egolinews.com

Western Areas NL (WSA) announced the pricing of an issue of $125 million of convertible bonds due 2015. The company said the bonds are to be issued a premium of approximately 28% to the last price of Western Areas shares prior to the launch of $5.18 per share and carry a coupon of 6.4%.

Western Areas said the offer was significantly oversubscribed, with strong demand from investors in all major capital markets including the United Kingdom, Europe, and Asia Pacific.

Managing director, Julian Hanna, said the transaction would enable Western Areas to pay down all its bank debt and provide the company with balance sheet flexibility to enable it to advance its exploration and mine development initiatives.

Specifically, the company said $45 million of the proceeds would be used to fully repay and cancel a BHP Billiton facility which was provided as part of the off-take agreement, while $60 million would be used to repay what has been drawn from the ANZ Facility, which remains in place until 31 March 2012.

Western Areas said proceeds would also be used to complete the feasibility study at the high grade Spotted Quoll underground mine and fund further drilling of advanced targets at its Forrestania Project and other joint venture interests in Western Australia.

“The effect of repayment of the BHP Billiton and ANZ Facilities will be to extend the maturity of some of the Company's existing loan debt profile until 2015, at a lower average interest rate,” the company said.

As at 1047 AEDT, Western Areas shares were down 25c to $4.93.

Western Areas NL (WSA) announced the pricing of an issue of $125 million of convertible bonds due 2015. The company said the bonds are to be issued a premium of approximately 28% to the last price of Western Areas shares prior to the launch of $5.18 per share and carry a coupon of 6.4%.

Western Areas said the offer was significantly oversubscribed, with strong demand from investors in all major capital markets including the United Kingdom, Europe, and Asia Pacific.

Managing director, Julian Hanna, said the transaction would enable Western Areas to pay down all its bank debt and provide the company with balance sheet flexibility to enable it to advance its exploration and mine development initiatives.

Specifically, the company said $45 million of the proceeds would be used to fully repay and cancel a BHP Billiton facility which was provided as part of the off-take agreement, while $60 million would be used to repay what has been drawn from the ANZ Facility, which remains in place until 31 March 2012.

Western Areas said proceeds would also be used to complete the feasibility study at the high grade Spotted Quoll underground mine and fund further drilling of advanced targets at its Forrestania Project and other joint venture interests in Western Australia.

“The effect of repayment of the BHP Billiton and ANZ Facilities will be to extend the maturity of some of the Company's existing loan debt profile until 2015, at a lower average interest rate,” the company said.

As at 1047 AEDT, Western Areas shares were down 25c to $4.93.

Santos Limited (STO) said it has agreed to sell its entire working interest in Evans Shoal in the Bonaparte Basin offshore Northern Australia to Magellan Petroleum Australia Limited for up to $200 million. The company said Magellan would pay a cash consideration of $100 million, with completion expected to occur in the second half of 2010.

In addition, Magellan would also pay $50 million on any final investment decision to develop Evans Shoal and $50 million upon first gas production from NT/P 48.

Santos said the transaction is part of its ongoing review of commercialisation options for its gas assets in the Bonaparte Basin and follows the sale of 60% of the Petrel, Tern and Frigate fields to GDF SUEZ for up to US$370 million announced in August 2009.

Santos vice president Western Australia and Northern Territory, John Anderson, said the company remains well positioned in its Northern Australia LNG business through it interest in Darwin LNG and the Bonaparte floating LNG project.

”Santos also holds a 40% working interest in the Barossa and Caldita fields in the Bonaparte and is considering commercialisation options for these assets”, Mr Anderson said.

The transaction remains subject to customary consents and regulatory approvals.

At the close of trade yesterday, Santos shares were trading at $14.76.

Qantas Airways Limited (QAN) reported a 14.2% increase in passenger numbers in February compared to the previous corresponding period. The company said 3.8% and 2.5% increases in Revenue Passenger Kilometres (“RPK”) and Available Seat Kilometres (“ASK”) respectively resulted in a revenue seat factor of 79.4%, or 1 percentage point higher than the pcp. Looking at the financial year-to-date, Qantas said passenger numbers were up 7.7% on the previous year. The company said RPKs increased by 1.3%, while ASKs decreased by 1.3%, resulting in a revenue seat factor of 81.9%, which was 2.1 percentage points higher than the previous year. Qantas said it has hedged 87% of its expected fuel requirement in 2009/10 at a worst-case crude oil price of US$88 per barrel including option premium.

