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PRESS DIGEST-Australian Business News - May 20

Reuters: [2008-05-19 23:20:00]

Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.

THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)

--Fairfax Media <FXJ.AX> chief executive David Kirk said yesterday the group would exceed a targeted A$45 million in cost savings and revenue from its A$2.8 billion acquisition of Rural Press last year. Following the takeover, Fairfax closed three printing operations and cut staff in some areas. "Some of the increase comes from continuous improvement programs that wouldn't have been possible without the merger," Mr Kirk said. However, he declined to put a number on the new revenue the group was able to generate. Page 18.

--A joint bid on dairy producer Dairy Farmers by Parmalat Australia <PLT.MI> and Victorian cooperative Murray Goulburn has gained clearance from the Australian Competition and Consumer Commission. The Parmalat-Murray Goulburn consortium is the third party to line up for Dairy Farmers' A$800 million-plus auction, following earlier bids by National Foods and New Zealand's Fonterra. "Given the high level of interest…the board will be methodical in its assessment of available options," Dairy Farmers chief executive Rob Gordon said yesterday. Page 18.

--B&B Infrastructure <BBI.AX>, the flagship fund of investment bank Babcock & Brown, says it is on track to successfully refinance a A$500 million loan due in August. "We are starting to see signs of the debt markets recovering, certainly in our space…[and] it's a refinanceable amount of money," the fund's chief financial officer, Jonathan Sellar, told the Macquarie Global Infrastructure Conference last week. B&B Infrastructure has about A$10 billion in debt across its asset base, with about 10 percent of this falling due in the period to June 2009. Page 19.

--Nine Network executive David Radoczy has been appointed as the first general manager of FreeView, an organisation backed by free-to-air television (TV) networks. The Seven, Nine and Ten networks, along with public broadcasters ABC and SBS, have set up FreeView to promote digital TV channels in the face of competition from pay-TV. Mr Radoczy, who is believed to have been appointed for an initial three months, will join FreeView next week. He has previously worked for the ABC, British-based pay-TV group BSkyB and BBC Enterprises. Page 21.

THE AUSTRALIAN (www.theaustralian.news.com.au)

--Hutchison Telecommunications Australia's <HTX.N> 3 mobile phone business yesterday reported a full-year loss of A$285 million, an improvement on the A$759 million loss in 2006-07. The company announced that the number of subscribers had increased by 9.2 percent to 1.72 million in the four months to April 2008. Canning Fok, managing director of the group's Hong Kong-based parent, Hutchison Whampoa, predicted an operating profit for Hutchinson Australia by the end of the year. Page 19.

--According to listed private health insurer NIB Holdings, its cheapest product is attracting customers for reasons other than private health care. "People who have bought lower-cost products are more likely to have been motivated by tax considerations," managing director Mark Fitzgibbon said yesterday. He revealed that individuals in the 20-29 age group formed the bulk of the 20,000 new members NIB signed up in the second half last year. Page 21.

--Mike Connaghan, the chief executive of marketing and communications group STW has assumed the role of main decision-maker and joined the agency's board. The move follows the announcement by executive chairman Russell Tate at the company's annual general meeting yesterday to step down from an executive role and become deputy chairman. Mr Connaghan told the meeting that STW remained optimistic about achieving its revenue targets for 2008 despite the current market uncertainty. Page 21.

--Chinese zinc and tungsten group Hunan Nonferous Metals said in a bidder's statement yesterday that its takeover offer for West Australian company Abra Mining <AII.AX> was aimed at lifting its stake in the metals explorer to 70 percent from the current 17.8 percent. Hunan has made an all-cash offer for Abra. "Our offer…reinforces our commitment to assist in the development of Abra's 100 percent owned…deposit located within the Mulgul project in central Western Australian," Hunan said. Page 23.

