High-flyer Takes To Infrastructure

Sydney Morning Herald

Wednesday July 25, 2007

Edited by Matt O'Sullivan

Allco, fresh from its failed tilt at Qantas, wants to play in the Mac and Babs game.

EXPECT one-time Qantas bidder Allco Finance Group to soon start making its presence felt in the infrastructure world.

In the midst of transforming itself into yet another mini version of Macquarie Bank and Babcock & Brown, Allco now sees itself as a manager and trader of assets - as opposed to an arranger of leases.

To that end it has raised $500 million which, with debt, gives it firepower of about $2.4 billion to buy a variety of operations in aviation, shipping, rail, property and other infrastructure.

But critical to this, says UBS, is how Allco's management - now headed by former senior MLC, Westpac and BT funds management executive David Clarke - handles this transition.

With its shares up 80c last week to just below $11 - prompting a "please explain" note from the stock exchange - talk in the market is that a deal or deals may soon be on the cards.

Allco replied it was not aware of any information that should be disclosed, but that didn't stop the stock rising a further 45c to $11.45 yesterday.

CommComm upup

Seems there are still some believers in Commander Communications. Despite some analysts expecting more bad news ahead for the IT equipment-supply company after two profit downgrades in quick succession, Perpetual Investments clearly sees it as a potential takeover target after increasing its stake to more than 13 per cent. Commander's share price has rallied about 14 per cent from a recent low of $1.03 two weeks ago, although not everyone is seeing the stock through the prism of an opportunity in a bull market.

"Lots of people are looking them over, but to make them a target it needs to be an industry player," BBY analyst Mark McDonnell said. "The share price has halved for a good reason ... and [a takeover bid] doesn't automatically follow."

Instead, some investors are turning their minds to mobile broadband operator Unwired, which had its fourth consecutive day of rises yesterday. The stock closed up 1.5c at 34c, taking its gains to 34 per cent over the last two weeks.

Two weeks ago pay TV pioneer Steve Cosser resigned as chairman citing "personal reasons", leaving some to speculate he could return with a bid.

Pluton no pup

Albert Wong's and Neville Wran's exploration play, Pluton Resources, has raised a good deal of interest in the market in the past week. Enough, at least, to send its shares to a record close of $1.50.

Not bad for a stock which came on last year with an issue price of 20c.

Even better for Wong and Wran, who got their stock for nix. Their stake of 3.4 million shares is now worth just shy of $5 million.

Last week's buoyancy can be attributed to a spate of institutional buying of the stock.

This week it has settled back with its last trade at $1.39. Drivinginterest in the stock is the expected release of assay results from its Dove River copper-gold prospect in Tasmania.

TV dramas

Channel Nine executives must be scratching their heads over how to claw back the advertising dollars they've lost, along with the viewers.

Still, things could be worse. Losing the bidding war for Southern Cross Broadcasting's Channel Nine affiliate station in Adelaide to WIN Corp may have been a blessing in disguise for Nine's new private equity owners. The South Australian capital shocked market watchers yesterday with the weakest advertising figures in the country. Spending on TV commercials in Adelaide edged up a meagre 0.63 per cent in the June half, compared with 6.57 per cent growth nationwide.

WIN's billionaire owner Bruce Gordon, who bought Nine Adelaide for $105 million in May, and his chief executive George Papadopoulos, have descended to the city of churches this week to discuss with management how to lift earnings at the station. Their visit comes after the pair spent time in West Australia to plan the turnaround of WIN's other acquisition, Channel Nine in Perth.

CBA knocker

His banking rivals might have found themselves in the limelight for all manner of reasons this year, but Commonwealth Bank boss Ralph Norris has been quietly beavering away with his overhaul of the country's largest bank.

The revamp, which he instituted following his appointment nearly two years ago, has certainly been solid rather than spectacular, but has nonetheless helped the bank's share price to outperform the market by 7 per cent since the start of this year.

But according to Citigroup, there are signs that the stock may have got a bit ahead of the hype - what with more work to be done at the retail banking level and some patience required before change is seen at the key premium business division which lends to small- and medium-sized companies. Citigroup anticipates CBA should settle at $55 by the end of this year, $1 higher than its previous forecasts but still below yesterday's $56.72.

Woolies can win

Brokers are giving Woolworths some chance of success in its appeal against the New Zealand competition regulator's decision to reject its proposed takeover of the Warehouse Group.

Last week the Commerce Commission finally gave the reasons for its rejection of Woolies's bid for the Kiwi retailer, citing concerns it would destroy a vital "third maverick player" in the supermarket industry. Foodstuffs, which has also been pursing the Warehouse, has launched its own legal action. "We are of the view that both Woolworths and Foodstuffs will make a compelling case in their appeals to the High Court," Goldman Sachs JBWere said. "If successful, then we would expect a bid from either or both parties to follow immediately."

xchange@smh.com.au

© 2007 Sydney Morning Herald

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