian dollar quickly lost 1.3% against the U.S. dollar and closed at 94.96 American cents. Australian dollar has gained 8% for the year so far and increased in value nearly 80% in the last five year against the U.S. dollar.

Herald Resources rise on revised offer from Bumi Resources

Australian zinc and lead miner Herald Resource''s shares rose by as much as 3.9% today after PT Bumi Resources increased its offer price for Herald Resources Limited to $2.80 cash per share.

Bumi also revealed plans to accelerate payment to Herald shareholders that accept the Calipso offer, with payment to be made within the 12 calendar days.

The Calipso offer is unconditional except for the remaining 50.1% minimum acceptance condition. Herald directors have unanimously recommended that Herald shareholders accept the revised Calipso Offer.

""In light of the superior offer from Calipso, the Herald directors have rejected the alternative $2.60 to $2.65 offer from Tango Mining Pte Ltd and have withdrawn their previous recommendation to accept the Tango Offer,"" read part of a statement on Herald''s website.

Herald and Bumi have entered into a break-fee agreement and Calipso would extend the closing date of its Offer to 7 pm Sydney time on Thursday, 26 June 2008. The Tango Offer is scheduled to close at 5 pm Perth time on Thursday, 19 June 2008.

Gainers and losers

Of the ASX 200 index stocks, JB Hi-fi Ltd led the gainers with a rise of 9.4% followed by increases in Lihir Gold Ltd of 1.7%, in Duet Group of 1.5%, in Santos Ltd of 1.4% and in Corp Express Australia of 1.2%.

Of the ASX 200 index stocks, Emeco Holdings Resources led the decliners with a fall of 10.6% followed by losses in Centro Retail Group of 10%, in Independence Group of 9.8%, in AWB Ltd of 9.7% and in Flight Centre of 9.6%.

Foster''s group downgrades earnings and accepts CEO''s resignation

Australia''s biggest beer and winemaker Foster''s Group Limited today reviewed its fiscal 2008 earnings outlook downwards and announced a non-cash write down to wine asset carrying values and a strategic review of the global wine business. Chief Executive Officer Trevor O''Hoy offered his resignation.

Foster said in a statement it expects fiscal 2008 net profit after tax before significant items to be between $700 million and $715 million. Earnings per share before significant items are expected to be between 36.2 cents and 36.9 cents. Constant currency earnings per share growth is expected to be between 5% and 7% below previous guidance of approximately 10% growth.

Foster''s said it expects to report non-cash impairment charge of $600 million to $700 million or $511 million to $590 million after tax to the carrying value of its global wine assets.

An impairment charge of $430 million to $480 million or $341 million to $370 million after tax is expected in its unit in California. This reflects a reduction in forecast sales of Californian sourced wines following the deterioration in performance over the past 12 months.

Foster''s also expects to report a $70 million non-cash write down to surplus Australian bulk wine inventories. Foster''s surplus Australian wine inventory reflects a higher than anticipated intake from the Australian 2008 vintage, lower than anticipated sales in fiscal 2008 and the impact of currency on the global demand for Australian wine.

The company said its board has also accepted the resignation of Chief Executive Officer, Trevor O''Hoy. Trevor has agreed to stay on to facilitate an orderly transition until the appointment of his successor. Foster''s Chairman, David Crawford said: ""Trading conditions have been tough and the continued strength of the Australian dollar has hit us hard. The reality is we did not execute the Southcorp integration as well as we expected and operating conditions are now more challenging.

""We must also recognise and acknowledge that we paid too much to acquire wine assets. We have been very open in saying wine returns are not acceptable and the board is fully focused on delivering value for shareholders.

Foster''s share rose 1.1%.

Queensland Gas bids for Roma

The boards of Queensland Gas Company and Roma Petroleum NL have agreed on terms for QGC to make a friendly bid for all the issued shares in Roma.

Queensland said in a statement, the implied value of the QGC offer, which is 50% cash and 50% stock, is 20 cents for each of the 254,700,311 Roma shares, valuing Roma at about $50.9 million based on the 10 day volume weighted average price of QGC shares up to the date of this announcement of $5.66.

Under the terms of the offer QGC would pay 10 cents in cash for each share in Roma, as well as a QGC scrip component of 0.0177 QGC shares for every Roma share.

All the directors of Roma intend to accept the offer from QGC in respect of all Roma shares held or controlled by the directors.

QGC Managing Director Richard Cottee said today an acquisition of Roma''s interests would expand QGC''s coal seam gas acreage. Roma holds a significant interest in a petroleum lease, PL 171. The acreage covered by the lease in the northeast Surat Basin is prospective for coal seam gas. It is close to QGC''s ATP 651P and adjacent to QGC''s ATP 574P.

PL 171 is near the proposed pipeline for the Queensland Curtis LNG project being undertaken by QGC and BG Group. QGC and Roma have entered into a pre-bid agreement in relation to the QGC offer. QGC has also entered into a pre-bid acceptance agreement with Oil Drilling & Exploration Limited, a major shareholder of Roma, which gives QGC an interest in 19.16% of Roma shares.

OD&E has agreed to accept the QGC offer in respect of its entire 19.16% shareholding in Roma within 14 days of receiving a formal offer.

QGC''s share fell 2.2%.

Gunns'' share down 7.9%

Tasmanian timber company Gunns'' share fell 7.9% after the close of trade today. The fall left the share at its lowest level in a year. The share has now dropped more than 13% since late last month when it was snubbed by ANZ, which pulled the plug on funding for its pulp mill.

Newcrest shares fall as it secures alternative gas source

Newcrest Mining fell 2.3% today despite announcing that it had secured access to an alternative source of gas, which is, sufficient to operate one of its two processing trains. The company said in a statement the gas was procured under a short-term contract at elevated prices, reflecting the current limited supply of gas in Western Australia.

""Operation of the second processing train requires the use of diesel to meet the total fuel requirements of the power station,"" the company said.

Newcrest said the overall impact of the explosion that occurred at Apache Energy''s Varanus Island gas export facility was estimated to reduce Telfer''s production by up to 30,000 ounces of gold plus associated copper.

""The combined result of higher diesel and gas prices and the earlier than planned maintenance program will lead to an increase in production costs,"" Newcrest said.

ABC completes fund raising of $82.2 million

ABC Learning Centres Limited today announced that it has completed an $82.2 million equity offering and placed shares with Morgan Stanley private equity in Asia and Lazard Asset Management.

The placement is for 15% of ABC''s current outstanding ordinary equity of 71.5 million new shares at $1.15 per share, a 15% discount to the last close of $1.35 per share.

The shares have been placed to Morgan Stanley Private Equity Asia and Lazard Asset Management Pacific Co. Of the 15% placement, MSPE Asia would take up 12.9% and Lazard Asset Management 2.1%.

ABC share was fell 9.3%.

World markets review

In Tokyo Nikkei 225 Index closed lower 160.21 or 1.13% to 14,021.17, in Hong Kong Hang Seng index decreased 1,026.66 or 4.21% closed to 23,375.52. In Australia ASX 200 index lower 154.60 or 2.76% to close 5,437.50. In Malaysia KL Composite index decreased 0.02 or 0.00% closed to 1,230.96.

In South Korea Kospi Index decreased 34.58 or 1.91% to close at 1,774.38, in Thailand SET index closed lower 13.64 or 1.69% to 791.94 and Indonesia JSE Index edged decreased 36.26 or 1.50% to 2,373.82. Sensex index in India decreased 176.85 or 1.17% to 14,889.25.