CORPORATE DEBT – AUSTRALIA

Clock ticking on debt-laden Seven as lenders make plans

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Original article by Lilly Vitorovich, Perry Williams, Bridget Carter
The Australian – Page: 19 : 13-Apr-20

Seven West Media’s $541m debt equates to 2.4 times its underlying earnings. CEO James Warburton is seeking to reduce costs in response to the coronavirus-induced downturn in the advertising market, but there are concerns that Seven’s lenders may opt to on-sell their debt; any buyers of this debt could potentially call in their loans or gain control of Seven via a debt-for-equity swap. Seven’s outlook has been complicated by uncertainty regarding the future of its $40m deal to sell Pacific Magazines to Bauer Media.

CORPORATES
SEVEN WEST MEDIA LIMITED – ASX SWM, PACIFIC MAGAZINES PTY LTD, BAUER MEDIA AUSTRALIA PTY LTD

Rio debt upgrade as iron ore rises

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Original article by James Thomson
The Australian Financial Review – Page: 22 : 8-Feb-19

Moody’s Investors Service has upgraded its rating on Rio Tinto’s debt from A3 to A2. The credit ratings agency has noted that Rio Tinto is better-placed to ride out periods of increased volatility in commodity prices as a result of its debt reduction strategy. The resources giant has slashed its debt from US28.5bn in 2013 to just $US12.5bn. Meanwhile, the iron ore price has risen to almost $US90 per tonne in the wake of the latest tailings dam disaster in Brazil, and some analysts say it could test $US100.

CORPORATES
RIO TINTO LIMITED – ASX RIO, MOODY’S INVESTORS SERVICE INCORPORATED, VALE SA

Cycle turning on discounts, says Fortescue

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Original article by Peter Ker
The Australian Financial Review – Page: 17 : 31-Jan-18

Fortescue Metals Group CEO Nev Power expects the price gap between lower-grade iron ore and the benchmark price to narrow in coming months. He says the December 2017 quarter is likely to represent the low-point for the price discount. Fortescue sold its iron ore at just 66 per cent of the benchmark price during the quarter, compared with 86-88 per cent between 2014 and 2016. Meanwhile, Citigroup has forecast that Fortescue will reduce its net debt to $US2.4bn by mid-2018, after it rose to $US3.3bn at the end of 2017.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, CITIGROUP PTY LTD, SHAW AND PARTNERS LIMITED, CLEVELAND-CLIFFS INCORPORATED, RIO TINTO LIMITED – ASX RIO, VALE SA

BHP pledges dividend windfall

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Original article by Matt Chambers
The Australian – Page: 19 & 22 : 23-Aug-17

BHP Billiton has posted a 2016-17 net profit of $US5.89bn, compared with a loss of $US6.34bn previously, while its underlying profit rose from $US1.215bn to $US6.732bn. The resources group reduced its net debt by $US9.8bn during the financial year, to $US16bn. BHP has flagged plans to divest its US shale assets, with CEO Andrew Mackenzie indicating that the sale of individual assets is preferable to an IPO of the entire business. BHP has also ruled out further investment in the Jansen potash project in the near-term.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, BT INVESTMENT MANAGEMENT LIMITED – ASX BTT, ELLIOTT MANAGEMENT CORPORATION

FMG powers up with plan to grow, cut debt

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Original article by Tess Ingram
The Australian Financial Review – Page: 11 & 16 : 22-Aug-17

Fortescue Metals Group shareholders will receive a 2016-17 full-year dividend of $A0.45 per share, compared with $A0.15 for the previous financial year. The pure-play iron ore miner has increased its net profit from $US985m in 2015-16 to $US2.1bn for 2016-17, while revenue was 19 per cent higher at $US8.4bn and underlying earnings rose 48 per cent to $US4.7bn. Meanwhile, Fortescue reduced its net debt from $US5.2bn to just $US2.6bn in 2016-17. Fortescue intends to increase its iron ore capital expenditure in 2017-18, while it looking to expand into commodities such as gold and copper.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, UBS HOLDINGS PTY LTD, ALLERON INVESTMENT MANAGEMENT LIMITED

‘White elephant’ desalination plant placed on ratings watch

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Original article by Ben Potter
The Australian Financial Review – Page: 8 : 10-Jan-17

Fitch Ratings has placed Victoria’s Wonthaggi desalination plant on negative watch. The credit rating agency stated on 6 January 2017 that the negative watch move is related to the recent equipment failure, which raised doubts about the plant’s financial position. The plant is owned and operated by Aquasure, which has debts of $A3.65 billion. Fitch rates Aquasure’s senior debt "A-" and S&P Global Ratings rates it "BBB+".

