The Star Online: Business
The Star Online: Business |
- Canada approves US$5.5bil Petronas takeover of Progress
- Analyst convinced of Kian Joo’s growth prospects
- Rolls-Royce faces graft probe
| Canada approves US$5.5bil Petronas takeover of Progress Posted: 07 Dec 2012 05:48 PM PST OTTAWA: Canada on Friday approved two major takeovers of energy firms by the Chinese state-owned giant CNOOC and Malaysia's national oil company Petronas - deals worth an estimated more than US$20 billion in total. Prime Minister Stephen Harper announced regulatory approval for CNOOC's $15.1 billion takeover of oil and gas company Nexen, and Petronas' offer for Canadian gas producer Progress Energy Resources, estimated at $5.5 billion. However, he cautioned that Ottawa would henceforth block attempts by foreign state-owned companies to buy controlling stakes in Canada's lucrative oil sands. "In light of growing trends and following the decisions made today, the government of Canada has determined that foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada," Harper told a press conference. "The larger purposes of state-owned enterprises may go well beyond the commercial objectives of privately owned companies," he said. "It is not an outcome any responsible government of Canada could ever allow to happen. We certainly will not." Harper however held open the door for "exceptional circumstances" when the new rule may not be applied. In a statement, Industry Canada - the government's economic development and corporate affairs department - said Ottawa will progressively increase the review threshold for deals to CAN$1 billion (US$1.01 billion). The industry minister will continue to review state-owned bids for Canadian companies in non-energy sectors when valued at CAN$330 million or more, it said. The CNOOC takeover of Nexen comes seven years after political panic about China's thirst for global energy assets scuppered a massive bid to take over California's Unocal. It is China's largest foreign investment and its largest energy deal, according to data firm Dealogic. And it too stirred strong opposition across Canada. Calgary-based Nexen produces the equivalent of around 213,000 barrels of oil a day, with concessions in Canada's oil sands, Britain's North Sea, Nigeria, the Gulf of Mexico and Colombia. China is the biggest energy consumer in the world, the second biggest consumer of oil and has been snapping up resource assets across the globe in order to fuel break-neck growth. CNOOC already has CAN$2.8 billion invested in Canada, including stakes in MEG Energy Inc. and oil sands producer OPTI Canada Inc. The company pledged in its proposal to keep Nexen's regional headquarters in Calgary and proposed that Nexen assume management duties for existing CNOOC operations in North America and the Caribbean. Nexen's assets in Britain, the United States and other countries would continue to be managed from regional offices, and CNOOC would retain the current management, employees and local suppliers in those operations. As for the Progress Energy deal, an earlier acquisition proposal by Petronas, aimed at securing stable supplies of liquefied natural gas (LNG) from North America, was rejected by the Canadian industry minister. Last year, Petronas established a joint venture with Progress Energy to develop a portion of the Canadian company's shale assets and an integrated LNG export facility in western Canada. The Malaysian giant this week sweetened its bid by offering to boost the Canadian terminal's capacity by 60 percent. There is growing demand for LNG in Asia's energy-hungry economies, especially in Japan, where power firms have had to step up conventional electricity generation with the country's nuclear plants shut down. |
| Analyst convinced of Kian Joo’s growth prospects Posted: 07 Dec 2012 05:35 PM PST PETALING JAYA: Kian Joo Bhd's expansion plans for its corrugated carton business are on track with its new Hanoi plant to commence operations in about six months, according to Public Investment Bank analyst Ching Weng Jin. Chin wrote in a report to its clients that a further capacity of 7,000 tonnes per month (mtpm) will come on-stream, in addition to the 7,000 mtpm it already has in Vietnam and 3,000 mtpm Malaysia. "The division, through 55%-owned BoxPak, is expected to be a steady contributor to the group, with estimated forward compounded annual growth rate of about 12%," Chin said. Public Investment, which met with Kian Joo's senior management recently, said that the management expected to spend another RM75mil over the next two years for ancillary machinery and maintenance capital expenditure. "The group's healthy operational cash flows should see