Macarthur in Play, Valad Lowers Estimates

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

Macarthur may become a subject of takeover from ArcelorMittal after Ken Talbot, director with 19.76% stake resigned from the board and sold 4.3% stake in the company to the steel giant. Separately, Valad Property lowered its earnings and distribution guidance as a weakness in global property market squeeze the activities.

[R]3:00AM New York, 7:00PM Sydney – Macarthur may be heading for a buyout offer from ArcelorMittal. Valad Property group lowered its earnings and distribution guidance.[/R]

Market Sentiments

ASX 200 index lost 0.1% or 4.6 to close at 5,283.70. The preliminary market turnover was 1.81 billion shares worth $5.61 billion, with 386 stocks rising, 985 falling and 310 unchanged. The most traded stock was Union Resources, with 87.67 million shares worth $2.85 million.

Market Driver

Macarthur Coal Limited''s largest shareholder Ken Talbot today resigned from the coal company''s board after selling a 4.3% stake to ArcelorMittal last month.

The resignation and the sell-offs have heightened speculation of a buyout offer for Macarthur by ArcelorMittal. Talbot, who holds 19.76% of the shares in the company, said his resignation was in the interest of the company.

Macarthur said the resignation would allow him greater flexibility to fully deal with his remaining stake in Macarthur Coal.

ArcelorMittal is seeking to increase its self-sufficiency in coking coal beyond 15% after prices for the raw material rose threefold to a record $300 a metric ton.

Macarthur share rose 0.3%.

Gainers and losers

Of the ASX 200 index stocks, PMP Ltd led the gainers with a rise of 10.9% followed by increases in Couer D''Alen of 9.3%, in Asciano Group of 9.3%, in Babcock & Brown of 8.9% and in Fortescue Metals of 8.4%.

Of the ASX 200 index stocks, Perpertual Ltd led the decliners with a fall of 9.9% followed by losses in ABC Learning of 9.6%, in Centro Properties of 7.7%, in Envestra Ltd of 7.6% and in Australia Infrastructure Fund of 7.1%.

Valad reviews earnings forecast downwards

Valad Property Group today lowered its earnings and distribution guidance due to uncertainty in financial markets and global property markets.

Valad said its underlying earnings for the 2008 financial year are expected to be 11.1 cents per security subject to advanced transactions.

The company said the lower level of activity had slowed growth in both its funds management and development and trading businesses.

As a result the company said it had decided not to deploy all of the $1.2 billion of capital recently raised within its managed funds based on the expectation that buying opportunities would improve throughout the course of this year and the next, resulting in greater returns for fund investors and Valad''s security holders.

Going forward, Valad indicated that it may adjust its dividend distribution to more closely match cash earnings, as opposed to underlying earnings as in the past.

Valad share fell 6%.

Rio Tinto to develop Bunder diamond project

The world''s third- largest mining company, Rio Tinto could build the first significant world class diamond mine in India if its mining lease applications for its Bunder diamond project in the Bundelkhand region of Madhya Pradesh, India is approved.

Rio Tinto also indicated an exploration target for diamond mineralization at the Bunder project of 40million to 70 million tons at a grade of between 0.3 and 0.7 carats per ton.

The targeted diamond grades are at least three times greater than the grade of the Panna mine, India''s only other hard rock diamond mine.

The original discovery was made as part of a regional exploration reconnaissance in 2004. A prospecting license was executed in September 2006, which allowed exploration activities to continue and evaluate the economic viability of the project.

Nik Senapati, managing director of Rio Tinto in India, said, ""Diamonds are a significant part of the history of India and an important product for Rio Tinto.

""We have spent more than Rupees 100 crore ($25 million) over the last six years on diamond exploration and evaluation in India, and remain excited about the prospects for the Bunder project.

Rio Tinto share fell 1.7%.