CORPORATES
FITCH RATINGS LIMITED, S&P GLOBAL RATINGS, AQUASURE, UNISUPER LIMITED, SUEZ ENVIRONMENT, KOOKMIN BANK LIMITED, ITOCHU CORPORATION, CIMIC GROUP LIMITED – ASX CIM

Santos takes ‘sweat or exit’ action

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 15 & 18 : 9-Dec-16

Australian-listed oil and gas producer Santos aims to slash its net debt by $US1.5bn ($A2bn) by 2019 as part of a restructuring program. This will including moving non-core assets to a holding company, allowing the group to focus on five key growth assets. These include the Gladstone LNG project, its Cooper Basin gas assets and the Papua New Guinea LNG venture. Santos will also make its gas processing facilities available to rival gas producers. The non-core assets could potentially be sold in the future.

CORPORATES
SANTOS LIMITED – ASX STO, ORIGIN ENERGY LIMITED – ASX ORG, ENN HOLDINGS, AWE LIMITED – ASX AWE, AUSBIL INVESTMENT MANAGEMENT LIMITED, CLOUGH LIMITED, RBC CAPITAL MARKETS

Investors circle ailing companies in the valley of debt

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Original article by Vera Sprothen
The Australian – Page: 19 & 23 : 12-Oct-16

Preqin estimates that private debt fund managers had access to a record $US199bn ($A262bn) at the end of June 2016. Such companies are believed to be seeking to acquire distressed assets in Australia, including sectors such as resources, mining services, agricultural and housing. Distressed debt funds are said to be looking to buy debt-burdened companies or the debts of businesses than cannot meet their repayments. Oaktree Capital Management and Lone Star Funds are among the global debt fund managers that have established a presence in Australia.

CORPORATES
PREQIN LIMITED, OAKTREE CAPITAL MANAGEMENT LLC, LONE STAR FUNDS, BAIN CAPITAL CREDIT, SC LOWY FINANCIAL (HK) LIMITED, MOODY’S INVESTORS SERVICE INCORPORATED, ARRIUM LIMITED – ASX ARI, PEABODY ENERGY CORPORATION, RESERVE BANK OF AUSTRALIA, WELLS CAPITAL MANAGEMENT, ALLENS, McALEESE LIMITED – ASX MCS, BHP BILLITON LIMITED – ASX BHP, ROYAL DUTCH SHELL PLC

BHP Billiton makes debt key priority

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Original article by Peter Ker
The Australian Financial Review – Page: 17 & 20 : 18-Aug-16

BHP Billiton’s net debt topped $US26.1bn ($A34bn) in 2015-16, which is its highest level in three decades. However, CEO Andrew Mackenzie believes that the resources group’s debt is unlikely to rise any further in the near-term, and he has identified reducing debt as one of its priorities. Meanwhile, Matthew Moore of Moody’s says the ratings agency has retained BHP’s negative outlook, and he has warned that the group’s "A3" credit rating could be downgraded if it does not make progress in improving its credit metrics.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, MOODY’S INVESTORS SERVICE INCORPORATED, RIO TINTO LIMITED – ASX RIO, STANDARD AND POOR’S CORPORATION, DEUTSCHE BANK AG, SAMARCO MINERACAO SA, ANGLO AMERICAN PLC

Ratings agencies demand debt before acquisitions for BHP

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Original article by Peter Ker
The Australian Financial Review – Page: 15 & 20 : 27-Jul-16

Matthew Moore of credit ratings agency Moody’s says BHP Billiton should give priority to reducing its debt rather than pursuing acquisitions. May Zhong of Standard & Poor’s agrees, arguing that BHP should allocate a significant proportion of its free discretionary cashflow over the next year to reducing debt. Zhong adds that any acquisitions should comprise commodities that it already produces. BHP is among the bidders for Anglo American’s coking coal assets in Queensland.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, MOODY’S INVESTORS SERVICE INCORPORATED, STANDARD AND POOR’S CORPORATION, ANGLO AMERICAN PLC, RIO TINTO LIMITED – ASX RIO, MITSUBISHI CORPORATION