Multiplex on a bad news roll… If blowing its credibility and losing
hundreds of millions of dollars wasn’t enough for Multiplex to handle, it’s now
suffering the prospect of ongoing negative headlines as investors are treated
to asset “fire sales”. They started in Saturday’s Oz:
“Multiplex is believed to have embarked on a 200 million pound ($476 million) fire sale of unprofitable development
projects in Britain in an attempt to shore up its balance sheet and
secure the confidence
of its lenders.” And it’s rolling on today with the Smagecatching up, and suggesting the Roberts family might buy back the construction business, while The Oz reports that the sell-off has begun with
a pair of British billionaire brothers bailing out the troubled construction giant
by agreeing to buy out its share of a huge building portfolio in a deal
estimated to be worth more than pound stg. 100 million ($236.3 million). In fairness, one person’s “fire sale” is
another’s “asset disposal opportunity”. Multiplex flagged the latter in its
interim results announcement on Thursday: “The Group is currently evaluating
various asset disposal opportunities, both to third parties and to newly
established Multiplex funds, in order to further strengthen liquidity and
provide additional working capital.” The trouble for Multiplex, or rather, one
of the troubles for Multiplex, is that every move it makes for the next year
will be reported as crisis management. Thus its attempts to spin up a better
outlook last week went nowhere. Perhaps it is at least fortunate that
everyone is concentrating on the Wembley disaster and what that’s done to the
company’s liquidity. Attracting less comment was the line in its results that
it had written down the value of its NSW residential housing development
inventory by $18 million in the December half. That write-down is at odds with the
ever-hopeful residential property cheer squad that is trying to talk up a
property bounce after a couple of swallows were sighted in Sydney. Good luck. – Michael Pascoe

…as it joins Crikey’s $100m loss club.
One of the best indicators of Australia’s economic boom and the healthy
state of corporate Australia is perhaps the dearth of companies
reporting losses of more than $100 million. Multiplex joined Crikey’s $100 million loss club list
last week when it revealed that more blowouts and delays at Wembley had
sent it $120 million into the red for the six months to 31 December.
However, it might yet claw this back by the time the full-year results
are revealed. Before that we had Miller’s Retail slashinginventory
and restructuring to produce an after tax loss of $103.4 million in
2004-05, while credit agency firm Baycorp Advantage lost $138 million
after tax over the same period. Hutchison Telecommunications is due to
report this week and it really
has been a sorry tale for investors given that net losses have been as
follows since it floated in 1999:

2000: $93m loss

2001:
$137m loss

2002:
$197m loss

2003:
$410m loss

2004:
$552m loss

2005:
Dropped $305m in first half and full year result due this week

No other Australian listed company has managed to lose more than $100
million five times, let alone five times in a row. It just goes to show how
hard it is to compete against Telstra, as Telecom New Zealand’s recent
$1 billion AAPT write-off demonstrated once again. Hutchison and One.Tel both bought 3G spectrum in the same 1999 Federal
auction as they strove to become the fourth and fifth mobile carriers.
It was too much for the Murdoch and Packer family but Asia’s richest
man, Li Ka-Shing, continues to bankroll Hutchison which has poured
millions into the Australian cricket team promoting its 3 brand. We now have almost 80 $100 million-plus losses listed
but for there to be only three reported in 2005 was quite amazing and
it will probably be similarly low by the time 2006 is finished. – Stephen Mayne, unhappy Multiplex shareholder who also dropped $3,000 in Hutchison

Newcrest shafts itself. Newcrest, Australia’s biggest gold miner,
was trashed last week after management owned up to more problems with its
Telfer mine – but shareholders should
perhaps be asking just how long the company had known about the difficulties
before fessing up. The West Australian‘s John Phaceas sums up Newcrest’s billion-dollar share dive over the past two trading days and
present perceived problems, but loyal Crikey subscribers might think the
Telfer problems sound familiar. When various brokers were trying to talk up
the chances that someone might make a bid for Newcrest in the wake of the
Barrick/Placer takeover, we poured cold water on the prospect because of
Telfer’s woes. Newcrest’s words of reassurance at October’s AGM have proven hollow. As The West reports:

“Board
credibility (has been) severely tested,” CSFB analyst Michael Slifirski
said in a client note. “Having restated the acceptability of Telfer’s
800,000oz production target on January 30, the sudden downgrade has not been
adequately explained.”

Mr Slifirski noted that Newcrest had now gone through four managing directors
and two acting chief executives since the redevelopment of Telfer was first
proposed in the mid-1990s.

Perhaps the only surprise about Newcrest last week was the
surprise – the WA gold industry remains quite well informed about itself even
if the ASX is not officially. Just when gold is finally up and running again, it is rather sad
that the only apparent hope for Newcrest shareholders is that some foreigner
will come along with a takeover bid. – Michael Pascoe

Peter Fray

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