BREAKFAST DEALS: Telstra's asset attack?

Regulatory storm clouds may be gathering above Telstra's Melbourne headquarters, amid talk the telco is seriously considering bidding for Leighton Holdings' telecommunications assets. Elsewhere, KKR and Allegro pick up a bargain at Lloyds, while Goodman Group shakes hands in Brazil. And who's building a stake in Virgin Australia?

Leighton Holdings, Telstra

Telstra appears to have defied regulatory nay-saying to formally enter the sale process for Leighton Holdings $1 billion telecommunications assets, including the prized intercity fibre network, NextGen.

Up until now, deal watchers had all but written off Telstra's interest in the assets, given the regulatory scrutiny a tilt at NextGen would guarantee. But sources confirm Telstra has filed an information memorandum to Macquarie Capital, which is running the sale, after lodging an expression of interest last month, according to The Australian Financial Review.

Macquarie and Leighton are said to be open to the sale of individual assets, so there's a chance Telstra will avoid NextGen in favour of other parts of the parcel. It has been suggested that Leighton's managed services provider Infoplex and data centre business Metronode could be rolled into Telstra without drawing fire from the Australian Competition and Consumer Commission. Alone, those assets could cost up to $120 million.

As for NextGen, market sources have long tipped TPG Telecom as the most likely buyer. However, the AFR relays speculation that offshore private equity firms and infrastructure investors might provide some stiff bidding competition.

Allegro, KKR, Lloyds Banking Group

Allegro Capital, a small Sydney-based fund manager, has teamed up with private equity giant KKR to buy an Australian portfolio of distressed debt from Lloyds Banking Group’s BOS International. And it looks like a steal.

The portfolio of more than 15 loans has a face value of $350 million, but it's said to have been sold at a discount of at least 50 per cent. Goldman Sachs and Macquarie Group are also thought to have lobbed bids.

Business Spectator's Stephen Bartholomeusz notes KKR and Allegro may simply be betting the big discount will make up for any loans which aren't recoverable. But given KKR's interest was acquired by its "special situations" unit, and Allegro's hand-on reputation, he expects the duo will work actively with the borrowers.

"They can provide new capital, if necessary, and management expertise," Bartholomeusz writes. "That produces the prospect of over-sized returns from creating value beyond simply buying debt at a discount and either holding out for its repayment or converting it to equity."

Goodman Group, WTORRE

Yesterday was a big one for Goodman Group, which has unveiled a new alliance with Brazilian real estate group WTORRE and embarked on a $400 million capital raising in Australia.

Goodman plans to raise the $400 million via an institutional placement priced at $4.25 per share, or a 5.3 per cent discount to it's $4.49 close on Wednesday. The offer is fully underwritten by Macquarie Group.

In fast-growing Brazil, Goodman will also chip in $160 million for a joint venture with WTORRE, which is a prominent force there. In return, WTORRE will contribute four existing development land sites across Sao Paulo and Rio de Janeiro, with an expected end value of $US1.1 billion ($1.05 billion), according to The Australian.

Whitehaven Coal

Fresh from fending off a boardroom spill last week, Whitehaven Coal has chalked up another win by securing $1.2 billion in secured bank facilities from ANZ.

The underwritten deal gives Whitehaven access to revolving, term and guarantee facilities, which easily cover the miner's $225 million in outstanding debts and the $575 million cost of its Maules Creek project.

Whitehaven, which did not disclose details of any covenants, was advised by Grant Samuel.

Wrapping up

There has been some interesting activity on Virgin Australia's register, which saw 15 million shares change hands yesterday, including a block of 10 million. On Wednesday, another 27.7 million Virgin securities were traded.

The Australian Financial Review notes most of the trades were made through Deutsche Bank, which helped Air New Zealand build its 18.5 per cent stake in Virgin last year. For that reason, the NZ carrier is also considered the most likely buyer this time around.

In the mining sector, Noble Minerals shareholders have backed an $85 million entitlement offer from Resolute Mining, killing off a proposed deal with China's Zhongrun in a tight vote.

Resolute will now issue an $85 million entitlement offer that gives existing Noble shareholders a chance to participate in the recapitalisation process, according to the AFR. Resolute will also take a 19.9 per cent stake in Noble.

Finally, listed investment company Contango MidCap Income intends to give Australia's sleepy IPO market an end-of-year kick, with a $200 million float slated for December 20. Lonsec is leading the offer, which is priced at $1 per share.

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