Mirvac Lowers Valuations, Indophil Higher Bid

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

Australian stocks fell as global financial stocks declined. The weakness in the U.S. trading and persistent worries related to the health of the U.S. banks kept Australian banks in check. ASX 200 index fell 1.5% to 5,288.30. Xstrata abandoned its offer for Indophil after a bid led by its chief executive offered 28% more. Victoria Supreme Court gave its approval for the merger between Zinifex and Oxiana. The newly merged company will be renamed Oz Minerals.

[R]2:15AM New York, 4:15PM Sydney – Australian stocks fell on global weakness. Zinifex and Oxiana merger gets a court approval. Xstrata abandons Indophil bid.

Market Sentiments

ASX 200 index lost 1.5% or 78.3 to close at 5,288.30. The preliminary market turnover 1.98 billion shares worth $6.95 billion, with 518 stocks rising, 756 falling and 360 unchanged. Telstra led the most active stocks with a trading volume of 58.4 million shares worth $252.5 million.

Market Driver

The index weakened today after local investors sold oil company stocks after China announced it is lifting the price of petrol, diesel and jet fuel between 16% and 18%.

World''s leading oil companies are reported to be negotiating to re-enter Iraq after 40 years. Woodside''s share fell 3.9%, Santos Ltd shed 6.2% and Oil Search declined 2.7%.

Gainers and losers

Of the ASX 200 index stocks, FKP Property Group led the gainers with a rise of 31.6% followed by increases in Iluka Resources of 9.9%, in Babcock & Brown of 6.7%, in Flight Centre of 6.3% and in Alesco Corp Ltd of 6.3%.

Of the ASX 200 index stocks, APN/UKA European led the decliners with a fall of 24.6% followed by losses in Transurban Group of 14.6%, in Babcock & Brown of 13.9% and in Centro Retail Group of 8.9%.

Xstrata backs down on Indophil

Xstrata abandoned its offer for Indophil after a bid led by its chief executive offered 28% more.

The world''s fourth-largest copper producer Xstrata Queensland Limited a wholly owned subsidiary of Xstrata plc, today announced that it would review a bid by a consortium comprising Crosby Capital Limited, the Alsons Group and Mr Richard Laufmann, CEO and Managing Director of Indophil Resources NL to acquire 100% of Indophil for $1.28 cash per share.

Mr Laufmann''s group''s $540 million offer translates to $1.28 a share in cash and 28% more than the offer from Xstrata. Xstrata has declined to match the offer according to a statement filed with the ASIC.

Xstrata has a 2.2% stake in Indophil and its stock surged 20%.

Fortescue welcomes draft proposal to open rail access

Australia''s third-largest iron ore producer, Fortescue Metals Group Ltd today welcomed a draft recommendation by the National Competition Council to declare open to third party access the rail services of Rio Tinto and BHP Billiton for the Robe, Hamersley and Goldsworthy railway lines. Fortescue said in a statement, it recognizes the ultimate decision rests with Treasurer Wayne Swan to act on the recommendations.

Fortescue Executive Director Graeme Rowley said: ""It has now become abundantly clear that the railroads of the Pilbara have not just been used to develop an iron ore business for a favored few but as a prohibition on the further development of the Pilbara by anyone else.

The decision by the NCC recognizes the opportunity available now for all mining companies operating in the Pilbara to capture the enormous export demand from China and other Asian markets for all minerals including iron ore,"" he said.

Fortescue share shed 5.7%, BHP fell 0.8% and Rio Tinto was down 0.2%.

Incite Pivot to shut down plant

Australia''s largest fertilizer maker, Incitec Pivot Limited fell 7.4% in today''s trade as it announced that its plant at Phosphate Hill in North West Queensland would close today for repairs and maintenance.

""Depending upon the assessment, repairs could take up to a month. If off-line for a month, the financial implication of loss of production and cost of repairs is estimated to be in the range of $58 million on the profit after tax.

""At this time of year, domestic demand for ammonium phosphate fertilizers is low with winter cropping seasonal demands largely met,"" the company said.

Mirvac announces review of operations

Australian property investor Mirvac lowered in asset carrying values of $300 million to $400 million or between 4% and 5%, clarified operating earnings guidance for the current fiscal year and restated its full year distribution of 32.9 cents per security.

The company said it had reassessed the value of residential and non-residential developments, intangible values and co-investments in managed listed funds due to the sustained deterioration in market conditions including prolonged global financial market volatility, rising cost of capital and general slow down in global and Australian economic conditions.

It wrote down 100% of its indirect investment in the Lane Cove Tunnel and lowered its carrying value by $75 million in Lane cove Tunnel.

Mirvac stock closed up 1.9%.

Zinifex –Oxiana merger gets a court approval

The Supreme Court of Victoria today gave the proposed merger between major Tasmanian miner Zinifex and Oxiana a thumps up paving the way for the finalization of the merger. The Victorian Supreme Court has approved the deal, which will create Australia''s third-biggest mining company after BHP Billiton and Rio Tinto.

The newly merged company will be named Oz Minerals after the shareholder approval on July 18 and will diversify its mining operations into copper, gold and silver.

Zinifex operates the Rosebery zinc mine on Tasmania''s west coast, and is in the final stages of taking over Allegiance Mining and the Avebury nickel mine at Zeehan.

The EGM would also confirm the appointment of the current Zinifex directors to the Board of Oxiana, among other matters.

Zinifex and Oxiana share fell 6% and 6.6% respectively.