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April 30, 2008
ABC seals deal to sell most of US business
ABC seals deal to sell most of US business
Childcare operator ABC Learning Centres has finalised the sale of 60 per cent of its US business to Morgan Stanley Private Equity.
ABC, a high-profile Australian casualty of the credit crisis when its share price collapsed in February on concerns over high debt levels, said the transaction would reduce total net debt by A$485 million ($582m). The deal valued the whole of the US business at US$700 million ($875 million), it said. ABC owns more than 100 childcare centres in New Zealand.
Founder and chief executive Eddy Groves, who sold nearly all his stake in the company to repay loans as directors refinanced about A$1.5 billion worth of debt, said the sale "addresses concerns about the capital required to grow the US business".
ABC will retain US$185 million of ordinary equity and US$20 million of preferred equity in the US joint venture.
"The transaction represents an excellent opportunity to crystallise the value of the US business and reduce ABC's gearing, while maintaining exposure to the upside potential of the attractive US childcare market," Groves said. "It also allows the management team to spend more time focusing on the Australian and New Zealand operations."
The US$700 million enterprise value is down from the US$775 million talked of when the deal was first signalled in early March. The sale price implies a multiple of 12.7 times earnings before interest, tax, depreciation and amortisation of the past 12 months.
After the sale, which is expected to result in a book loss of around A$280 million, ABC expects a net loss of A$80-A$89 million in fiscal 2008.
Before the transaction the company had expected a net profit of A$161-A$170 million. Earnings per share net of tax were expected to be a loss of 17c to 19c, down from earlier expectations for a profit of 34c to 36c a share.April 30, 2008
Currency: Kiwi settles lower
Currency: Kiwi settles lower
The New Zealand dollar slipped further today as most currencies awaited important US data for direction.
US GDP (gross domestic product) figures are due out overnight, as are the latest interest rate decision by the US Federal Reserve.
At 5pm the New Zealand dollar was at US77.66c, down from US78.22c last night. It also slipped against the yen at 80.70 yen (81.54 yen yesterday) and euro at 0.4981 (0.5000) and languished against the stronger Australian dollar at A83.11c (A83.55c).
ANZ Institutional Bank senior dealer Mark Elliott said trading volumes had been moderate ahead of the US moves, which would probably be "quite defining" for currency markets over the next month or so.
There had been some selling pressure on the kiwi dollar near its lows of US77.26c today, "but it seems to have held up".
Against the Aussie dollar, the kiwi briefly fell through a key support level of A83c.
A break through the previous low of A82.50c in October last year could herald a "significant move" lower, Mr Elliott said.
But all eyes were really on the "Fed" which was expected to make another quarter per cent cut but possibly signal an end to its easing cycle.
" Technically the US stock market look vulnerable to another fairly large selloff. Now whether that translates into US dollar weakness or carry trade weakness, it really is impossible to tell at this point," Mr Elliott said.
The trade weighted index was 69.43 from 69.84 at 5pm yesterday.
Currency rates:
NZ dlr/US dlr US77.64c US78.22c
NZ dlr/Aust dlr A83.10c A83.55c
NZ dlr/euro 0.4981 0.5000
NZ dlr/yen 80.70 81.54
NZ dlr/stg 39.45p 39.32p
NZ TWI 69.34 69.84
Australian dollar US93.45c US93.68c
Euro/US dollar 1.5584 1.5652
US dollar/yen 103.94 104.22April 30, 2008
Mideast economies 'less vulnerable'
Middle East economies are unlikely to suffer from the global credit crisis to the same degree as the West because of ample regional liquidity.
That is the view expressed by Central Bank of Bahrain Governor Rasheed Al Maraj in an interview in the forthcoming 'The Report: Bahrain 2008,' the latest edition of the business guide to be published by Oxford Business Group.
He said that the question about whether regulators should have taken pre-emptive measures to mitigate the effects of the credit crunch had come up on many occasions.
'My position is that regulators cannot micro-manage the investment portfolios of banks,' he said.
'We are focused on making sure that licensed institutions adhere to regulations.
'If licensees take risks that are contrary to their prudential limits, that burden cannot be put on the regulator. It is the responsibility of the bank's management and board of directors. Each business must be managed and run according to the decisions made by institutions.'
'By the end of last year, affected institutions in Bahrain disclosed their exposure and they have taken measures to rectify the problem since,' he said.
'The wider implications of the credit crunch are more than likely to affect local banks, especially as a number of leading global institutions have been severely affected.
'However, unlike Western economies, economies in this region have ample liquidity at hand due to high oil prices so I feel we are not as likely to suffer from credit worries.April 30, 2008
GCC, Egypt, Jordan GDP to top $1 trillion
GCC, Egypt, Jordan GDP to top $1 trillion
The combined GDP of the GCC economies, together with Egypt and Jordan, will cross $1,045 billion in 2008, thereby sustaining the region’s demand for white goods and consumer electronics, according to an industry research.
The strong growth of Middle East economies at a rate of 6.5 per cent annually is fueled mainly by the continuing high oil prices.
“The strong economic growth is also intensified by the real estate boom across countries in the Middle East that continues unabated and translates into huge opportunity for appliance manufacturers,” said Eckhard Pruy, CEO of Epoc Messe Frankfurt, organisers of International CES/hometech.
“In the Gulf Cooperation Council (GCC) countries, investment spending will expand to at least $800 billion over the next five years, with major projects in the oil and gas sectors, infrastructure, and real estate,” he said.
Morgan Stanley estimates that GDP for the GCC plus Egypt and Jordan will reach $1,045 billion in 2008, more than twice the 2002 figure of $484 billion.
“Industry estimates reveal that, due to the unabated growth in real estate development and spending across the Middle East, the volume of new office space in Dubai will increase from 1.6 million sq m presently to 5.6 million sq m in 2009,’ said Mehtap Kenar, senior show manager, International CES/hometech.
“Construction of huge new megamalls and expansion of the current megamalls are also planned. Similarly, in Doha, capital and port city in Qatar, more than 16,000 new apartments will be available by 2010, while retail space availability is also set to increase - from 450,000 to 1.13 million sq m between 2007 and 2012. Riyadh is also witnessing huge investments in retail space,” he said.
Pruy noted that: “Given the urge to splurge in the region appliance manufacturers can expect to boost their sales volumes in 2008.”
International CES/hometech Middle East, to be held from May 25-27,2008 at the Dubai International Convention and Exhibition Centre, is a successful platform for the Gulf states, the wider Middle East, North and East Africa, the CIS and the Indian Subcontinent, to source the latest in home technology, home entertainment, home automation, home appliances and domestic devices.
The UAE and Dubai in particular, is among the leading markets for consumer electronics products in the Middle East. Dubai also features as the prime distribution centre for regional electronics sales. Industry analysts believe the surge in sales of electronics products in and through Dubai is due to competitive prices. With diversification of import sources and introduction of new products, huge demand in the Middle East has arisen, giving a new dimension to the scale of supply required.
At International CES/hometech in 2008, professionals will witness the latest trends in home networking, wireless and mobile technology, audio technology, home entertainment, gaming, home appliances and ‘In-car’ technology. Industry experts believe that the prolific product profile of the event will mark it as the most important technology event of the Middle East. The exhibition area on which participants will exchange information and opinions on technologies in IT and consumer electronics will double compared to last year.