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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

Shelby-GSEs would foot bill for US mortgage fund

Reuters: [2008-05-19 22:56:00]

WASHINGTON, May 19 (Reuters) - The top Republican on the U.S. Senate Banking Committee said housing finance companies Fannie Mae <FNM.N> and Freddie Mac <FRE.N> would fund a multi-billion dollar mortgage rescue plan under a legislative compromise he struck with the panel's Democratic chairman.

"This is a victory for the taxpayers. As far as the housing component is concerned, we're not funding this ... with taxpayers money, we're going to do it through a GSE affordable housing fund," Alabama Sen. Richard Shelby said on CNBC. (Reporting by Tim Ahmann) ((tim.ahmann@reuters.com; +1 202 898 8370; Reuters Messaging: tim.ahmann.reuters.com@reuters.net)) Keywords: USA HOUSING/CONGRESS SHELBY

U.S. senators say have deal on housing rescue bill

Reuters: [2008-05-19 22:47:00]

WASHINGTON, May 19 (Reuters) - The two top members of the U.S. Senate Banking Committee announced on Monday that they have a deal that will create a multi-billion dollar mortgage rescue fund and a new regulator for Fannie Mae <FNM.N> and Freddie Mac.

"The bill addresses the root of our current economic problems - the foreclosure crisis - by creating a voluntary initiative at no estimated cost to taxpayers which will help Americans keep their homes," Christopher Dodd, Democrat chairman of the Senate Banking Committee, said in a statement.

The deal he reached with Sen. Richard Shelby, the panel's top Republican, will also create a new regulator for the two mortgage-finance giants.

((patrick.rucker@thomsonreuters.com; +1-202-310-5474; Reuters Messaging: patrick.rucker.reuters.com@reuters.net)) ((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com

* BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: USA HOUSING/CONGRESS

UPDATE 3-Abertis preferred for biggest U.S. toll road deal

Reuters: [2008-05-19 22:29:00]

(Adds background)

MADRID/NEW YORK, May 19 (Reuters) - A consortium led by Spanish infrastructure company Abertis <ABE.MC> was named preferred bidder on Monday in the largest U.S. toll road deal ever after offering $12.8 billion to lease the Pennsylvania Turnpike.

Pennsylvania Gov. Ed Rendell said Citigroup <C.N> was also part of the group, which had pledged total investment on the road of $14.5 billion over the 75-year lifetime of the contract. However, the state legislature, which rejected previous privatization plans, still must approve this deal.

In a statement, Abertis -- which also runs airports and has a telecommunications unit -- said the contract would make it the largest infrastructure operator in the world with assets in the United States, France, the UK, Latin America and its home Spain.

It would help it further diversify beyond Spain and "facilitate the expansion of other business units in the largest market in the world," Abertis said in a statement.

Abertis controls half the project, while Citigroup has a 41.67 percent stake, and Spain's Criteria <CRIT.MC>, which groups the industrial holdings of publicly owned bank La Caixa, will also take a 8.33 percent stake.

The deal -- which comes amid a global credit crisis -- would be 41.4 percent funded with equity and 58.6 percent through bank debt, Abertis said.

The Pennsylvania Turnpike network totals 801 km (497 mile) of roads, linking Philadelphia, Scranton, Harrisburg and Pittsburgh.

The Turnpike's annual turnover was $607 million last year and Abertis forecasts it will grow to $780 million in 2009 with EBITDA (earnings before interest, tax, depreciation and amortisation) of $570 million, equivalent to a margin of 73 percent.

Abertis proposes putting toll fees up 25 percent initially, followed by subsequent inflation rate increases and a minimum rise of 2.5 percent.

Abertis estimated an internal rate of return (IRR) on the deal would be "in the low range of double digits," and gave no further details.

It said investment required on the road would not compromise its dividend policy.

Of the investment needed for the deal, $8.5 billion will be financed by bank debt and the three partners will fund the remaining $6 billion.

Abertis will put up $3 billion, Citi will fund $2.5 billion and Criteria $500 million.

PRIVATIZATION CONTROVERSIAL

Gov. Rendell said Abertis had considerable experience in running toll roads and noted that two years ago a bipartisan commission recommended that the state spend $1.7 billion a year on transportation repairs.

But similar privatizations of U.S. roads have recently stalled in several states, including Texas and New Jersey, amid concerns the banks and developers were benefiting at the taxpayer's expense.

Pennsylvania's legislature has already killed similar deals, and some credit agencies say only new roads should be privatized, not existing ones.

The Federal government is now mulling whether to approve levying tolls on Interstate 80, the Turnpike's main east-west competitor.

The price Citi and Abertis offered for the Turnpike, one of the nation's busiest east-west routes, was at the bottom of the $12 billion to $18 billion range estimate by investment bank Morgan Stanley <MS.N>.

The price was so much less because market conditions have changed and Pennsylvania limited yearly toll hikes to around 3 percent instead of the much bigger increases Morgan Stanley's forecast assumed, which were based on an Indiana plan, said Gov. Rendell.

Rendell called the offer by Citi a "slam dunk" because it would raise $150 million a year to improve transportation and allow Pennsylvania to drop plans to get motorists who drive on Interstate 80, the Turnpike's main east-west competitor, to pay tolls for the first time.

"Citigroup is probably as American an institution as you can find," Rendell told reporters, noting questions had been raised about foreign companies that sought to participate.

The Citi-Abertis offer topped the next highest bidder, a Goldman Sachs <GS.N> group which offered $12.1 billion, and a bid from Spain's Cintra <CCIT.MC> and Australia's Macquarie <MIC.N>, Rendell added.

Abertis shares rose 1 percent to 21.08 euros just before they were suspended at 5 pm local time (1500 GMT). The stock market regulator said trading would resume at 0830 am (0630 GMT) local time on Tuesday. (Reporting by Carlos Ruano, Sarah Morris, Joan Gralla and Ben Harding, editing by Richard Chang) ((sarah.morris@reuters.com; +34 91 585 8328; Reuters Messaging sarah.morris.reuters.com@reuters.net)) Keywords: ABERTIS PENNSYLVANIA/CONFIRMATION

Keywords: ABERTIS PENNSYLVANIA/CONFIRMATION

US STOCKS-Dow, S&P end up with energy; Nasdaq dips

Reuters: [2008-05-19 22:11:00]

(Updates to 4 p.m.)

NEW YORK, May 19 (Reuters) - The S&P 500 index and Dow Jones industrials ended higher on Monday as record oil prices boosted energy companies, while the Nasdaq closed lower as a chipmaker's warning about discretionary spending hurt technology shares.

Based on the latest available data, the Dow Jones industrial average <.DJI> rose 41.11 points, or 0.32 percent, to end unofficially at 13,027.91. The Standard & Poor's 500 Index <.SPX> gained 1.16 points, or 0.08 percent, to end unofficially at 1,426.51. The Nasdaq Composite Index <.IXIC> was down 12.76 points, or 0.50 percent, at 2,516.09. (Reporting by Caroline Valetkevitch; editing by Gary Crosse) ((caroline.valetkevitch@thomsonreuters.com; +1-646-223-6393; Reuters Messaging: caroline.valetkevitch.reuters.com@reuters.net)) ((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com

* BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: MARKETS STOCKS

 
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