3:00AM New York, 7:00PM Sydney – The ASX 200 index increased 0.1% led by energy and coal miners. Allco Finance surged on sale of its wind power subsidiary.
Market Sentiments
ASX 200 index gained 0.1% or 51 to close at 5,422.70. The preliminary market turnover was 1.88 billion, worth $6.66 billion, with 590 stocks up, 642 stocks down and 369 unchanged. The most traded stock was Empire Oil & Gas with 82.1 million shares worth $2.1 million.
Market Driver
Allco Finance Group and a consortium comprising the US-based ArcLight Capital Partners and Terra-Gen Power today agreed to the sale of Allco''s and its co-investors'' US wind energy interests for a total sale price of US$325 million.
Allco said in a statement that the interests being sold comprise a circa 3100MW wind development project in Tehachapi, California, one of the largest wind development projects in the world.
Allco said it would in conjunction with its co-investment partners realise significant liquidity and profitability from the sale which was part of a previously announced asset sales program.
Allco''s after tax share of sale proceeds is expected to be approximately $165 million, which it will use to further pay down its senior debt facilities with its banking syndicate. In addition, on closing of the sale, Allco will be released from certain letter of credit obligations of $65 million.
Allco''s corporate senior debt and contingent commitments are expected to be reduced by approximately $230 million in total as a result of the sale, based on current exchange rates.
Allco, which is facing a June 30 debt deadline, said its current drawn borrowings and contingent commitments under its senior debt facilities was $935 million and as result of the Tehachapi sale and other asset sales, it would be targeting a senior debt level of $675 million by 31 July 2008.
The Tehachapi wind development project is the largest single wind development in the US under one entity. Allco share rose 86.2%.
Gainers and losers
Of the ASX 200 index stocks, Allco Finance led the gainers with a rise of 86.2% followed by increases in Babcock & Brown of 16.4%, in Felix Resources of 13.6%, in Babcock & Brown of 13% and in St Barbara Ltd of 10.5%.
Of the ASX 200 index stocks, Asciano Group led the decliners with a fall of 6.7% followed by losses in Centro Properties of 6.6%, in Energy Res Australia of 5.8%, in Platinum Asset of 5.7% and in Minara Resources of 5.4%.
Australia''s Reserve Bank to leave rates unchanged
The Australian Reserve Bank board today left its key cash rate unchanged at 7.25%. The board members noted that most economic indicators in the past month continued to suggest moderation in the growth of domestic demand.
These included flat retail sales, declining household and commercial loan approvals, lower growth in housing and business credit, and subdued business and consumer confidence. Asset markets were also less buoyant than previously. Labour market conditions, on the other hand, had remained strong to date. This could be explained by lags, in which case a moderation in employment growth could be expected soon.
Members agreed that economic slow-down trend to continue. In discussing the outlook, they noted that there remained considerable uncertainty in the forecasts for demand and inflation, as there were strongly opposing forces operating on the economy.
While financial conditions were working to moderate demand, the rise in Australia''s terms of trade would work in the opposite direction, and would add substantially to national income and ability to spend.
The members of the interest rate review committee noted, “There was also a high degree of uncertainty about the international economic outlook, in particular the extent of the slowdown that was occurring in the developed economies. Conditions in international financial markets, though gradually improving, also remained difficult.” |
