Alh Looks At Lion Nathan's Vic Pubs
Sydney Morning Herald
Friday January 30, 2004
No pokies but, gee, a pub's a pub and Australians haven't given up drinking just yet.
Australian Leisure & Hospitality group will be one of the interested parties lining up to have a look at Lion Nathan's Victorian hotel operations.
Lion has employed Caliburn Partnership to sell 23 of its 41 pubs in a line. The other 18 are sub-leased to third parties and will probably be dealt with separately.
An information memorandum is yet to be circulated but already the likes of the Taverner Hotel Group and hotelier Bill Waugh are said to be interested in the assets, which carry a book value of about $50 million.
Waugh and his advisers at Macquarie and Merrill Lynch recently called off $500 million plans to float his hotels business leading some observers to play down the prospects of a serious bid from the NSW pub baron.
Interestingly, one of the reasons for Waugh's decision apart from the spectre of rising interest rates was the sharemarket's tough reception of ALH.
But this hasn't stopped the Foster's spin-off hinting it will have a look at the Melbourne and Geelong hotels some time in the near future. Although ALH boss Geoff Rankin is mainly interested in pubs with pokies, the group has about 13 hotels in Western Australia, where gaming is not allowed in such venues.
With an effective cap on the number of one-armed bandits in Victoria, it would be difficult for ALH to introduce poker machines into any of Lion's hotels. However, it is understood ALH is keen to broaden its portfolio into pure beverage and food assets.
Lion will maintain pourage rights in the hotels and is expected to use the sale proceeds to reduce debt.
``We estimate the asset generated a small loss before interest and tax in 2003, due to depreciation and heavy management overhead," JP Morgan notes.
Alumina no prize
While analysts concentrate on post-results operational issues, the impact of Chinese alumina demand and the ill-effects of the rampant Australian dollar, it's worth remembering the reason Alumina came into being.
When Hugh Morgan split up WMC at the end of 2001, the theory was Alumina's AWAC joint venture partner, Alcoa, would gobble it up given the compelling tax benefits and scale advantages.
However, there are a few reasons why investors, who have watched the stock slip 17 per cent this year, may have to wait a while before a bid hits the table.
Once again, the dollar plays an important role. As Citigroup points out, Alcoa prefers cash acquisitions with the only equity deal in recent memory being the Reynolds food packaging purchase in 2000.
These days Alcoa shares are trading at about $36, which would enable it to attempt a scrip bid, according to most analysts. But the US78c exchange rate ``would be a major impediment to creating value in the process", as Citigroup puts it. When Alcoa made a $10.20 a share bid for WMC about three years ago, its share price was $US31 and the exchange rate US50c, giving Alcoa's share price an Aussie dollar value of $62. The Pittsburgh company's share price is now worth $47.
Alternatively a cash bid would be difficult, given Alumina shares are ahead of most valuations.
Put simply, Alumina shareholders will probably have to wait until either the Aussie battler falls off its perch or Alcoa's share price improves dramatically. This won't happen until aluminium share prices rise and/or the US economy recovers.
Village struggling
Who'd be a Village Roadshow investor? Just when things were looking up for ordinary and preference shareholders alike because of the company's proposed prefs buyback, the whole thing's been put on ice.
Spoiling tactics used by a few shareholders who forced a second vote on the scheme after complaining to the courts have been successful so far.
Village is now appealing against the court judgement that allowed pref holders to vote against but not for the scheme, but that could take until March to settle. Until then, both sorts of shares will remain in limbo.
The prefs Village is offering $1.25 a pop for the non-voting stock were steady at $1.09.
The stock was languishing around 63c mid-last year after Village outraged investors by suspending dividend payments.
It gradually recovered as details of the buyback proposal were revealed and settled around $1.15 after investors initially approved the scheme last November.
The ordinary stock was harder hit by the collapse of the scheme. It had rallied to a high this year of $2.04 on the back of the buyback, compared with 99c at their weakest last year. But investors began baling out when a second shareholders' meeting held last week scotched the scheme, with the shares falling from $1.93 last week to close at $1.68 yesterday.
Ta-ta to Townsville
Change is afoot among Macquarie's private client branch network, with two of its very few regional offshoots parting amicably with the Martin Place-based Millionaires Factory.
At first it was thought the exit of Macquarie from Toowoomba and Townsville was a reflection of the growing economic cost of such outposts particularly as the monetary burden of the Financial Services Reform Act takes its toll.
Not so says Macquarie's John Dornbush, who is driving divorce proceedings from the Toowoomba/Townsville end. The practicalities of offering clients a decent enough service when the main show was in Sydney was not easy and both offices were pretty keen to go it alone. It was a mutual decision that suited both parties. Etrade will provide the settlement services.
VILLAGE ROADKILL
Village Roadshow
Nov 18, 03
Victorian Supreme Court rejects scheme of arrangement.
Sep 24, 03
Former director Peter Ziegler seeks $148m in termination payment.
Jan 27, 04
Company fails to get shareholder approval for capital restructure.
Source: Bloomberg.
© 2004 Sydney Morning Herald