THE SYDNEY MORNING HERALD (www.smh.com.au)

--Troubled general insurer Insurance Australia Group <IAG.AX> (IAG) yesterday rejected rival QBE's <QBE.AX> A$8.7 takeover offer, stating that the suitor's third attempt still "fell short of fair value." But QBE chief executive Frank O'Halloran told the stock exchange that his company "considers its final proposal is fair and reasonable, given IAG's declining profitability in the past three years and its recent profit downgrade." According to analysts, IAG is seeking A$5 per share, which would value it at A$9.45 billion. Page 19.

--The board of St George Bank <SGB.AX> has backed Westpac Banking Corp's <WBC.AX> merger offer to create a A$66 billion entity. St George chairman John Curtis told shareholders yesterday that the scrip-based bid by Westpac, valuing the target at about A$18 billion, was more attractive than any potential rival all-cash offer as it would allow St George to retain its brand, besides being a better financial deal. Analysts said a rival offer from overseas was unlikely, but there was a strong possibility of a competing local bid from National Australia Bank. Page 19.

--West Australian ammonia producer Burrup Holdings yesterday revealed plans for a A$500 million initial public offering. The listing is expected to value Burrup founder Pankaj Oswal's 70 percent stake at up to A$1.7 billion. As part of the float, Mr Oswal will sell down his shareholding to 53 percent, while Norwegian ammonia trader Yara International will reduce its holding to 27 percent from 30 percent. Page 21.

--Poker machine group Aristocrat Leisure <ALL.AX> will pay an estimated A$150 million to A$170 million to settle a class action initiated by investors who argued the company failed to keep the market informed six years ago. If Justice Margaret Stone of the Federal Court approves the deal, it will be a record payout by an Australian company to its shareholders. Aristocrat's insurers are expected to pick up most of the settlement bill. Page 21.

THE AGE (www.theage.com.au)

--Federal Infrastructure Minister Anthony Albanese has made new appointments to the board of advisory body Infrastructure Australia, with half the members coming from the private sector. "This is the first time we've had…direct private sector involvement in a coordinated way, making recommendations to Government," Mr Albanese told Sky News yesterday. The new members include Babcock & Brown senior executive Ross Rolfe, Infrastructure Partnerships Australia chairman Mark Birrell and Sydney Water chief executive Kerry Schott. Page B1.

--Industrial services provider Spotless Group <SPT.AX> yesterday extended its unsolicited takeover offer for property maintenance group Programmed <PRG.AX> to June 13 from May 26. Spotless said it had pushed back the deadline to allow shareholders to consider Programmed's annual results, which are due later this month. Page B2.

--A Committee for Economic Development in Australia meeting in Perth heard yesterday that financial markets would not be surprised by the introduction of a national emissions trading scheme in 2010. "We're well prepared," said ABN Amro director of environmental markets Craig McBurnie. He said the use of Renewable Energy Certificates and Greenhouse Gas Abatement Certificates showed that emissions trading had already commenced. "2010 is the start of compliance but not the start of the market," Mr McBurnie said. Page B3.

--Victorian Minister for Industry and Trade Theo Theophanous last night presented the Victorian Manufacturing Hall of Fame awards. The 11 companies inducted into the Hall of Fame included five automotive component manufacturers. Mr Theophanous said the Government recognised the challenges faced by the manufacturing sector, which contributed A$29.6 billion annually to the state's economy. "The Government will shortly be delivering a comprehensive Victorian industry and manufacturing strategy," he said. Page B3. --

((Sydney Newsroom +61-2 9373 1800; sydney.newsroom@reuters.com)) Keywords: DIGEST AUSTRALIA BUSINESS

Romania pension reform hits snag ahead of launch

Reuters: [2008-05-19 17:38:00]

BUCHAREST, May 19 (Reuters) - Romania's far-reaching pension reform has hit snags before its launch on May 20 as some major firms have yet to provide employee data, leaving their pension accounts empty, the national pension agency said on Monday.

The overhaul sets up mandatory private pension funds for Romanians up to 35 years old, who will funnel some of their social insurance tax to investment accounts, in addition to a state pension scheme.

The reform is expected to give a push to Romania's still-developing financial markets by creating a solid base of local investors.