MMC Contrarian Limited (MMA) has signed agreements to acquire Bupa Australia’s Life Insurance business and Wealth Management business for $195 million. The company said as part of the transaction, it has entered into an exclusive alliance with Bupa Australia to market its life insurance and wealth management products to Bupa Australia’s 2.9 million private health insurance customers for a period of 10 years. MMC said the price represents a 22.6% discount to embedded value or an 8.5% discount to embedded value. The company said the acquisition would be funded through existing cash resources, as well as a $61.7 million fully underwritten institutional placement and a $73.3 million fully underwritten non-renounceable pro-rata entitlement offer. MMC also announced the appointment of former CEO of CommInsure Simon Swanson as the company’s new managing director. MMC said its previous managing director, Alex Hutchison, would become the CEO of MMC's Wealth Management and Advice business.

Australia and New Zealand Banking Group Limited (ANZ) is pushing ahead with plans to make the company Australia’s largest foreign bank. As a part of this plan, CEO Mike Smith said ANZ would invest up to US$100 million in capital in Indonesia during 2010 to complete the acquisition of the Royal Bank of Scotland (RBS) retail and commercial businesses in Indonesia and to accelerate organic growth.

Mr Smith said Indonesia’s economy was resilient during the economic downturn, had a large domestic market and had relatively low dependence on external trade.“Economic growth in Indonesia is expected to reach approximately 5.6% in 2010,"  Mr Smith said.

We are optimistic about the economy’s prospects which are supported by the Government’s commitment to infrastructure development and to continued economic reform.”

Trade between the two countries totaled US$8.7 billion in 2008, Mr Smith noted – an increase of 10% from the prior year.

“Given this, Indonesia will be one of ANZ’s most important markets as part of our objective to become a super regional bank.”

Mr Smith said the acquisition of the RBS interest in Indonesia was on track to be completed by June 2010.

Currently ANZ operates in Indonesia through its 85% owned subsidiary PT ANZ Panin Bank, trading as ANZ.

At the close Thursday, ANZ shares were trading at $25.35.

US stocks closed mixed Thursday after an early rally was halted by a strengthening dollar, sending equities and commodity prices lower. Earlier in the day the broader indices had reached fresh 18-month highs.

Federal Reserve chairman Ben Bernanke said interest rates would remain at their current low levels for some time yet. He said rates would eventually be lifted, however not in the short term.

In employment news, new unemployment claims dropped from a revised 456,000 the previous week to a better than expected 442,000 last week. It was the lowest level in six weeks.

Continuing claims fell from 4,725,500 to 4,648,000 in the same period.

Meanwhile, the Dubai government said it would introduce US$9.5 billion in funding into Dubai World and its property development arm Nakheel. Even so, Dubai World will still owe over US$14 billion to creditors.

The Dow Jones added 5.06 points, or 0.05%, to 10,841.21, the S&P's 500 shed 1.99 points, or 0.17%, to 1,165.73 and the NASDAQ slid 1.35 points, or 0.06%, to 2,397.41.

Financials led the early rally, however, like the broader market, they lost steam. Citigroup and Bank of America added 2.9% and 1%.

Tech heavyweights finished mainly higher with Microsoft, Oracle and Google gaining between 1% and 1.3%.

On the other side of the ledger, Apple fell 1.2%.

Qualcomm put on 4.9% after the wireless chipmaker lifted its second quarter sales and earnings forecast.

Best Buy rallied 3.6% after the electronics retailer beat quarterly sales and earnings estimates and increased its full-year profit forecast.

Aluminium producer Alcoa was among the worst performers on the Dow, dropping 1.5%.

Energy stocks were weaker despite a rise in the price of crude. ConocoPhillips fell 1.9%, while Larger rival Exxon Mobil and Chevron weakened 0.3% and 0.2% respectively.

NYMEX light crude oil for May delivery rose US45 cents to US$81.06 a barrel.

COMEX gold for May delivery rose US$2.60 to US$1,091.40 per ounce.

Newmont Mining shed 2.8%.

