PRESS DIGEST-Australian Business News - July 31

Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.

THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)

Regional pay television group Austar United Communications (AUN.AX) announced results for the June half yesterday, recording a A$35.5 million profit compared to a A$7.6 million loss during the corresponding period last year. Chief executive John Porter said that cash balances and cash flows would be used to make debt payments due over the next few years, but the company would also seek to refinance part of its A$850 million in senior debt. Mr Porter said the company expects to make an announcement on a refinancing deal in coming weeks. Page 43.

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Coal gas-to-liquids company Linc Energy (LNC.AX) placed itself in a trading halt yesterday as it prepares to make an announcement on a capital raising. Analysts say the company is likely to seek between A$50 million and A$60 million to assure funding for the development of its coal projects in Queensland and South Australia. Chief executive Peter Bond said of the move, 'it just takes that uncertainty out of how you plan to go forward over the next year or two without worrying about whether you're going to have an asset sale.' Page 43.

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Mining company Whitehaven Coal yesterday announced plans to gather more than A$300 million in funds through an institutional share placement and the sale of a stake in its Narrabri coal project. The fully underwritten share placement will raise up to A$176 million, while the sale of 7.5 percent of the Narrabri operation is expected to generate over A$125 million. The announcement has raised speculation that Whitehaven may be looking to take a leading role in consolidation within the sector. Page 44.

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Forestry company Gunns (GNS.AX) has been selected as the preferred partner to fund and operate a new hardwood chip export facility at Victoria's Port of Portland. Previous plans to build the facility collapsed following the failure of two of the companies involved, managed investment schemes Great Southern and Timbercorp. Port of Portland Group chief executive Scott Patterson said the new facility, the second of its type at the port, was needed to address expected bottleneck problems. Page 45.

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THE AUSTRALIAN (www.theaustralian.news.com.au)

Citibank raised its recommendations on banking stocks yesterday, upgrading Westpac Banking Corporation (WBC.AX), Commonwealth Bank of Australia (CBA.AX) and National Australia Bank (NAB.AX) to 'buy.' Analysts report that the shift, together with Reserve Bank of Australia governor Glenn Steven's positive speech on Tuesday, indicates that the Australian economy is already improving. Citibank analyst Craig Williams said that 'evidence was continuing to mount that the economic downturn in Australia would be less severe than anticipated.' Page 17.

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Investor Nicholas Bolton has secured another win against toll-road operator BrisConnections BCSCB.AX, with the Supreme Court ordering the company to pay Mr Bolton's legal costs, estimated at between A$200,000 and A$400,000. Judge Ross Robson refused to allow Mr Bolton's company Australia Style Investments to be wound up by BrisConnections, describing the winding up application as an aggressive tactic, thereby resulting in the costs order against the company. Mr Bolton did not comment on the ruling. Page 17.

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Rural services, finance and manufacturing company Elders (ELD.AX) appears to have reached an agreement with QBE Insurance (QBE.AX) to sell its insurance division for between A$200 million and A$300 million. Analysts report that QBE already provides re-insurance and underwriting services for Elders' insurance arm, which made a profit in the 2007-08 financial year of $18.1 million. Elders have been active in selling assets since last December, seeking to reduce debts of almost A$1 billion. Page 17.

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Premier of Western Australia Colin Barnett will seek to force companies involved in the development of the Browse Basin to process the gas in the Kimberley region. Analysts report that Mr Barnett wants a new plant created at James Price Point, which is located near Broome, in order to create jobs in the region. Woodside Petroleum (WPL.AX), which owns half of the project, has supported the Premier, however, project partners BP (BP.L), Chevron, Shell and BHP Billiton (BHP.AX) are against it, and instead want to use an existing plant in the Pilbarra for processing. Page 18.

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THE SYDNEY MORNING HERALD (www.smh.com.au)

Trevor Rowe yesterday announced that he would resign from his position as chairman of the Queensland Government-owned Queensland Investment Corporation (QIC) when his current term ends in September. Mr Rowe said he had informed state Treasurer Andrew Fraser of his decision earlier this month. As well as his role at QIC, Mr Rowe is a director of the Australian Securities Exchange and chairman of troubled toll road operator BrisConnections. Page 17.

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Shareholders in building materials company Boral may now be thankful that the company's chief executive, Rod Pearse, did not succumb to pressure earlier this year to undertake an equity raising. Analysts had called for a raising to address the company's US$700 million debt, however, Mr Pearse instead undertook alternative measures such as asset sales. Since their nadir in March, Boral shares have more than doubled, with the company yesterday receiving cautiously positive comments from Macquarie Equities analysts. Page 18.

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Airport infrastructure owner Macquarie Airports (MAp) MAP.AX decision to buy out parent investment bank Macquarie Group's management rights via an all-scrip deal is being questioned by investors. The scrip used in the buyout is currently valued by the market at a substantial discount to the value of the company's assets, and analysts say MAp could have used some of its cash reserves instead. MAp is thought to have more than A$1 billion in cash, which the company says is prudent to have in reserve in the current environment. Page 18.

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The building and construction industry benefited from the Federal Government's 'education revolution' in June, with A$1.5 billion of education building contracts let during the month. That amount is more than four times the level seen before on records which go back more than a decade, although the result was not distributed evenly across states. In New South Wales, education contracts were down compared to recent months, with suggestions that there are delays in letting contracts. Page 18.

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THE AGE (www.theage.com.au)

The chairman of the Federal Government's A$58 billion Future Fund, David Murray, yesterday said the fund is prepared to start investing in bank debt which does not have the insurance of the Government's wholesale funding guarantee. Analysts say Mr Murray's comments reflect renewed confidence in Australian banks, which is likely to lead to banks paying less for their wholesale funding. The Reserve Bank of Australia governor, Glenn Stevens, this week called for the banks to start phasing out their use of the guarantee. Page B1.

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Goldmining company Ramelius Resources (RMS.AX) yesterday made a late bid for gold producer Dioro Exploration DIO.AX with a 2-for-1 scrip offer which values Dioro at A$1 a share, or A$92 million in total. The bid comes after the board of Dioro gave its conditional approval on Wednesday to a rival bid by miner Avoca Resources AVO.AX, which values Dioro at A71 cents a share. Analysts say that Avoca, which has already raised its offer twice in a bid to secure support from Dioro's board, is unlikely to match Ramelius's bid. Page B3.

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Oil and gas company Arrow Energy AOE.AX yesterday reported that net gas production for the June quarter increased by nearly 20 percent from the previous quarter to 4370 terajoules, with gas sales rising by over 30 percent to 2722 terajoules. The company also said its partnership with Liquefied Natural Gas (LNG.AX) would announce a final decision on a proposed liquefied natural gas project by the first quarter of next year. Shares in Arrow rose sharply in early trading before closing A2 cents higher at A$4.16 a share. Page B3.

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Listed investment company Milton Corporation (MLT.AX) yesterday reported that annual net profit last year fell 59 percent to A$50 million. However, the company said that underlying operating profit after tax for the year to the end of June was down by only 11 percent to A$73.6 million. Milton said the discrepancy was due to impairment losses of A$22.6 million for the year, which the company described as an accounting issue which distorted perceptions of its investment performance. Page B3.

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