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Australian Financial Review : October 17th 2006
FBA 001 St.George Bank Limited ABN 92 055 513 070 AFS Licence No. 240997 9624/7250A C10/06 We know one trade finance solution does not fit all. When it comes to importers and exporters -- every business is different. So at St.George, we know that trade finance solutions should also be individually tailored to meet the specific needs of your business. You will have a Relationship Manager who will customise your unique plan and work with you to ensure it's always working as efficiently as it can. St.George has a comprehensive suite of products and services to help your business. That, together with access to international markets along with local expertise, can help you make the most of every opportunity. Let's talk. Call 1300 789 151, 8am -- 6pm (AEST), Mon -- Fri, or visit stgeorge.com.au/corporate. Total recall It pays to get ahead in the name game. Page 60 IT liftout Peter Shergold pushes public service online revolution. Page 29 Nuclear energy Power stations within a decade, page 3. Plus: Australia's weapons option, page 59. Companies API rebuffs Sigma bid, page 13. Plus: GrainCorp's earnings downgrade, page 14. FINANCIAL REVIEW TUESDAY 17 OCTOBER 2006 www.afraccess.com Price $2.50 (incl GST) INDEX Home delivery 1800 646 990 www.afraccess.com World 10 Companies 13 Financial Services 18 Markets 19 Information 29 Enterprise 47 Property 51 Letters 58 Work Space 60 Editorial 62 Nine, magazines sell-down Private equity joint venture Cash for gambling expansion Packer in $4 billion media play James Packer is reshaping PBL to build a stable of world-class gaming assets. Photo: LOUIE DOUVIS Damon Kitney and Neil Shoebridge OUT OF THE BLOCKS James Packer has used first-mover advantage to raise cash at the peak of the market frenzy on media deals while maintaining maximum flexibility. A key motivation is the desire to liberate the value in the portfolio of PBL's media assets and thereby lower the net exposure to a declining old media space, in particular free-to- air TV, which is a broadcast medium under considerable threat from changing viewing habits and competing technologies. PMP management buy-out, page 13 Ten's painful truth, page 14 Rewriting media rules, page 16 Market reaction, page 19 -- Chanticleer page 64 -- Brett Clegg, comment, page 17 Continued page 16 James Packer's Publishing & Broad- casting Ltd is completing a plan to sell half of its media interests, including the Nine television net- work and ACP Magazines business, to private equity investors. The deal would bankroll its ambitions in gaming and capitalise on the federal government's changes to media ownership laws. PBL's board yesterday approved the deal, which has taken shape over the past four months and will result in PBL retaining a 50 per cent stake in the media spin-off. The new group will also house PBL's interests in the pay television companies Foxtel and Premier Media Group (the producer of Fox Sports) and its ''new media'' interests, including internet portal ninemsn and online websites Seek and carsales.com.au. The private equity consortium includes the American funds New- bridge Capital and Kohlberg Kravis Roberts, which are also part of a group that has made a $17 billion bid to buy retailer Coles Myer. However, the final make-up of the consortium is still to be settled. PBL has previously valued its media interests at about $7.5 billion, so a half stake would be worth more than $3.75 billion. Its gaming business, including the Crown and Burswood casinos and its Melco International joint venture in Asia, will remain a separate listed company. The deal could be announced some time this week. Backed by private equity money, the PBL media spin-off is expected to look for acquisitions and mergers after the easing of the cross-media ownership rules next year, which would enable it to buy a newspaper or radio business. The House of Representatives is expected to vote tomorrow to approve the government's package of media reforms, following their passage through the Senate last week. Private equity firms, as foreign investors, need the current laws to be scrapped before they can take significant stakes in Australian media assets. Mr Packer and senior PBL direc- tors and executives such as deputy chairman Chris Anderson and chief executive John Alexander have been keen to retain a large stake in the group's media assets. PBL believes the outlook for Nine is improving after more than a year of savage cost-cutting. ''James wants Nine to stay part of the family for the foreseeable future,'' a source close to PBL said. ''He can't see a situation where they are not controlling share- holders. He believes they can make Nine more valuable than it is today.'' However, the deal indicates the significant change in mindset since the death of Kerry Packer late last year and highlights James Packer's reshaping of PBL to build a stable of world-class gaming assets to add to its holdings in Melbourne's Crown Annualreportshituse-bydate Fiona Buffini and Damon Kitney Continued page 8 Companies, page 13 They were once the primary way for companies to communicate with their owners, but investors are rapidly abandoning annual reports. Frustrated with their size ± more than 300 pages in some cases ± and the bewildering complexity of infor- mation, shareholders are telling companies to take them off the mailing list. And federal changes designed to cut red tape mean the reports now thumping into letterboxes could be the last; they may be posted online next year and sent only to share- holders who request them, in a reversal of existing law. The size of annual reports has blown out in recent years ± as lawmakers introduce greater regu- lation of corporate governance, executive pay packets and account- ing ± and as a result the number of investors reading them is falling. One director of a top 50 com- pany, who declined to be named, said that the changes in accounting standards would add about 30 pages to the group's annual report this year, taking its length to more than 300 pages. Another said many shareholders were getting fed up because reports were unintelligible in parts. Energex boss forced out Mark Ludlow and Stephen Wisenthal Continued page 4 Queensland's state-owned energy company, Energex, has become embroiled in another scandal and its chief executive, Andrew Kre- mor, was forced to resign after admitting that he had traded in the shares of his two largest listed competitors. With the government preparing to sell the $1 billion retail side of the company later this year, Dr Kremor ± who has been chief executive for just over a year ± told the board last Friday that he had breached the company's restricted trading register. In the past two years the firm has suffered a string of scandals, from the suicide of former chief executive Greg Maddock amid