European Markets

Banks led European markets close to 18-month highs ahead of the commencement of the EU summit in Brussels amid reports leaders are prepared to put together a joint loan package for Greece. Economic data out of the US also boosted confidence, as did the Dubai government’s announcement that it would support state-owned firms Dubai World and Nakheel.

The UK benchmark FTSE100 gained 49.77, or 0.88% to 5,727.65. The French CAC40 rose 50.67, or 1.28% to 4,000.48, while the German DAX advanced 93.95, or 1.56% to 6,132.95.

UK banks HSBC and Barclays rallied 3% and 1.7%.

Deutsche Bank put on 3.4%, while in France BNP Paribas and Societe Generale rose 1.5% and 1.2%.

Miners tracked metals prices higher. Xstrata, Anglo American and Antofagasta gained 2%, 1.3% and 0.7% respectively.

Aussie peers BHP Billiton and Rio Tinto added 0.6% and 0.1%.            

Hochtief jumped 4.9% after the German builder reported a 25% increase in profit last year.

Next climbed 5% after the UK retailer increased its dividend by 20%.

A broker upgrade from RBS sent coal-fired power plant owner Drax shares 7.8% higher.

Volkswagen fell 3.5% on reports the automaker is selling preferred shares at between 64 euros and 65 euros in an effort to help finance the takeover of Porsche SE’s auto-making unit.

Vodafone shed 1.1% on a broker downgrade.

Japanese Markets

Japan’s Nikkei advanced on optimism of strong earnings for tech stocks and as the yen weakened against the greenback a day earlier. 

The Nikkei 225 added 13.82, or 0.13% to 10,828.85.

Nintendo added to the previous sessions 8.7% gain, putting on another 5.3%. The rally has followed the revelation that Nintendo is to sell a 3-D game player that doesn’t require glasses.

Advantest Corp climbed 2.7%, while automakers Mazda and Honda added 1.3% and 1.2%.

However, a weaker yen sent Seven & I Holdings and Fast Retailing shares 2.5% and 1.5% into the red on the likelihood import costs will increase.

All Nippon Airways dropped 3% on a broker downgrade.

Hong Kong Markets

Hong Kong markets tracked lower Thursday, touching three week lows. Li & Fung, which supplies clothes to US giant Wal-Mart as well as Australia’s Pacific Brands, was the day’s major story as it tumbled 10.7% after the company missed earnings estimates.

The Hang Seng lost 230.07, or 1.10% to 20,778.55.

Among the banks, ICBC and Bank of China lost 1.4% and 1.7% respectively.

The market’s biggest stock, HSBC, gave up 1%.

Among other clothing makers, Yue Yuen, the world’s largest third party shoemaker, lost 1.1%.

European focused Esprit was 1% cheaper.

Elsewhere China Unicom retreated 4.1% after also missing estimates. Larger rival China Mobile was 1.1% down.

In IPO news, Huiyin Household Appliances surged 44% on its first day on the Hong Kong stock exchange.

CNOOC lost 1.1%. 

Sovereign debt concerns out of Europe continued to weigh on the Aussie market, however an afternoon rally saw losses limited to just 0.1%. While most sectors finished below the gain line, strength was seen among the defensive healthcare and telco stocks.

Meanwhile, the Australian Reserve Bank Assistant Governor warned that further interest rate rises were on the way as the bank looks to head off a house price bubble.

At the close, the All Ords lost 6.9 to 4,896.3, while the ASX/200 retreated 6.1 to 4,885.4. Around 2.2 billion shares worth around $5.1 billion had changed hands.

The Banks and Financials sector was down 0.2%.

ANZ lost 2c to $25.35, while CBA dipped 1c to $57.20. Westpac edged 3c higher to $27.79 as NAB bucked the trend, adding 0.5% to $27.52.

All the major insurers were lower as M&A activity in the sector draws closer to a decision from the ACCC. IAG shed 5c, or 1.3% to $3.91.

The Property Trusts sector reversed early gains to finish 0.9% below the gain line.
 
Westfield fell 11c, or 0.9% to $11.88, while Stockland shed 6c gain to $3.99 after both stocks were in the black at midday.

Elsewhere, the Materials and Resources sector gave up 0.1% on widespread losses among the mid-cap stocks.

BHP Billiton lost 4c, or 0.1% to $43.32, while Rio Tinto rallied $1.42, or 1.8% rise to $78.62.

