Foster’s Group has said it will structurally separate its beer and wine divisions and predicts an impairment charge of up to $1.34 billion before tax for its wine business in the current financial year.
The company said the demerger will create separate listed businesses and is unlikely to occur until at least the first half of the 2011 financial year.
“We will proceed as quickly as possible, but priority will be given to ensuring that all relevant matters are carefully and rigorously examined with the intention of continuing to grow our businesses and minimising disruption to our customers, employees, suppliers and other stakeholders,” Foster’s chief executive Ian Johnston said in a statement.
Additionally, the company said it expects a non-cash impairment charge of $1.1-1.3 billion before tax against its wine assets. However, this charge will not have any effect on the company’s banking facilities, it said in the statement.
Meanwhile, mining giant Rio Tinto has said it remains cautious about the company’s short-term outlook but demand from China and India will help make the business an “attractive proposition”.
“We have seen the recent sovereign debt crisis in Europe and its sweeping contagion into financial markets around the world,” chairman Jan du Plessis said at the company’s annual general meeting in Melbourne.
“This illustrates the potential for persistent economic imbalances and hidden risks to cause ongoing disruption to global economic activity.”
“Looking long-term however, China’s demand for iron ore, copper, coal and aluminium is expected to continue to grow over the next 15 years, after which time we expect to see increasing commodity demand from India.
While chief executive Tom Albanese added some concerns over the near-term prospects for the company, he said there would be no major revisions to the company’s strong outlook.
The Australian sharemarket has opened over 2% higher this morning following a flat result from Wall Street, where investors have gained confidence in materials and equities.
The benchmark S&P/ASX200 index was up 47 points or 1.1% to 4313.3 at 12.10 AEST, while the Australian dollar managed to gain some ground to US82c.
ANZ shares gained 0.9% to $21.53, as Commonwealth Bank shares rose 1.1% to $50.86. Westpac rose 0.5% to $22.37, as NAB gained 0.1% to $23.79.
Wattyl has reportedly received a takeover offer from US paint group Valspar for $1.30 per share, valuing the company at about $110 million.
In a statement to the ASX, Wattyl said the proposal still requires a board recommendation and is conditional on approval from the FIRB.
“The Wattyl board has not formed a view with respect to the proposal and recommends that shareholders take no action at this time,” the company said.
Minara Resources now searching offshore
Minara Resources has said it will be looking offshore to more suitable tax conditions due to the looming threat of the Government’s proposed Resources Super Profits.
“Under the new proposed tax, if the rules come in, it would be much more favourable to look at investments offshore,” chief executive Peter Johnstone told AAP. “In the world of nickel, there’s no shortage of resources, particularly laterites… in Indonesia, The Philippines, New Caledonia, Brazil and Canada.”
As reported by Reuters, the Foreign Investment Review Board has reportedly delayed a final decision on whether the Bright Food Group $1.75 billion bid can go ahead for the sugar business of CSR. The order is set to last 90 days.
Meanwhile, a group of coal producers has offered to purchase the QR Central Queensland coal track network from the state government for $4.85 billion.
“Importantly, our offer is able to be settled with the government prior to the IPO and will not be dependent on volatile equity markets, removing major risk for the state while also providing early settlement,” Queensland Coal Industry Rail Group chairman Nick Greiner said in a statement.
“We have considered the alternative model under the IPO and associated regulation and legislation and strongly believe it does not represent an optimal or even reasonable basis for assuring the future of the state’s major export industry.”
He added the plan would also include a facility to fund the current QR capital works plan and add rail capacity.
The plan would see the Australian Rail Track Corporation act as manager, with the eventual goal of becoming an equity owner.
“It is their (ARTC’s) intention to participate as an equity owner and provider of long-term railway management – operation and maintenance – services,” Greiner said.
Global economy at risk to Euro debt crisis
Overseas, German authorities are considering extending the ban on short-selling in order to contain the risks surrounding the Eurozone debt crisis. Reuters has reported a draft German finance ministry document calling for restrictions on speculative trades contains possible plans for extending the ban.
The move highlights the current economic uncertainty in Europe. Dominique Strauss-Kahn, managing director of the International Monetary Fund, told a conference in Sao Paulo that the debt crisis is currently the largest threat facing the global economic recovery.
“The main risk is related to the so-called debt crisis,” Strauss-Kahn said. He added that while reforms have been made to financial systems, more needs to be done to ensure the financial crisis of 2008 never occurs again.
In the United States, stocks finished flat as investors gained confidence in materials markets, with the Dow Jones Industrial Average finishing just 22.82 points lower, or 0.23% to 10,043.75.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
