Today's Business Headlines

12/02/2009 - 06:47

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Rio, Chinalco ink $US20bn deal; Arrow fires new Pure Energy bid to oust rival; CBA flags first cut in 17 years; China's trade slump fuels global fears; WA chases miners for $300m

Today's Business Headlines

Rio, Chinalco ink $US20bn deal
Rio Tinto has been warned that its plan to sell a stake in its assets to Chinese state-owned Chinalco could "back it into a corner", sacrificing the Anglo-Australian mining giant's future strategic options to resolve its huge debt problem. The Age

Arrow fires new Pure Energy bid to oust rival
Arrow Energy has dealt itself back into the battle for coal seam gas player Pure Energy with a board-endorsed $890 million cash-and-scrip bid, trumping this week's surprise offer from Britain's BG Group. The West

CBA flags first cut in 17 years
Commonwealth Bank has become the second major bank in less than a week to flag a possible cut in its annual dividend, as the deteriorating economy hacked into the lender's December half-year profit, causing a five-fold blowout in bad debts. The Australian

China's trade slump fuels global fears
China's exports plunged 17.5 per cent in January - the sharpest drop in more than a decade - as the collapse of its trade accelerated, adding to the threat of more job losses and intensifying pressure on Beijing to boost slumping economic growth. The West

WA chases miners for $300m
The West Australian government is aiming to reap an extra $300 million a year in revenues by forcing BHP Billiton and Rio Tinto to pay higher iron ore royalties.

 

THE WEST AUSTRALIAN:

Page 3: The US banking system came close to collapse in September as authorities moved to stem a massive rush of withdrawals, it was revealed yesterday.

Commonwealth Bank has warned shareholders it may cut future dividends after a slowing economy and rising bad debts saw its half-year profit fall 16 per cent.

A $6 million government package to ensure some of the state's most remote Aboriginal communities were connected to broadband technology last year has drawn fire after investigations revealed just two out of 12 communities had used the taxpayer-funded service.

Page 6: A further $600,000 from WA was donated to the Red Cross Victorian Bushfire Appeal yesterday.

Page 7: The state's bushfire fighting infrastructure needs $11 million so volunteer firefighters are better prepared for blazes such as those seen in Victoria, the WA Local Government Association claims.

Page 9: Rents soared across WA last year because of low vacancy rates and would rise further this year, market analyst Residex said yesterday.

First-home buyers have flooded back into the housing market but their enthusiasm is not rubbing off on the wider community, with consumer confidence tumbling despite deep interest rate cuts and the Rudd government's new stimulus package.

Page 11: There are new doubts over whether the Perth Arena indoor stadium will be ready to host the Hopman Cup before 2013, potentially depriving the tennis event of a home for two years.

Page 12: US President Barack Obama accused Wall Street of seeking an "easy" way out of the financial crisis after the sharemarket slumped on news of a new $US2 trillion bank rescue with tighter controls.

Page 13: A WA meat processor has become a victim of the global economic downturn, with its Waroona business to close at the end of the week.

Business: Fleetwood Corporation has defied a downturn in caravan sales to post a record interim profit of $18.4 million.

Arrow Energy has dealt itself back into the battle for coal seam gas player Pure Energy with a board-endorsed $890 million cash-and-scrip bid, trumping this week's surprise offer from Britain's BG Group.

China's exports plunged 17.5 per cent in January - the sharpest drop in more than a decade - as the collapse of its trade accelerated, adding to the threat of more job losses and intensifying pressure on Beijing to boost slumping economic growth.

An economic stimulus combined with string growth over recent years will help Australia narrowly avoid slipping into recession, but this won't stop unemployment shooting up to decade-long highs which could trigger a fresh round of lending losses, Commonwealth Bank of Australia chief executive Ralph Norris warns.

Harvey Norman's service-focused business model could be obsolete within the decade as the rise and rise of low-cost, discount operators forced prices and margins even lower, founder Gerry Harvey conceded yesterday.

Murchison Metals yesterday took just five minutes to confirm shareholders had approved constitutional changes to stop China's Sinosteel from gaining control without their approval.

 

THE AUSTRALIAN FINANCIAL REVIEW:

Page 1: BHP Billiton is lobbying the federal government to reject China's attempt to grab a pivotal stake ion Australia's premier natural resources through Rio Tinto's controversial planned $US20 billion ($29.9 billion) asset sale and capital raising.

Commonwealth Bank of Australia chief executive Ralph Norris has signalled he is unlikely to pass on future interest rate cuts in full, saying the bank has copped an increase in wholesale funding costs, while warning that it may slash dividends because of an uncertain outlook.