Gold stocks paced a decline in the price of the precious metal, with Newcrest and Lihir off 1.6% and 1.9% respectively.

Iluka Resources gained 13c, or 3.1% to $4.36, however other stocks in the sector were lower, including Alumina, James Hardie and Macarthur Coal which were between 2% and 4% in the red.

Orica and Amcor capped losses, climbing 1.8% and 1.6% to $26.67 and $6.29.

The standout in the Energy sector was Santos whose shares climbed amid rumours Woodside Petroleum is set to make a takeover offer for the company. 

Santos shares jumped 2.7% to $14.76.

Woodside added 6c to $47.48, while the sector was 0.4% stronger.

Origin was up 17c to $16.83 as uranium specialists Paladin and ERA lost 2.2% each.

Retailing stocks Pacific Brands, which today closes its last Australian factory, Myer and JB Hi-Fi all lost between 1.1% and 1.6%.

Premier Investments, owner of the Just Jeans brand, lost another 3%, bringing this week’s losses to almost 9%.

Crown shares fell 22c to $8.17 after saying it would spend over $200 million upgrading facilities for high-rollers at the Melbourne Crown casino, including purchasing a plan to fly them in.

Newscorp added 45c, or 2.5% to $18.68, while Fairfax dipped 1.9% to $1.80.

The Consumer Discretionary sector eased 0.3%, while the Consumer Staples sector was also down 0.3%.

The big retailers, Woolworths and Wesfarmers, were 0.5% and 0.2% lower, while Coca-Cola gained 0.8% to $11.24.

The Industrials sector was 0.9% weaker after heavyweight Brambles fell 15c, or 2% to $7.28, while Leighton lost 24c, or 0.6% to $38.81.

Qantas added 6c, or 2.2% to $2.85. Smaller rival Virgin shed 2.9% to 67c.
 
Telstra gained 3c to $3.11, while the broader Telecommunications sector added 0.9%.

1.3% and 2.3% gains from CSL and Ramsay saw the Healthcare sector advance 0.6%.

Around the region, the Nikkei 225 gained 19.6 to 10,834.6, while the Straits Times Index dipped 0.2 to 2,886.2 and the NZSE50 added 4.8 to 3,237.5. The Hang Seng lost 258.5 to 20,750.1.

Spot gold was trading at US$1,087.60 per ounce, while the Aussie was buying US$0.9096.

---

RBA paints an optimistic picture
Philip Lowe, assistant governor to the RBA, said this morning that the Australian economy was in a reasonably solid upswing. Mr Lowe said however that the nature of the upswing would start to shift from public sector driven, through government stimulus packages, to a more private sector led recovery.

Soul Pattinson profit down on lower coal prices
Washington H. Soul Pattinson said its post-tax profit fell 86.9% to $123.4m for the six months to 31 January 2010. The result came on the back of fluctuations in the earnings of its 60% controlled coal miner New Hope Corporation, which reported earlier in the week.

By the end, Soul Pattinson shares were up 18c to $13.80.

Brickworks half-year profit falls 65.5%
Brickworks reported a 65.5% drop in profit for the six months to 31 January 2010. The company posted a profit of $88.2 million for the period, compared to $255.3 million a year earlier.

At the finish, Brickworks shares were trading up 5c to $12.65.

Crown to spend $212m on VIP upgrade
Crown said it would be spending $212m to upgrade the premium player facilities at the Crown Entertainment Complex. The company said the decision to make the investment was underpinned by strong growth in recent years of international premium player turnover.

By the close, Crown shares were down 22c to $8.17.

Aquila says Belvedere Pre-Feasibility Study complete
Aquila Resources said the Pre-Feasibility Study for the Belvedere Hard Coking Coal Project in Central Queensland confirmed the potential technical viability of the project. With a 24.5% interest in the project, Aquila said the study proposes an underground longwall mine, producing initially 3.5 million tonnes per annum of coking coal product and then up to 7Mtpa of coking coal product when the second longwall is installed.

At the end of the day, Aquila shares were down 27c to $10.71.

Santos hoses down takeover talk
Santos in response to an ASX price query, hosed down speculation that it was a takeover target for Woodside Petroleum. 

By the final whistle, Santos’ share price was 39c higher to $14.76.

