Cash-strapped Asciano hires ABN Amro for $1b asset sales

Port and rail operator Asciano has appointed investment bank ABN Amro to advise it on $1 billion asset sale options, as the loss-making company seeks to obtain cash to pay down its debt.

According to The Australian Financial Review, the company came to look into the sell-off option as it was no longer able to use a project finance avenue to fund its development plans.

The asset sell-off would require approval from major lenders, who are holding the assets as security for the company’s $4.5 billion in loans.

After dismissing a $2.9 billion takeover bid from a US private equity consortium led by Texas Pacific Group (TPG), the company started processes to free up billions of dollars by selling stakes last month.

As part of its plan to raise cash, the company has launched a $91.1 million security purchase plan, enabling existing security holders to buy up new securities at a five per cent discount.

The struggling company has posted a net loss after tax of $182 million in the 2007-08 fiscal year, but said it is confident of a strong year backed by new coal and grain transport contracts.

The company’s chief executive Mark Rowsthorn said last month: “The coal business will continue to benefit from strong demand and high coal prices and we expect to see capacity constraints in the Hunter Valley network ease during the coming 12 months.

“Finally, the successful restructuring of Asciano’s grain business during the year will see a substantial recovery in the profit contribution of this business in 2008-09.”

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