The Obama administration has raised doubts about its ability to seize control of the crisis engulfing the US economy after investors slammed the lack of clarity in a plan to inject up to $US2 trillion ($3 trillion) into the ailing financial system.

Mounting job fears threaten to derail efforts to stimulate the economy despite signs that first-home buyers are surging back into the property market as a result of plunging interest rates and generous government handouts.

Page 3: Unions will be blocked from launching workplace safety prosecutions under proposed national laws that have been drawn up as part of the Rudd government's federal reform agenda.

Page 5: The West Australian government is aiming to reap an extra $300 million a year in revenues by forcing BHP Billiton and Rio Tinto to pay higher iron ore royalties.

Company boards will consider a cap on executive bonuses to avoid huge payouts in the face of falling share prices and profits.

Page 9: The federal government risks losing a crucial vote on its $42 billion economic stimulus plan today after key senators aired frustration about their inability to negotiate amendments to the plan in good faith.

Page 11: GM Holden says it will be forced to restructure to ensure a "sustainable future" in the face of falling domestic and export sales, after its US parent confirmed it will cut its worldwide office workforce by about 10,000.

 

THE AUSTRALIAN:

Page 1: Privacy laws and interstate bickering over funding sabotaged plans to introduce a nationwide fire-alert system in time for this year's killer bushfire season.

Page 2: The green movement was yesterday blamed for the severity of the Victorian fires that cost so many lives and ruined so much property.

Page 4: Kevin Rudd has ordered Assistant Treasurer Chris Bowen to move quickly to resolve cases in which insurance companies refuse to make good on legitimate policies of Victorian fire victims.

Page 7: With no champagne, no chauffeur-driven cars and no glamorous after-parties, the focus was firmly on the clothes at the David Jones collections launch in Sydney yesterday.

Page 8: Consumers are increasingly fearful about the economic outlook, despite the gains they are receiving from both the Government's stimulus packages and interest rate cuts.

Confidence in the Coalition's ability to handle the economy has slipped to its lowest level since Andrew Peacock was Liberal leader, as the global recession keeps economic management as the public's top priority.

The fate of the Rudd Government's $42 billion economic stimulus package should be determined today after negotiations between Wayne Swan and crossbench senators failed to secure its passage through the Senate late yesterday.

The Liberal Party's delicate grip on power in Western Australia makes it unlikely to force mass council mergers against the wishes of coalition partners the Nationals.

Business: If Rio Tinto reckons its widely anticipated $US20 billion ($30.5 billion) ''strategic alliance'' with Chinalco represents an end to a credibility crisis created by its ill-fated Alcan acquisition, it can start thinking again.

Commonwealth Bank has become the second major bank in less than a week to flag a possible cut in its annual dividend, as the deteriorating economy hacked into the lender's December half-year profit, causing a five-fold blowout in bad debts.

Chinese exports have suffered their biggest fall in more than a decade, dropping for the third month in a row as demand for the country's products evaporated in the US and Europe.

Australian banks are being investigated over concerns some are misleading consumers with advertisements for high-interest online savings accounts.

Tom Albanese and Paul Skinner will attempt to convince both Canberra and the market this evening that Rio Tinto's best option is a deal with Chinalco.

Rio Tinto is preparing to sign a deal for a $US13 billion ($20 billion) asset sale and $US7 billion convertible note issue with China's Chinalco today, as it looks to pay down debt and tackle shareholder discord.

Arrow Energy has raised its bid for Pure Energy Resources with an unconditional cash-and-scrip offer that values the target at $890 million and trumps BG Group's bid this week.

Telstra has increased its portfolio of Chinese online properties with the $302 million purchase of two mobile phone content operations.

Building materials giant Boral has slashed 1800 jobs, cut overtime and mothballed half its US plants as it suffers from the economic meltdown.

Commonwealth Bank is conducting high-level, internal and external reviews of last year's botched capital raising involving Merrill Lynch and has backed away from any commitment to future guidance on bad and doubtful debts.

Glove and condom manufacturer Ansell has cut full-year profit forecasts as the impact of the global economic slump on manufacturing activity reduces demand for the company's industrial work gloves.

Four former bank chiefs have been accused of saying sorry only as a public relations move after refusing to admit to personal errors in the run-up to the near collapse of RBS and HBOS.

Private equity firms, pension funds and other investors that are needed to jump-start the Government's plans to buy toxic assets from banks have expressed frustration about the lack of detail offered by US Treasury Secretary Timothy Geithner.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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