Santos Limited (STO), in response to an ASX price query, hosed down speculation that it was a takeover target for Woodside Petroleum.

Just before the close of trade Thursday the Aussie gas producer said that it was aware of media speculation regarding Woodside’s interest in the company.

The company went on to say that “Santos has not been approached by, nor is it aware of any potential interest of Woodside Petroleum other than the media speculation”

Santos added that the share price movement today – the shares hit $15.05 early in the day – was possibly due the announcement by BG Group of a $60 billion gas sale to China National Offshore Oil Corporation.

Santos’ share price just before the close was a more modest 41c, or 2.9% higher to $14.78.

Santos Limited (STO), in response to an ASX price query, hosed down speculation that it was a takeover target for Woodside Petroleum.

Just before the close of trade Thursday the Aussie gas producer said that it was aware of media speculation regarding Woodside’s interest in the company.

The company went on to say that “Santos has not been approached by, nor is it aware of any potential interest of Woodside Petroleum other than the media speculation”

Santos added that the share price movement today – the shares hit $15.05 early in the day – was possibly due the announcement by BG Group of a $60 billion gas sale to China National Offshore Oil Corporation.

Santos’ share price just before the close was a more modest 41c, or 2.9% higher to $14.78.

Acrux Limited (ACR) said the deal with US-based top-10 global pharmaceutical company Eli Lilly announced last week was the beginning of a new era as it forecast a maiden profit of $44 million to $48 million for FY10.

The Australian drug delivery company said, in a presentation to Shaw Stockbroking, that entering the agreement with Eli Lilly for the potential commercialisation of Acrux’s experimental underarm testosterone solution AXIRON was the largest deal made by any Australian company in the biotechnology sector.

In exchange for these rights, Acrux is eligible for US$335 million, including an upfront payment of US$50 million, plus US$3 million on the transfer of manufacturing assets and US$87 million subject to issuance of marketing authorisation by the US Food and Drug Administration (“FDA”).

The company said it also eligible for $195 million in potential commercialisation milestones, as well as royalty payments on future global sales if AXIRON is successfully commercialised.

Acrux said the drug application is currently under regulatory review by the FDA for the treatment of testosterone deficiency (hypogonadism) in men.

With a distribution in 143 countries Acrux believes Lilly is the ideal partner, having already established leadership in men’s health through its erectile dysfunction therapy Cialis.

Cialis sales reportedly grew to $1.6 billion in 2009 to be placed in the top three in the market behind Viagra.

AXIRON also has the advantage of being the only product in the world delivered through the armpit.

Acrux CEO, Richard Treagus, said the company received a number of offers in its search for a global licensing partner and was confident in what Lilly had to offer.

“Something a lot of pharmaceutical companies want to do is sign a deal with one of these big gorillas,” Mr Treagus said.

“The company is established in men’s health, which stands us in good stead.”

Cialis’ track record, which included a 20% growth in sales numbers at the same time Viagra flat lined, was another factor.

“Right from the start the aim was not to run second or third in market,” Mr Treagus said in relation to Lilly’s objectives.

“It was to go right to the top.“

Another encouraging point for Acrux was the fact Lilly has a tendency to look at the product’s potential and whether it can be modified for other uses.

Given that the royalties include the perpetuity of anything developed from AXIRON and the technology used by Acrux, this could also have significant benefits for the company.

The company said 80% of the products market in the US, while Lilly also covers strong growth opportunities in Latin America and China.

“A lot more men are going to their general practitioner and getting tested,” Mr Treagus said mentioning that the population is ageing, while the test is also cheap and reliable.

“They (patients) are also getting comprehensively reimbursed.”

Acrux expects the outcome of the FDA review in 1QFY11 and the product launch in 2HFY11.

“For us it was an incredible return of investment,” chief financial officer Jon Pilcher said referring to the fact the company invested very little in AXIRON when compared to the potential return.

“This deal has completely transformed our financial position.”

Acrux forecast a significant reduction in costs in FY11 and when questioned on the risks surrounding the FDA decision Mr Treagus was clear.

“There is always a residual risk with the FDA,” he said.

“I think we’ve been diligent and we believe our product is certainly better than the market leader.”

Subject to FDA approval Acrux expects to pay it first dividend in 2011, which would be exempt from tax, while the company joined the ASX/300 last Friday in what has been a historical week for Acrux.