Asciano scraps asset sales in favor of stock offer
Tuesday, 16 Jun 2009
Bloomberg reported that Asciano Group has abandoned a plan to sell assets in favour of an AUD 2 billion share sale after its stock jumped fourfold since February. It will sell the shares at AUD 1.10 apiece, 40% less than the last traded price.
Asciano joins Rio Tinto Group in dropping plans to sell assets after credit and equity markets improved in the past three months, allowing companies to strengthen balance sheets after write downs stemming from the credit crisis. Australian companies sold AUD 25.2 billion in shares in the first four months of the year.
Mr Chris Weston, an institutional dealer at IG Markets in Melbourne, said that "It is a much better option raising capital than selling their assets, especially at what they are calling fire sale prices. The 40% discount is enough to entice most people."
Asciano derives about 50% of its earnings from the ports unit and the rest from its rail business. Asciano was created in June 2007, when Toll Holdings Limited spun off its port and rail units. Shares in the company plunged from a record AUD 9.15 on June 20th 2007 to the February 27th 2009 low.
The Queensland government this month announced an AUD 15 billion asset sale including its entire coal railroad network and two export ports. Queensland Rail is Australia's largest coal transporter and the sale of its non passenger assets could fetch AUD 7 billion.
In a separate statement, the company said that full year EBITDA will be about AUD 655 million in the fiscal year ending June 30th 2009, adding that it won't pay a second half dividend.