these amounts adequately covered without having to resort to additional borrowings. No other major moves are on-hand given the recent aluminium-line expansion," the research house said. The potential full utilisation of its new aluminium lines, meanwhile, will add another RM400mil-RM500mil to revenue numbers and an estimated RM60mil to pre-tax profits on assumption of its historical 15% margins. Kian Joo's 70% domestic share in a market with only two major players in the aluminium tin business and its eight-colour printing line gives the company a competitive advantage. Coupled with the spare capacity on hand, a "healthy growth" was expected from this division moving forward, Public Investment stated. Public Investment has its outperform call on Kian Joo with an unchanged target price of RM3.08 premised on 12 times financial year 2013 earnings per share of 25.7 sen. The research house has forecast dividend yields to be around 6% and does not expect to see higher dividend payments going forward. |
| Posted: 07 Dec 2012 05:32 PM PST LONDON: Aerospace and defence group Rolls-Royce may face prosecution after Britain's Serious Fraud Office (SFO) ordered it to hand over details of possible bribery and corruption in China and elsewhere, according to the company. The world's second-largest maker of aircraft engines said the SFO had asked it to conduct an internal inquiry into dealings involving intermediaries in China, Indonesia and other overseas markets, which it did not name, and report the results. "It is too early to predict the outcomes, but these could include the prosecution of individuals and of the company. We will cooperate fully," chief executive John Rishton said. Shares in Rolls-Royce, which have risen a quarter this year, fell as much as 5.6% in early trade. The stock was down 3% at 886.75p by 1410 GMT, valuing the group at around 16.6 bil. A source close to the investigation said the allegations related to events in the "distant past" and Rolls-Royce had told the US Department of Justice about the inquiry. A separate source said a whistle-blower had raised the allegations with the SFO, which then ordered Rolls-Royce to undertake a preliminary investigation earlier this year. The company hired a law firm for the task and passed the results, which had identified matters of concern, to the SFO. The company, a major British exporter, dates back to 1884 and on its website says it prides itself on its "integrity, reliability and innovation." "I want to make it crystal clear that neither I nor the board will tolerate improper business conduct of any sort and will take all necessary action to ensure compliance," Rishton said in a statement. "This is a company with exceptional prospects and I will not accept any behaviour that undermines its future success." Analysts said past fines within the sector over corruption tended to be relatively small. Any offences committed in the "distant past" would probably not fall under the British Bribery Act, which came into effect only in July 2011. This tougher law introduced an offence of failure to prevent bribery, and clamps down on "facilitation payments" and disproportionate hospitality to oil the wheels of business. Companies can be handed unlimited fines if they cannot show they have "adequate procedures" to prevent bribery, while guilty individuals face up to 10 years in prison and unlimited fines. Rolls-Royce's profits have risen strongly in recent years due to soaring demand for more fuel-efficient engines for planes made by Airbus and Boeing. Luxury Rolls-Royce cars are made by a separate company belonging to BMW AG . Aerospace and defence companies use intermediaries, which can be individuals or companies, in countries where they do not have a large presence. Intermediaries cover tasks from sales to coordinating maintenance and support contracts. The SFO declined to give details of the investigation. "It's up to Rolls-Royce to say what they think is right to say. It's not something we would provide information about or comment on," a spokesman said. Allegations of corruption are not new to the defence and aerospace industry. BAE Systems , Europe's biggest defence company, was fined US$450mil by the United States and Britain in 2010, following long-running corruption investigations at home and abroad into defence deals in Saudi Arabia, Tanzania, Sweden, the Czech Republic and Hungary. "BAE ended up with fines that were not exactly huge, so you would imagine that Rolls could end up with a fine that won't trouble investors much," said Espirito Santo analyst Ed Stacey, noting that the European Union has banned arms sales to China. Reuters |
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