Catalyst Investment Managers has sold part of its shareholding in bedding retailer Adairs via a block trade. The private equity firm hired investment bank UBS to offload 12.5 million shares on Friday night. The deal was done at $2.20 a share in line with the company's closing price on Thursday. It's understood the stock was picked up by Australian institutional investors, including existing shareholders. Catalyst still holds 40 million shares, or 24 per cent, of the company. At Adairs' annual investor day last week, chief executive Mark Ronan affirmed the retailer's 2018 earnings (EBIT) guidance, which was upgraded by about 7 per cent last month to between $44 million and $46.5 million, compared with a $30.8 million result in 2017. Ronan outlined plans to open seven to 10 stores a year over the next three years and to expand about 15 existing stores to showcase a wider range of exclusive products in a curated environment.
Financial Review AMP Limited (AMP):
Global ratings agency Moody’s has taken a swipe at beleaguered wealth manager AMP, arguing its cashflows could continue to fall in the wake of its “governance failures”. Moody’s senior credit officer Frank Mirenzi said the revelations in the royal commission about AMP (AMP) vindicated the agency’s negative stance on the company’s credit rating. AMP’s life insurance division has a Aa2 credit rating, according to Moody’s, which said the scandals drubbing the company’s reputation were creating additional pressures on its credit rating. “While it is still too early to predict the potential outcomes from the allegations against AMP raised by the commission, AMP’s governance failures are credit negative for the company and are appropriately reflected by our negative outlook on its rating,” Mr Mirenzi said. “AMP’s credit profile is under pressure, despite its strong capitalisation and market position, because of the potential for reputational damage and additional legal and compliance costs associated with the allegations of governance failures,” he said.
BHP Billiton Limited (BHP):
Mining giant BHP Billiton has offloaded a $100 million-plus exposure to Newcastle Coal Infrastructure Group. Street Talk understands the miner had investment bank Rothschild marketing the $100 million parcel of perpetual bonds to potential buyers last month, before securing a deal at "above par". While the buyer is not yet known, sources said it was a strong result for both BHP and the Hunter Valley coal chain company. BHP, which is one of NCIG's six coal miner shareholders, had deemed the position "non core" and for NCIG, it continued its run of attracting new money into its capital structure. BHP's sold position, said to be worth more than $100 million, was believed to be a tranche in NCIG's HIPRS funding line. NCIG was set up with $270 million of perpetual preference share-like instruments. It's understood the position was marketed to superannuation funds and infrastructure funds. NCIG holds the long term lease of a coal export terminal at the world's largest coal exporter, the Port of Newcastle. Its capacity is fully contracted through agreements with BHP and fellow miners including Whitehaven, Yancoal Australia and Peabody Australia.
Commonwealth Bank of Australia (CBA):
Commonwealth Bank of Australia’s chief financial officer has stepped down after less than a year in the role. The resignation of Rob Jesudason, who the bank (CBA) said had decided to pursue an external role in Hong Kong, comes just over a month after Matt Comyn took over as chief executive from Ian Narev. Mr Comyn joined Commonwealth Bank in 1999 and was most recently head of retail banking operations. Commonwealth Bank, Australia’s largest bank by assets and the country’s biggest mortgage lender, said Alan Docherty would become acting chief financial officer with Mr Jesudason leaving with immediate effect. Mr Docherty was finance chief for Commonwealth Bank’s institutional banking and markets arm.
Elders Ltd (ELD):
The historic agribusiness Elders has continued its turnaround, lifting its underlying profit after tax by 13 per cent to $39.7 million for the first half of 2018. Elders grew underlying EBIT by 10 per cent to $45.7 million, which the company attributed to both strong performance in its retail business, as well as higher earnings thanks to bolt-on acquisitions. Elders' Chief Executive Officer Mark Allison said: "We are focused on improving our service offering for clients and delivering value to shareholders. We now have a solid and stable platform to capitalise on the many opportunities that lie ahead for Elders and Australian agribusiness." The company will pay a fully franked interim dividend of nine cents per share, to be paid on June 15.
Healthscope Ltd (HSO):
The board of Healthscope is weighing the merits of two competing takeover bids, after Canada's Brookfield Asset Management showed its hand and lobbed a higher $4.35 billion offer. Healthscope, the hospital group which is in the crosshairs of suitors after a patchy earnings performance since re-listing four years ago, confirmed the receipt of the Brookfield-led offer on Monday. "Healthscope Limited today announced that it has received an unsolicited, non-binding indicative proposal from Brookfield Asset Management Inc, together with its affiliates and their managed funds, to acquire all of the shares in Healthscope by way of a scheme of arrangement," the company said in an ASX statement. The $US40 billion Brookfield emerged as a suitor on Monday morning, with a $2.50 a share offer valuing Healthscope's equity at $4.35 billion and the company at about $6.3 billion including debt. The new bid – which is being sought as a scheme of arrangement – represents a higher 23 per cent premium to Healthscope's closing share price of $2.03 on April 24, the last trading day before BGH Capital tabled its offer. BGH's proposal was pitched at $2.36 a share for Healthscope, valuing the company at $6 billion including debt.
