What Stakes The Bank Holds - By Hook Or By Crook

Sydney Morning Herald

Tuesday May 13, 2008

Edited by Colin Kruger xchange@smh.com.au

No waiver on share notices - the ANZ has had to spill the beans.

THE pain continues for ANZ Bank, which was pressed to disclose yesterday any substantial shareholding it has as a result of margin loans despite earlier promises of a waiver by the Australian Securities and Investments Commission.

After discussions with ASIC, ANZ agreed to disclose any substantial stakes as of May 1. This includes shares held by ANZ-backed broker Tricom, stocks held against margin loans with ANZ directly, as well as its fund management joint venture with ING. While the disclosed stocks are not necessarily subject to margin calls or in any trouble, it makes for an eye-opening list.

The notices disclosed ANZ's interest in a 12.6 per cent stake in Babcock & Brown Communities Group, more than 10 per cent of Cabcharge, and Wotif.com, as well as substantial stakes in Billabong, Incitec Pivot, Toll Holdings and Tatts.

There is also more than 14 per cent of Hedley Leisure and Gaming Property Fund - which its CEO, Tom Hedley, almost lost in the Opes collapse. The shares were subsequently transferred back to Tricom.

Strictly strategic

Speaking of Hedley Leisure, Woolworths has picked up a 19.9 per cent stake in Australian Leisure & Entertainment Property Group (ALE) from the troubled pub fund for $57 million, or $3.34 per security.

Woolies said it was a "strategic investment" and it had no intention of increasing its stake.

Hedley Leisure retains a 3 per cent stake in ALE, which features a Woolies subsidiary as a tenant in 105 of its pubs.

Mining countdown

The official countdown to the $12 billion tie-up between Zinifex and Oxiana began yesterday, leaving potential gatecrashers with less than five weeks to make a play for either miner on an individual basis.

The long list of potential interlopers - including Xstrata, Anglo American, Teck Cominco, Lundin Mining, Antofagasta, Freeport McMoran, Vedanta Resources and Chinese groups - were thought to be unlikely to bid for either company until details were provided from the 500-plus pages of scheme documentation released yesterday morning.

Only Zinifex shareholders will vote on the "merger of equals" deal at a June 16 meeting.

Independent expert Grant Samuel said the terms of the deal were fair to Zinifex shareholders.

Grant Samuel valued Zinifex at $6.2 billion to $6.9 billion and Oxiana at $5.9 billion to $6.7 billion.

Grant Samuel noted that while the deal did not provide a control premium to Zinifex shareholders, the combined company would have an open share register and could receive a takeover premium at a later stage.

Most analysts think predators would prefer to bid for the combined entity rather than the individual companies. But they have not ruled out individual plays since Zinifex has more zinc exposure and cash, while Oxiana has more copper and gold exposure and growth potential.

Oxiana shares closed 6c higher at $3.54, while Zinifex shares closed 5c lower at $10.42.

It appears the market is betting Oxiana is the more likely target of a rival bid, given its 3.1931-for-1 offer valued Zinifex at $11.30.

Profit realignment

The Reserve Bank's dour outlook on the economy is giving the glass-half-empty crowd plenty to grumble about.

"The combination of much weaker growth and persistently strong inflation bodes poorly for company profits," said Goldman Sachs JB Were chief economist, Tim Toohey. He says the gap between the RBA's bearish forecasts and market consensus will be closed in coming weeks "as consensus growth expectations are revised down. Our view is that this process will entail significant downgrades to Australian equity analysts' EPS forecasts."

© 2008 Sydney Morning Herald

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