Talk Of Pbl Seeking Macau Sub-licence

Sydney Morning Herald

Tuesday November 16, 2004

Edited by Michael Evans

It would make perfect sense for a casino owner to have a few outlets in China.

Speculation is growing that Kerry Packer's PBL has a licensing arrangement that will allow it to enter the lucrative Macau gaming market.

PBL lost out on a master licence earlier this year but that doesn't stop it from negotiating for a sub-licence with the party which received a master licence.

After James Packer was spotted in Macau amid reports PBL was after a management contract at one of Macau's new Las Vegas-style casinos, PBL chief executive John Alexander said in August the company was "not actively seeking anything" in Macau.

But one fund manager said that while the timing of any announcement was unclear, the "noise level was increasing", with PBL lawyers believed to be doing quite a bit of commuting to and from the region.

The renewed Macau talk comes several months after James Packer reputedly visited Moscow to check out the gaming scene there. There are also rumours PBL has been looking at gaming opportunities in eastern Europe.

Mr Packer offered only an intimidating stony face when recently asked by the Herald about his Moscow jaunt, while PBL's publicity machine was also quiet on the topic. But that was the reaction after it was confirmed by other sources that Packer and Crown Casino chief Rowen Craigie had visited Macau in June.

Also worth noting is that there is a gaming conference in Russia next month.

A bit of Brazil

The frenzy of speculation surrounding WMC Resources is not going anywhere. A veritable United Nations of names such as Inco (Canada), Phelps Dodge (US), CVRD (Brazil), Falconbridge (Canada) and Norilsk (Russia) have now been merrily tossed on the pile that included BHP Billiton (UK-Australia), Rio Tinto (UK), Anglo American (South Africa) and, of course, Xstrata (Switzerland).

A visit by CVRD executives later this month - even though it was scheduled long before Xstrata's $6.35 a share "proposal" was made public - had the market excited yesterday.

The Brazilian iron ore group had a look at Canadian nickel group Noranda before it fell to the Chinese. This suggests it might be interested in WMC's world-class nickel operations in Western Australia - though at present prices (WMC shares closed 8c higher at $7.05) - it will take a brave chief executive to launch a bid.

CVRD could also look elsewhere for nickel assets - Minara Resources (the old Anaconda) is a logical suspect.

Having caught up with a few of his institutional shareholders in Sydney yesterday, WMC boss Andrew Michelmore heads off to China for the rest of the week.

Michelmore will catch up with his main nickel customer but might be tempted to use the trip to sound out Chinese backers for a planned expansion of the Olympic Dam copper-uranium mine.

Given the expansion is expected to cost upwards of $4 billion, the company is expected to seek a partner.

Is Coke staying home?

What does Coca-Cola Amatil's foray into food mean for the company's Asian operations?

Chief exec Terry Davis has said that he would prefer to spend his cash close to home where he can get better returns - even if he has to go outside the beverage sector - than in risky Asian markets.

Davis would argue that the SPC bid is not quite the radical strategic change some analysts are making out. After all, he's still putting food in containers, tinkering with products and packaging, and then selling the stuff.

However, the potential $600 million-plus deal has been seen by some as a signal the group will be a pure Australia/New Zealand company.

"We believe [Amatil] will divest South Korea, Indonesia and the Islands in the next 12 to 18 months," CS First Boston's Larry Gandler told clients.

"The Asia components of Amatil are diminishing in importance. The company is emphasising local earnings and fully franked distribution of those earnings."

Buyers could include The Coca-Cola Co or Korea's Lotte Chilsung, or a float with other Asian franchises. Gandler points out that "the combined Asian operations could be worth up to $US1 billion".

Nice turn on B&B

Fund managers and wealthy investors lucky enough to get stock in Babcock & Brown's October float must be laughing their heads off. The stock closed yesterday at $8.75, which means they are sitting on a 75 per cent capital gain.

While analysts cite plenty of reasons for the stock going up, such as a strong pipeline of deals, the strength of its bigger peer, Macquarie Bank, and its potential inclusion in key stockmarket indices, some eyebrows were raised last Thursday when the share price spiked 5 per cent in one day.

Apparently, the run-up was related to a research report by UBS doing the rounds, which has a valuation north of $9 on the stock. Analysts are also wondering whether the bank will upgrade its prospectus forecasts but, as Macquarie Bank pointed out in a report yesterday, that would be highly unusual so soon after the listing.

Macquarie Bank's first-half result is out today: $250 million net?

© 2004 Sydney Morning Herald

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