The European Union member fully liberalised its capital markets in 2006, but has next to no secondary debt market, limited issuance of treasury bonds and a small stock exchange.

Around 89 million lei, or 24.1 million euros ($38 million), will be tranferred on Tuesday into individual private pension accounts for 3.19 million employees, or about 65 percent of the labour force.

Some 300 million euros are expected to reach pension fund coffers this year and more than double that in 2009.

However, pension agency chief Mariana Campeanu said some accounts will remain empty this month as various employers did not provide a statement concerning employees' individual tax contributions.

"There are serious private firms that have filed statements with delays of one or two months, or not at all. Others make changes every month," Campeanu told a news conference.

"An employer may make payments and yet money will not show up in employees' accounts simply because these statements did not reach the agency."

The companies include heavyweights such as the Romanian units of Greek bank Piraeus <BOPr.AT>, Austrian Volksbank International AG, the world's second-largest software maker Oracle Corp <ORCL.O>, and Orange, a unit of France Telecom SA <FTE.PA>. She also named utilities firm Distrigaz, the Bucharest public transport agency and a municipal hospital.

Once the private pension system starts, 2 percentage points of social insurance contributions will be placed in individual savings accounts run by private pension funds, reducing payments to the state system to 7.5 percent of monthly gross wages.

Private fund contributions will rise by half a percentage point annually over eight years until they reach 6 percent.

(Reporting by Luiza Ilie; Editing by Gerrard Raven) ((luiza.ilie@reuters.com ; +40 21 315 8320; Reuters Messaging: luiza.ilie.reuters.com@reuters.net )) ($1=2.326 Lei)

Keywords: ROMANIA PENSION/REFORM

UPDATE 3-No end in sight to market woes say Trichet, Buffett

Reuters: [2008-05-19 17:26:00]

(Adds details, Buffett quotes)

LONDON/FRANKFURT, May 19 (Reuters) - The end to the credit crunch is still not in sight, European Central Bank President, Jean-Claude Trichet and Warren Buffett, the world's most famous stock market investor, warned on Monday.

"These are demanding times, challenging times... It is an ongoing, very significant market correction," Trichet told BBC radio in Britain.

Buffett, whose years of shrewd investing have earnt him a fortune estimated at $62 billion by Forbes magazine and the nickname "the sage of Omaha", struck a similar tone at a news conference in Frankfurt.

"I'll talk about the United States. I don't think the effects of the credit crunch are far from over at all. I think there will be rippling secondary, tertiary effects."

Trichet and Buffett's comments come after U.S. Federal Reserve Chairman Ben Bernanke said last week the healing process from the credit crisis would take some time.

Deutsche Bank's <DBKGn.DE> Chief Executive Josef Ackermann was more upbeat however in an interview over the weekend.

"I think that we are getting closer to the end of the financial crisis," Ackermann told the Swiss Sunday newspaper Sonntagsblick. "It is not fully over yet, but the signs from the United States are encouraging."

With market turbulence persisting, Trichet added governments and financial decision makers needed to keep an iron grip on oil and food price fuelled inflation.

"We have this accumulation of the oil shock, the food and agro-products shock... Price stability and credibility in price stability in the medium term is the best way to have a high level of sustainable (economic) growth and sustainable job creation."

OIL SLICK

Trichet also warned governments not to make the wrong moves and risk the knock-on "second round effects" of inflation, such as higher wages, which followed the last oil price shock in the 1970s.

These, he said, had "enshrined the high level of inflation for a long period of time" and led to mass unemployment in Europe.

Oil prices <CLc1> <LCOc1> remain within sight of $130 a barrel because of unrelenting demand, speculative buying, global tensions and supply snags.

The surge is causing widespread headaches for the global economy by pushing up the price of almost everything and is creating a number of problems for Trichet's ECB and other central banks.

While some of the 15 euro zone countries look in danger of following the U.S. into a sharp economic slowdown, near record inflation in the region has given the Frankfurt-based central bank little room for manoeuvre with regards to interest rates which have been on hold at 4 percent for the last 11 months.

