Business lending plunges, Ports giant Asciano to raise $2bn: Economy roundup

More signs that the business community is being hit hard by the downturn have emerged this morning, with lending data from the Australian Bureau of Statistics showing total commercial finance commitments value fell by 12.9% in April.

But the housing sectors and consumers are still holding up. The value of housing finance rose a seasonally adjusted 1.9% during the month, while the value of total personal finance commitments jumped 0.2%, with a 3.8% rise in fixed lending commitments. Revolving credit comments fell by 2.9% while lease finance commitments dropped 8.4%.

Struggling ports and rail group Asciano, who has spent the best part of 12 months looking for a way out from under its mountain of debt, is looking to raise $2 billion and will scrap its full-year dividend.

The company also said that its earnings before interest, tax, depreciation and amortisation will grow by about 7% during 2009-10, and earnings for the 2009 financial year will be 3% higher than during 2007-08.

“The proceeds of the new issue will be applied primarily to the reduction of debt,” Asciano said in a statement to the ASX. The company currently has about $4.9 billion in outstanding debt.

“The decision not to pay a distribution has not been taken lightly … the decision recognises that the process of restructuring Asciano’s debt will take place over the coming weeks and months,” chairman Tim Poole said.

“Beyond 2010, it is intended that Asciano will transition towards a distribution policy typical of an industrial company, with distributions linked to a payout ratio of underlying earnings after budgeting for growth related capital expenditure.”

The Australian share market has opened lower today after poor results from miners and the major banks.

The benchmark S&P/ASX200 index was down 11.6 points or 0.29% to 4050.6 at 12 noon AEST. The Australian dollar has also opened lower, falling to US80.8 cents.

NAB shares fell 0.7% to $21.86, while Westpac lost 0.1% to $19.90. AMP lost 0.6% to $5.11 while Woolworths lost 0.6% to $26.13.

Meanwhile, the Construction Forestry Mining and Energy Union will begin a legal test case today that is aiming to stop Rio Tinto from moving employees onto new five-year agreements before the new FairWork legislation comes into play on 1 July.

Under the new agreements, the union claims that workers would have no right to bargain for future wage rises and other conditions. The case will be held in the Federal Court.

“This is the first legal challenge of its kind in Australia and one that will hopefully test the reach of the Rudd government’s new IR laws,” CFMEU West Australian secretary Gary Wood said.

Federal minister for financial services Chris Bowen has said that changes will be made to the practice of executive share schemes, even though the Government’s revised proposal of changes has not stopped companies cancelling them altogether.

“There will be changes. People who want the old regime to continue unabated, completely unchanged, need to accept that the Government has made a change here,” Bowen told ABC’s Inside Business.

“What we’ve said is that we’re more than happy to make sure that the change is sensibly balanced, it’s calibrated properly; that there’s no unintended consequences and we’ve worked those issues through.”