iiNet buys AAPT’s consumer division for $60 million: Economy roundup

ISP iiNet has confirmed it acquired the consumer division of AAPT from Telecom NZ for $60 million, in a deal it says will provide a further 113,000 broadband subscribers and over 251,000 other active services to its network.

The deal is expected to bring $20 million in EBITDA in the first full year after it is completed. Managing director Michael Malone says the acquisition will be completely funded in cash, avoiding shareholder dilution.

The AAPT brand will not be acquired, and the board unanimously approved the transaction.

“The relationship between iiNet and Telecom New Zealand has been very positive and we would like to thank Telecom New Zealand for their support during the term of their investment,” Malone said in a statement.

The announcement comes after months of speculation, during which it was rumoured TPG founder David Teoh had made a bid for AAPT as well.

iiNet has also confirmed that as part of the acquisition deal, Telecom NZ has sold off its 18.2% stake in iiNet to “institutional and sophisticated investors”.

iiNet also made a pre-results announcement today, revealing it expects EBITDA of $76.9 million for the 2010 financial year, representing an increase of 20% from 2009.

Underlying net profit after tax, excluding legal costs of the AFACT copyright case, is expected to grow by 36% to $34.8 million. Malone said the company has continued to focus on cost management, saying its “focused strategy continues to deliver strong results”.

“iiNet’s customer service levels have remained above our global best practice benchmark. Our unique brand campaigns continued to increase brand awareness in key markets. We released lots of cool new products, delivered our synergy target for Westnet and also acquired Netspace.”

Meanwhile, Graincorp and AWB have announced plans to create a $2 billion new business, saying the company will be able to compete against larger international groups.

Graincorp shareholders will control 58% of the merged entity, which will carry the Graincorp name, while shareholders in AWB will hold 42%.

AWB chairman Peter Polson said in a statement the company would be able to deliver a “more stable earnings profile for shareholders, with the potential for increased revenues and reduced earnings risk across the company’s operations”.

Macquarie Group announced it expects a mixed full-year result due to some of its key areas making lower contributions.

“The outlook is all about confidence and there has been a substantial decline in confidence on global markets. We don’t know when confidence will return to financial markets,” managing director and chief executive Nicholas Moore told a media conference.

“We are in very uncertain markets today. The markets are actually operating at very low levels. We’re back to 2004-style levels.”

Shares open lower after poor Wall Street performance

The Australian share market has opened lower today following a disappointing performance on Wall Street, where stocks dropped due to poor jobless data.

The benchmark S&P/ASX200 index was down 27 points or 0.62% to 4496.2 at 12.10 AEST, while the Australian dollar also actually moved to just over US90c.

ANZ shares lost 1.2% to $22.91, while Commonwealth Bank shares lost 1% to $42.50. NAB fell 1.1% to $25.04, with Westpac also falling 1.4% to $23.91.

Oil and gas manufacturer AWE has said its June quarter production jumped 47% to 1.65 million barrels with the BassGas project having been restarted.

Sales came to $354 million for the 12 months ending in June, down 40% from the previous corresponding period in 2009, with realised oil prices rising to $84 per barrel.

“The New Zealand drilling program to date has not produced any major success and this has been immediately reflected in the steep decline on AWE’s share price,” the company said in its quarterly report.

“By any measure, and notwithstanding the high risk nature of the oil and gas exploration business, the past quarter has not lived up to our aspirations in our quest to grow the company and provide shareholder wealth.”

Also in the energy sector, Energy Resources of Australia revealed its first half profit dropped 82% to $22.7 million, compared to $127.6 million during the previous corresponding period.

“The average realised sales price of uranium oxide for the six months to June 2010 was $US44.79 per pound compared with $US48.02 per pound for the corresponding period in 2009,” ERA said in a statement.

Queensland appoints underwriters for coal transport

The state of Queensland has appointed sub-underwriters for the QR National coal transport business as it prepares to float the company by the end of this year.

Commonwealth Bank and Wilson HTM were appointed as managers, the Government said in a statement, while Ord Minnett and Patersons Securities were both announced as co-managers.

“These institutions are key to the retail market and have come on board as we look towards a planned listing by year’s end,” Queensland Treasurer Andrew Fraser said in a statement.

In the United States, the stock market dragged again due to disappointing jobs data, weak reports from financial companies and a warning from a Federal Reserve official. The Dow Jones industrial average dropped 30.72 points, or 0.29%, to 10,467.16.