Mortgage Results Could Break Deadlock

Sydney Morning Herald

Tuesday August 19, 2008

Edited by DANNY JOHN

Count went backwards; now it's Mortgage Choice's turn to show.

THE wrestling match between the financial planning franchise Count Financial and its would-be takeover target, Mortgage Choice, could take a decisive turn this week.

Count made the opening move yesterday, announcing an unhelpful 6 per cent decline in net profit to $21.3 million. The drop was blamed on investment losses - including its 4.9 per cent stake in Mortgage Choice, which was acquired before Count's bid for the mortgage broker last month.

Count picked up the shares around the $1.04 mark in June, just in time to watch them plunge to a low of 80c on the last day of the financial year.

Count's scrip bid, worth about $1.05 a share, has since helped to prop up the Mortgage Choice share price despite the offer being rejected, but so far Count doesn't seem to have become frustrated with the stalemate.

Is Count hoping to use the credit crisis - which has driven banks to strip out commissions for mortgage brokers - to drive Mortgage Choice into its arms?

We will have a better idea tomorrow when Mortgage Choice reports its full-year results.

BHP's oil quest

A few months back it looked as though BHP Billiton's 13-year quest to gain access to the lucrative Halfayah oilfield in Iraq - through wheat donations and other means - was closer to bearing fruit. At the time the nation's government appeared about ready to hand a $US500 million technical support contract to the Big Australian and partner Shell.

Halfayah is the field which led to BHP being dragged into the Cole inquiry into the UN oil-for-food scandal.

Multinational oil companies had been seeking the technical contracts with the Iraqi Government to place them in a better position to gain rights to operate the fields at a later date.

Britain's Telegraph now reports the US Government has said the Iraqis appear unlikely to proceed with most or all of the no-bid technical support contracts in their current form.

But it is possible BHP could win the rights to Halfayah at a later date, in light of it being one of 35 companies pre-qualified to bid for rights to operate fields.

Yes and no from iiNet

Futuris has one less party interested in buying its 50 per cent stake in Perth telco Amcom, after iiNet ruled itself out yesterday.

But iiNet has put its hand up as an interested buyer of Futuris's 22 per cent stake (via Amcom) in itself.

Announcing a 50 per cent rise in underlying net profit to $17.8 million for the year to June, iiNet managing director Michael Malone said a purchase of the Amcom stake did not make sense because it was in a different business to his company.

Futuris last week pressed ahead with plans to leave the telecoms sector with the sale of its Amcom stake, which it expects to be completed by the end of the financial year.

IiNet is still integrating Westnet - a Perth internet service provider it bought for $81 million in May - but remains intent on acquiring several medium-to-large ISPs.

The company will pay a fully franked final dividend of 4c a share on October 3, taking the final payout to 7c - up 1c a share on a year earlier. Shares in iiNet fell 2c to $1.68.

Media rump

The James Packer camp will present its first set of results today, posting full-year earnings for Consolidated Media Holdings - the remaining bits of his late father Kerry's media empire - before moving on to the main game, Crown, tomorrow.

Some of CMH's more coveted assets, Foxtel and Seek, have revealed healthy profit growth for the year just ended. But the market's focus will be on the performance of PBL Media, the indebted private equity controlled owner of the Nine Network and ACP Magazines.

While Nine's ratings resurgence this year is yet to be reflected in advertising dollars, a 7.8 per cent decline in the circulation of ACP's titles for the June quarter heightened concerns last week.

Citigroup's analysts have warned the key risk to CMH's earnings is its 25 per cent stake in PBL Media, "with downside risks stemming from TV and magazine revenue softness".

There could also be higher interest charges for the venture's $4.2 billion debt pile as a result of floating debt arrangements, or the inability to retire debt, the broker said.

Crown write-down

Meanwhile, Goldman Sachs JBWere is tipping Crown will write down nearly half of the $414 million it spent between August and January buying stakes in Harrah's Entertainment and Stations Casino Group.

xchange@smh.com.au

© 2008 Sydney Morning Herald

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