why the Lynas deal fell over
Chinese lenders may be known for providing debt at what Westerners would deem uncommercial rates, but it seems that when it comes to security over assets, they often take a stricter stance.
One of the key reasons that China Nonferrous Metal Mining's (CNMC) bid to buy 51 per cent of rare earths miner Lynas fell over was its unwillingness to cut the proposed ownership to below 50 per cent.
Insider hears that majority control was a crucial condition of CNMC's financing package. Perilya's Chinese investor Zhongjin secured majority control of the Broken Hill zinc miner earlier this year despite the Government's preference for 49 per cent stakes. That was key to Zhongjin because it allowed it to consolidate Perilya in its accounts.
But at the time, Perilya was on the brink of administration with hundreds of jobs in Broken Hill at stake.
Perilya, with help from Zhongjin, has since obtained low-interest loans from the Bank of China's Sydney branch.
Industrial and Commercial Bank of China yesterday said it was also looking to lend to Australian miners. At least those with ''Chinese strategic partners''.
Fortescue Metals already has a Chinese partner in Hunan Valin, but it has yet to finalise a $US6 billion ($6.86 billion) debt package with Chinese lenders before a supposed September 30 deadline.
It seems very little work has been done in recent weeks and, despite months of talks, the lenders have yet to even start due diligence.
Returning to Lynas, the well-publicised FIRB issues and delays are likely to prove a blessing in disguise.
Lynas has raised its profile exponentially in recent weeks and its shares last traded at 90c, compared with the proposed 36c price of the placement to CNMC.
It is now well placed for a more conventional financing package for the $300 million or more need to complete its project, which may include a sizeable equity raising.
ROAD SHOWMyer, which is planning to release some long-awaited details on its float when its prospectus is filed on Monday, is not the only Australian department store embarking on a global roadshow in coming weeks.
The David Jones boss Mark McInnes and finance director Stephen Goddard will soon head to New York and Edinburgh for JP Morgan's annual Australian showcase, and they are expecting plenty of questions about his soon-to-be-public rival.
Notably, McInnes definitely didn't ignore what he called ''the elephant in the room'' yesterday.
In his presentation to investors, McInnes laid out plenty of comparisons between the stores.
A few of the claims about trading in their respective Melbourne city stores and their relative sales performance in Doncaster are understood to have made the Myer folks grumpy.
However, they have created so much hype around the Myer float that it is only natural for a consummate salesman like McInnes to portray his company in the best possible light.
The real disappointment yesterday - one that sent DJs shares down 3.9 per cent - was the lack of a profit upgrade. There were conspiracy theories that McInnes deliberately kept the forecast low to make potential investors in Myer think twice before piling into a high-priced float of that business.
But DJs has been notoriously conservative with its guidance and has a well-trodden reputation for underpromising and overdelivering - so much so, that much of the market has calculated it into its forecasts.
McInnes won't rule out a profit upgrade, but he understandably wants to ensure Christmas trading is strong before making a final call.
TATTS CONFIDENTTatts Group's confidence that it will emerge the winner of the NSW Lotteries sales process does not appear misplaced once the numbers have been crunched. The Merrill Lynch analyst Nathan Gee agrees Tatts is in pole position to make the $500 million purchase, despite competition from Tabcorp, Intralot and others.
Tatts existing lottery footprint in Victoria, Queensland, Tasmania and the Northern Territory would offer it an advantage over other bidders in terms of cost savings.
Gee estimates that of the $70 million a year of controllable costs associated with running the business, Tatts could strip out $30 million while the others would save $10 million to $15 million. However, those cuts are likely to take time because existing employees have been guaranteed three years of job protection if they choose to move to the private sector after the sale.
UBS STILL ON TOPThere were only eight days between updates to the Dealogic investment banking league tables, but the recent spate of raisings by the likes of AWB, Valad Property Group and Primary Healthcare means there has already been movement at the top of the fee-take ladder.
While UBS remained the dominant player in core investment banking revenue, with $241 million so far this year, or a 17.6 per cent share, Deutsche Bank overtook Macquarie Capital for the number two slot, with $168 million. Macquarie was a very close third with $167 million.
However, those figures did not include the sell-down of CanWest's $680 million stake in Ten Network which Macquarie snared yesterday, so those rankings are likely to be very short lived.
http://www.theage.com.au/business/...eal-fell-over-20090924-g4qj.html -----------
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