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Audacity at Whitehaven may yet pay dividends for Tinkler

IT MAY have been a surging market or it may be that some support is emerging for coal baron Nathan Tinkler's audacious privatisation of Whitehaven Coal.

Whitehaven shares closed above the $4 mark again yesterday, jumping almost 5 per cent, restoring some credibility to Tinkler's $5.3 billion bid.

Yesterday's close still represents a steep discount to the $5.20 offer price, but there was speculation that cashed-up Hong Kong commodities trader Noble Group could pitch in to help fund the extra 17 per cent he needs, on top of the 48 per cent he already speaks for - in a non-binding way - to take Whitehaven private.

Due diligence should not be a problem: Tinkler knows these assets backwards.

Bribery boosts retail

ANALYSTS are starting to provide a bit more colour on how the government's carbon tax bribe, the Household Assistance Package, is trickling through the economy.

Coles and Woolies are expected to report a boost in next week's quarterly sales numbers, and not just from a bigger spend on groceries.


''Improvements seem to have accrued mainly towards the budget end of the market and benefited discount department stores, hotels, gaming and to a lesser extent food retail,'' said the retail analyst team at Credit Suisse.

Woolworths also told analysts touring its facilities last week that the payments had led to improved trading at Big W with people spending the government largesse on iPads. Tobacco and liquor also got a boost, says Woolworths.

The key question to be answered next week is whether the momentum has carried over into the new financial year.

For the main part, Coles owner Wesfarmers and Woolworths are expected to sing a similar tune next week. Coles' growth is still expected to be driven by strong grocery sales, with liquor lagging, while Woolworths' barnstorming liquor business hides a more subdued grocery performance.

Luck gets worse

AS IF Harvey Norman boss Gerry Harvey wasn't having enough trouble at home.

The retail veteran's European foray hit a new low with news that Slovenia is the next domino set to topple in Europe. The former Yugoslav republic is expected to join Greece, Ireland, Portugal and Spain in asking the European Central Bank for help in propping up its ailing banking sector.

Harvey Norman has five stores in Slovenia and 14 in the Republic of Ireland.

Pokies game still on

THE growing rivalry between the two poker machine makers begat by industry legend Len Ainsworth, continues apace.

Macquarie Equities initiated coverage of Ainsworth Game Technology with a $2.60 price target on the basis of its expected success in the US. Not bad for a stock that began the year at 50¢ and is currently trading around the $2.20 mark.

With a 30 per cent share of poker machine shipments, AGI is running a close second to Ainsworth's now-spurned first-born, Aristocrat Leisure. Aristocrat is still recovering from an alleged profit upgrade that sent its share price tumbling earlier this month.

Shares tumbled more than 11 per cent after it announced that after-tax profit for the six months to June 30 would be $30 million to $33 million. While this is well above the $24.9 million profit reported for the prior corresponding period, investor expectations were high.

Deustche Bank analysts added to expectation this week with a report saying Aristocrat had improved its market share in a stronger than expected New South Wales market.

Market demand is also expected to improve in Victoria for the current half-year as its pokie industry moves to a new ownership structure next month.

Seven's tough future

SEVEN West Media shares dropped to a record low yesterday after completing the institutional component of a $440 million capital raising.

Seven West said $259 million was raised from the institutional offer with 91 per cent of shareholders supporting the 1-for-2 renounceable entitlement offer at $1.32 a share.

Shares fell 7¢, or 4.6 per cent, to $1.45 after the trading halt was lifted yesterday.

The stock was trading above $6 last year before the media sector got crunched by faltering advertising.

Seven West is looking to use the $440 million raising to tackle market concerns about its debt levels, which will be cut from $1.9 billion to $1.4 billion.

But Deustche analyst Andrew Anagnostellis says the media group faces a challenging year with rising television production costs and no sign of recovery in the weak advertising market.


Ian McIlwraith is on leave.