Lendlease Group (LLC):
Development and construction heavyweight Lendlease has outlined more than $20 billion worth of opportunities it is pursing across Europe as it swings its operations towards new markets on the continent and builds on its massive pipeline in Britain. The group, which has renewed its offshore push into a small number of international cities, updated investors on two major projects in Milan, that will add to its hefty pipeline of both development and building work in the British capital. However, one of its main projects, the $7 billion Haringey Development Vehicle in London, on which it is preferred bidder, could come under renewed pressure with reports that British Labour leader Jeremy Corbyn has come out against the scheme. The 20-year project, to be set up as a 50:50 joint venture partnership with Haringey Council, would see about 5000 new homes across the borough, with a split of 40 per cent for affordable housing and 60 per cent mixed between private rental and for sale housing. British media reported last week that the company was seeking meetings with the newly installed leaders of the Haringey council — now led by Joseph Ejiofor — as it sought to ensure the scheme went ahead.
QBE Insurance Group Ltd (QBE):
QBE chief executive Pat Regan is confident the insurer’s growing investment in technology venture capital groups will help reshape the way it assesses future risk and help the company back to profitability. The Sydney-based global insurance group booked a 2017 fullyear loss of $US1.25 billion ($1.66bn), which was a 248 per cent drop on its profit one year earlier. The company blamed weather events, including Cyclone Debbie and hurricanes Harvey and Irma, coupled with underperforming international businesses for the huge losses. Investors reacted to the poor financial results by delivering QBE directors their first strike at its annual meeting earlier this month, lodging a 45.57 per cent vote against the company’s remuneration report. Mr Regan told The Australian that QBE was increasing its -investment in venture capital groups that specialise in -insurance technology development to help the business prepare for the future. QBE now holds stakes and partnership agreements in artificialintelligence gathering group Cytora, US group HyperScience, which specialises in automating office work, and machine learning company RiskGenius.
Seven Group Holdings Ltd (SVW):
Seven Group has upgraded its full-year guidance on the back of strength in mining production and improved east coast infrastructure activity. In an update to the ASX this morning, the company (SVW) said it expects underlying earnings before interest and tax to be between 20 to 25 per cent higher than the $376.9 million it booked last year, subject to the settlement of deals this year. “Our industrial services businesses continue to benefit from an upswing in mining and infrastructure activity levels,” said chief executive Ryan Stokes. “The group has successfully executed a number of value accretive transactions in the financial year to date, enabling us to enhance our exposure to these core sectors while also enhancing the capital structure.” It comes as unseasonably dry weather and one-off projects has helped to lift profit and revenue for the group for the fiscal year, the company said. At 12.30pm (AEST) shares in Seven Group were up 36.5 cents, or 1.86 per cent, to $20.035.
Specialty Fashion Group Ltd (SFH):
Struggling retailer Specialty Fashion Group has sold its stable of mid-market brands Millers, Katies, Rivers, Crossroads and Autograph to rival group Noni B. The sale will net Specialty Fashion $31 million in cash, and leave it with only one brand in its portfolio - City Chic, the successful plus-sized women’s apparel label seen as the jewel in its otherwise challenged business. Specialty Fashion’s chair Anne McDonald said that following a review of the business, directors unanimously agreed that retaining City Chic and selling all other businesses would maximise value for shareholders. The brands being sold ran at a combined $6.2 million loss in the 12 months to the end of December, while City Chic was on track for underlying earnings of $19 million to $20 million this financial year. Specialty Fashion ran at an $8 million loss in 2017. Noni B requested a trading halt on Monday morning ahead of announcing a round of equity raising.
Telstra Corporation Ltd (TLS):
Telstra has flagged more tough times for ahead for its mobile business, with the telco’s full year 2018 earnings set to come in the bottom end of the forecast range of $10.1 to $10.6 billion. In a market update, released on Monday, the incumbent telco said that despite the growth in its overall customer base its margins were under significant pressure. “The challenging trading conditions in FY18 are expected to continue in FY19, including ongoing pressure on mobile and fixed ARPUs and the accelerating impact of the NBN,” it said in a statement. In its Q3 results the telco said that it had added more customers both in the fixed and mobile market. However, price competition and the impact of the NBN continues to put pressure on its margins. Telstra (TLS) signed up 36,000 fixed line customers during the quarter and holds a 50 per cent share of the NBN market. Telstra has reaffirmed its overall FY18 guidance, with full year income expected to and in the middle of the $27.6bn to $29.5bn range. Its capital expenditure for the period is set to be on the upper end of the $4.4bn to $4.8bn range.