Australian Dollar Surges, Macarthur Battle

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

The battle for Australian coal resources heat up after Posco and ArcelorMittal acquire stakes in the company. ArcelorMittal raised its stake to 20% and Posco took a stake of 10%. Steel companies from China, Korea and Europe are eying for Australian mineral resources as coal, iron ore and other raw materials rise in prices. Australian dollar surges. ANZ declined to take a majority stake in prime broker Chimera after initial review. Babcock agrees to pay higher interest and delays debt repayment.

[R]3:00AM New York, 7:00PM Sydney- ASX 200 index edges lower as record oil prices continue to dent company profits and economic growth. Australian dollar rises to two-decade record.

Market Sentiments

ASX 200 index shed 0.4% or 21.7 to close at 5,215.30. The preliminary market turnover estimate indicated 2.54 billion shares worth $7.48 billion, with 795 stocks down, 651 up and 350 unchanged. The most traded stock was Cluff Resources, with 148.49 million shares worth $2.69 million.

Market Driver

Babcock & Brown today agreed to a pricing change of 50 basis points to a 200 point margin on its loan with its banking syndicate. The company said the change was unlikely to have any material impact on its overall cost of capital. The syndicate also agreed to waive its right to a review of Babcock & Brown.

In addition, Babcock also agreed to cede approximately $400 million to the syndicate from previously announced asset sales once these transactions are closed.

Babcock share closed up 17.9%.

Gainers and Losers

Of the ASX 200 index stocks, Babcock & Brown led the gainers with a rise of 17.9% followed by increases in Spark Infrastructure of 11.4%, in Australia Infrastructure Fund of 10.5% and in Seven Network of 5.3%.

Of the ASX 200 index stocks, Murchison Metals led the decliners with a fall of 13.2% followed by losses in ABC Learning of 13, in Macquarie Office of 10.9%, in ING Office Fund of 8.7% and in Great Southern of 7.9%.

Australian dollar surges to a record high of 97 cents to one American dollar as the takeover battle for Macarthur heats up.

ArcelorMittal and Posco Vie for Macarthur

Foreign companies have upped the tempo in their quest to gain access of minerals in Australia with the latest acquisition coming from ArcelorMittal increased its shareholding in the company to 19.9% from 14.9%.

The company made the increase through the purchase of a further 5% interest at A$20 from Talbot Group Holdings, a company owned by Ken Talbot a director on the board of the company who recently resigned. ArcelorMittal's total investment in the company is $843 million.

Meanwhile, Asia's third-biggest steelmaker, Posco indicated its intention to gain access to Macarthur's resources when it agreed to pay about $20 a share for a 10% stake in the coal company. Posco would pay $424 million.

Macarthur share fell 6.3%.

Arrow and AGL Sells Pipeline

Arrow Energy Ltd and its partner AGL Energy Limited will sell their North Queensland Gas Pipeline to Victorian Funds Management Corporation for a $205 million. The sale will result in a pre-tax profit to Arrow of approximately $25 million.

The two would however retain ownership of the Central Queensland Gas Pipeline development opportunity and the gas processing and compression facilities located at Moranbah, which will be integrated into the Moranbah Gas Project infrastructure and operated by Arrow.

Arrow and AGL purchased the Enertrade gas assets (NQGP, Moranbah gas compression facilities, Central Queensland Gas Pipeline development opportunity and North Queensland Gas Merchant Business) in November 2007 for approximately $280 million.

Arrow Managing Director, Nick Davies said, """"We are extremely pleased with the outcome, as the structure of the sale largely enables Arrow to retain the same commercial position with respect to gas throughput and storage rights as ownership of the pipeline but without having significant capital tied up in a non-core asset.""""

AGL Energy Ltd share rose 1.6% and Arrow Energy Ltd rose 3.1%.

ANZ Says No to Chimera

Australia and New Zealand bank today pulled the plug on it impending investment in financial group Chimaera Financial Group after a due diligence review.

Chimaera had issued a media release on April 23 2008 indicating that ANZ is likely to gain majority stake with $53 million investment.

ANZ's share shed 1.2%.

Qantas Labor Talks Postponed

Australia's largest airline Qantas added 1% today after its labor union deferred a meeting to discuss salaries until July 2.


Qantas' 1,500 engineers are seeking an average pay rise of 5% while Qantas is offering 3%.

Murchison Metals Prefers Midwest

Murchison Metals Ltd says it would prioritise its merger with iron ore miner Midwest Corp Ltd before considering China's Sinosteel Corporation's offer.

The Foreign Investment Review Board has barred Sinosteel from acquiring more than 15% of Murchison while the Treasurer considers its application. The FIRB order allows Treasurer Wayne Swan to decide whether the Chinese state-owned steel maker can lift its stake in Murchison above its current 2.4% within the next 90 days.

Murchison stock fell 2%.