(Reporting by Kate Kelland and Jonathan Gould. Writing by Marc Jones and Mike Shields, Editing by Tim Castle/Gerrard Raven) ((kate.kelland@reuters.com; +44 (0)207 542 7947; Reuters Messaging kate.kelland.reuters.com@reuters.net))

Keywords: ECONOMY EUROPE/TRICHET

First Direct resumes UK mortgages, clears backlog

Reuters: [2008-05-19 16:33:00]

LONDON, May 19 (Reuters) - First Direct, the UK online and telephone lender owned by HSBC <HSBA.L>, will resume offering mortgages to borrowers on Monday after withdrawing from the market six weeks ago due to rocketing demand.

First Direct said it had cleared a backlog of mortgage application approvals that had forced it to suspend its offer to people without existing accounts at the bank on April 1.

It said at that time demand had surged after rivals raised their mortgage rates or withdrew offers due to the credit crunch. Its 2-year fixed rate of 4.95 percent had been one of the best on offer to homeowners.

The lender, which said it had completed a year's worth of mortgages in the past three months, will offer a 2-year fixed rate of 5.76 percent plus fees.

It requires at least a 20 percent deposit on home loans.

HSBC has an underweight position in UK mortgages and, including First Direct, usually takes about 3.6 percent of the market, but that share has jumped this year. (Reporting by Steve Slater; editing by David Hulmes) ((steve.slater@reuters.com; +44 207 542 4367; Reuters Messaging: steve.slater.reuters.com@reuters.net))

Keywords: FIRSTDIRECT/MORTGAGES

Egypt indexes slide a hair, but EFG-Hermes rises

Reuters: [2008-05-19 15:52:00]

CAIRO, May 19 (Reuters) - Egypt's two main stock indexes dipped on Monday as short-term investors took profit from Sunday's 4 percent surge, but EFG-Hermes <HRHO.CA><HRHOq.L> jumped after announcing first quarter results, traders said.

The benchmark Case 30 index <.CASE30> shed 0.5 percent to 10,506.69 points, while the Hermes index <.HRMS> lost 0.6 percent to 91,013.84. Both indexes had jumped nearly 4 percent on Sunday, ending an eight-session losing streak.

Egypt's broader CIBC index <.CIBC> gained 0.6 percent to 521.79 points.

"I don't see the panic. I see consolidation, with the market going sideways for a while," said Teymour el-Derini of Beltone Financial. "Tomorrow when the market opens, it will open up."

Government moves to eliminate tax exemptions in some free zones, raise energy prices and impose a tax on treasury bill interest earlier this month had sent stocks tumbling as foreign investors shed shares, traders said.

They said short-term investors were now taking profit from gains on Sunday, while medium-term investors including foreigners were buying by end-session. Foreign investors were net buyers by 9.7 million Egyptian pounds ($1.8 million), and accounted for 21.8 perent of the day's trade.

EFG-Hermes, Egypt's largest listed investment bank, climbed 3.3 percent to 51.50 pounds after reporting a 39 percent rise in first quarter net profit to 348.5 million pounds.

Traders said the results, which were in line with market expectations, had boosted the shares, which had hit a year low of 44 pounds on May 13, down from over 68 pounds in January.

But other market heavyweights dropped including Orascom Construction Industries <OCIC.CA><OCICq.L>, which fell 2 percent to 371.01 pounds. Commercial International Bank <COMI.CA><COMIq.L> lost 1.1 percent to 78.50 pounds.

Regional mobile operator Orascom Telecom <ORTE.CA><ORTEq.L> lost 1.4 percent to 76.30 pounds. The firm said on Monday it had successfully tested its North Korean mobile network and planned to launch services in the second half of the year. ($1 = 5.36 Egyptian pounds) (Writing by Cynthia Johnston) ((cynthia.johnston@reuters.com; +20 2 2578 3290/1; Reuters Messaging: cynthia.johnston.reuters.com@reuters.net))

Keywords: MARKETS EGYPT CLOSER/

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