Asciano shares crash, halts share trading

Pacific National.

According to media reports, Asciano is seeking to sell its coal haulage business. (Image courtesy of Pacific National)

Shares in Asciano have been put on a trading halt, after experiencing a dramatic fall of 60 per cent today.

The Australian port and rail operator said the securities would remain in pre-open until tomorrow pending response to a query from the stock exchange.

The company has reportedly played down the speculation that it was planning a capital raising in order to lessen its staggering debt of $4.5 billion.

“We are in the monetisation process, where we are looking at part or full sale of one of our assets. And we are well progressed in that,” a company’s spokesperson told Reuters.

“We understand the need to address our capital structure and that’s what we are in the process of doing.”

With its market value estimated at $1.5 billion, it is speculated the company was seeking to sell its coal business, which it holds a 50 per cent stake.

According to Merrill Lynch, the coal business could help the case-scrapped company up to $900 million.

The company has been persistently rejecting the takeover proposal from private equity consortium TPG.

The Texas-based consortium of TPG Capital and Global Infrastructure Partners recently put up a $1 billion share offer, as an alternative approach to its ill-fated $2.9 billion non-binding offer made in August.

Asciano, however, stood firm on the view that the offers underestimated its true value.

The company’s chairman Tim Poole previously said at the annual general meeting that: “The board absolutely believes that the current market price of Asciano securities in no way reflects the underlaying value of Asciano’s businesses.

“The board and management team are working to close the gap between the security prices and the underlying value of our business as soon as possible,” he said.

The company’s shares have been constantly plummeting since mid-2007, with their values now hitting below six per cent of the values recorded in the peak.   

Asciano dismisses $2.9 billion takeover approach

Asciano has dismissed a $2.9 billion takeover offer from a Texas-based consortium, saying it undervalues its business.

The rejection came shortly after the Australian rail and ports operator has announced that it has received “an unsolicited non-binding indicative proposal” from Texas Pacific Group (TPG) and Global Infrastructure Partners to acquire 100 per cent of the issued securities of the company through a scheme of arrangement.

“The proposal includes a cash alternative of $4.40 per Asciano security. There is a scrip alternative of unlisted securities in a bidding company,” the company said in an Australian stock exchange (ASX) statement.

Fuelled by speculations about the bid, the company’s shares sharply rose 68 cents to $4.83, surpassing the TPG-led consortium’s offer.

Responding to queries from the ASX on a dramatic increase in its share price, the company said: "Asciano remains aware of ongoing media speculation regarding the potential for Asciano to raise additional equity and/or to sell assets.

"Asciano continues to assess a range of options and consider a range of factors in determining the optimum financing strategy for future growth."

Analysts said the price proposed in the bid was too low, and the current price of the company’s stock does not reflect its potential value. 

Angus Gluskie, a portfolio manager at White Funds Management, said the TPG offer was “a very low ball bid.”

“On most analysts’ numbers you can also see the underlying assets are worth significantly more than the current share price. On our numbers, there is still several dollars in it,” he told The Sydney Morning Herald.

“As often happens when people lose sight of the fundamental value of the asset, an opportunity arises. It’s a minor surprise but it makes a lot of sense.”

The report on the company’s full year results is expected to be released on August 6.

TPG makes a $1 billion move on Asciano

Private equity consortium TPG has reportedly made a $1 billion share offer to Asciano, after its initial takeover proposal was thwarted three months ago.

According to The Australian Financial Review, TPG founder David Bonderman has recently flown from the US to Melbourne to put another proposal to buy more than $1 billion in Asciano shares.

The Texas-based consortium of TPG Capital and Global Infrastructure Partners (GIP) initially approached Asciano this August with a $2.9 billion “non-binding” offer, but the company rebuffed the proposal, saying the bid underestimated its true value.

At the company’s annual general meeting held two weeks ago, Asciano chairman Tim Poole had said: “The board absolutely believes that the current market price of Asciano securities in no way reflects the underlying value of Asciano’s businesses, in the same way that the indicative offer from TPG and GIP failed to recognise that true value.”

Asciano’s shares are now languishing at around $2.15, less than half of the takeover offer of $4.40 per security.

The paper said the cash-strapped company was likely to reject the new offer again as it intended to push through with its plans to raise $ 1 billion by asset sales or monetising.

It attempted to ease its debt burden through the underwritten security purchase plan in September, but secured only 10 per cent of the initial target.

Asciano, which owns some of Australia’s major transport assets including Pacific National, is reported to have a market value of $1.5 billion, while its debt amounts to almost $4.5 billion.

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