Few bright spots in dour market

ALL deals during the fiscal year were done, or proposed, at a time of financial crisis, attracting a certain level of admiration from the investment community for the successful combatants.

The boom period of win-win deals has passed, and accusations of opportunism or acclamations of clever timing - depending on what side of the deal the pundit is on - are coming thick and fast.

At a cursory glance, the big M&A plays involving household names BHP Billiton, Rio Tinto and BankWest look like a treasure chest for local dealmakers, and the significance of the transactions to Western Australia are evident. But in reality, the deals are negotiated in offices as far away as London.

There have, however, been several interesting WA-centric deals that have been concluded during 2008-09 and several others currently on the table.

Local driller and contract miner Ausdrill may have successfully defended a hostile approach from Macmahon Holdings, but it wasn't cheap.

Along with $2 million taken from the company's coffers used for the defence, managing director Ron Sayers personally bought 8.3 million shares in the company he founded at $2.50 a share from a hedge fund - which needed a nudge from a corporate adviser - as he upped his stake. Ausdrill shares are currently trading at less than $1.

Ausdrill turned to long-time adviser Charles Fear from Argonaut Capital, and a Lazard Carnegie Wylie team to advise on its defence. Mr Fear, who heads Argonaut's corporate advisory arm, and chief executive Eddie Rigg established Argonaut in 2002 and have turned the firm into a prominent local M&A player and equity-raising manager.

Corporate finance heavyweights Azure and UBS were on the other side of the transaction advising Macmahon.

Ausdrill managing director Ron Sayers recently told WA Business News that the business he founded more than 20 years ago was now takeover-proof, and was a likely instigator of acquisitions when conditions improved.

"I spent a lot of money recently defending a takeover from Macmahons buying shares at $2.50," Mr Sayers said. "I wouldn't be too keen going and doing a deal at $1 at the moment."

Twenty per cent stakeholder Mr Sayers, friends and family collectively own about half of the company stock.

A financial crisis was not the only thing troubling Pankaj Oswal's ammonia producer Burrup Holdings last year as it tried to get an initial public offering off the ground.

Burrup scrapped its IPO in June last year due to the downturn in global stock markets and the temporary loss of the company's gas supply after the Varanus Island gas explosion.

While float plans have remained on hold ever since, adviser Ernst & Young did help broker a deal with Norwegian fertiliser company Yara International ASA, whereby Yara paid $176 million to lift its stake from 30 per cent to 35 per cent. Yara has a long-term offtake agreement with Burrup.

The deal, whereby money changed hands at a price higher than the proposed IPO, was enacted just before September 16, the day insurance giant American International Group suffered a liquidity crisis.

If the transaction had been delayed by a few days, when the fallout from AIG and Lehman Brothers swept the market, the transaction would almost certainly not have proceeded at those prices.

The battle between gold miners Avoca (the potential buyer) and Dioro (the target) has run into the new financial year. Advised by RBC Capital Markets, Avoca has criticised Dioro's board for rejecting its scrip offer, and mocked a KPMG valuation of Dioro that is three times its current share price. Pendulum Capital is providing takeover defence advice to Dioro.

The fiscal year also had its share of boardroom tussles, as the drawn out bid by Seven Network's Kerry Stokes and Peter Gammell for seats on the board of West Australian Newspapers carried over into 2008-09.

Iron ore miner Portman unsuccessfully attempted to rejig the Golden West Resources board during the year, while the plans of Buru Energy chairman Eric Streitberg to privatise Buru also failed.

The Karl Simich-chaired investment company GoldLink IncomePlus last month proposed to buy 10 per cent of shares in Subiaco-based Indago Resources (formerly Western Metals) as part of a bid to replace the board with its own nominees.

The attempt to install industry veteran Miles Kennedy at the helm of Indago by GoldLink continues.