Wesfarmers tight-lipped on refinancing speculation
COLES owner Wesfarmers has refused to confirm reports it is close to refinancing debt of more than $7 billion that is due in the next two years.
The report in The Australian Financial Review claimed Wesfarmers (wes.ASX:Quote,News) had negotiated fresh terms with about two-thirds of its lenders.
The diversified retail and resources conglomerate is seeking to pay down debt related to its $20 billion acquisition of the Coles group in 2007 - the largest completed takeover in Australian corporate history.
A Wesfarmers spokeswoman said that the Perth-headquartered company would not comment on the report. She said the company "continues to consider a range of options on refinancing'', quoting its update to the Australian Securities Exchange last week.
The newspaper report speculated that some of Wesfarmers' financiers, including Royal Bank of Scotland and Deutsche Bank, had agreed to roll over their existing loans to Wesfarmers for at least another 12 months.
The report said Wesfarmers' key relationship banks, including Commonwealth Bank, NAB and Westpac, were understood to also be in the process of signing to new refinancing terms.
Australian share market up 1pc as resource stocks soar
THE share market was driven higher by resources stocks on the back of firmer commodity prices.
The benchmark S&P/ASX200 index was up 38.4 points, or 1.08 per cent, at 3589.3, while the broader All Ordinaries index advanced 36.1 points, or 1.03 per cent, to 3531 after a positive lead from Wall Street on Friday.
"The market held on to some quite good gains earlier in the session," CommSec market analyst Juliette Saly said.
"Trading volumes were thin."
Ms Saly said the market was anxiously awaiting BHP Billiton's December quarter production report on Wednesday amid speculation the mining giant will be forced to close its Ravensthorpe nickel laterite mine in Western Australia due to low prices for the metal.
"There has been some speculation that BHP's quarterly production figures could fall under quite a bit of pressure due to slowing demand (for its products) and a big drop off in commodity prices," she said.
BHP Billiton was up 50 cents at $30.38 while its debt-laden rival Rio Tinto jumped $2.20 to $40.55.
"Rio was once again the stand-out," Ms Saly said.
"It has been under a lot of selling pressure heading into the end of 2008 but we're starting to see a bit of a recovery in Rio shares."
The energy sector was stronger.
Woodside gained 2.27 per cent to $34.29, Santos rose 4.62 per cent to $14.73 and Oil Search put on 8 cents to $4.51.
Gold stocks were mostly higher.
Newcrest leapt 8.01 per cent to $31.27, and Lihir Gold jumped 6.72 per cent to $2.86, but Newmont fell 1.97 per cent, to $5.46.
At 4.18pm (AEDT), the spot price of gold in Sydney was $US838.00 per fine ounce, up $US17.20 on Friday's close of $US820.80.
Ms Saly said ANZ was the stand-out performer in the banking sector, up 13 cents to $14.43.
NAB was 9 cents higher at $19.44 while Westpac, which is undertaking a capital raising this week at about $16.00, dropped 2 cents to $16.09.
The Commonwealth Bank has split its corporate division from its institutional banking unit to service customers and manage its capital better.
"We also heard of management changes," Ms Saly said.
She said Commonwealth Bank shares were under pressure for most of morning but closed 8 cents higher at $27.43.
Ms Saly said the local market was expected to be flat on Tuesday, with US markets closed overnight for the Martin Luther King holiday.
"We'll be looking for a pick-up on Wednesday as we see Barack Obama inaugurated as the 44th president of the US."
On the Sydney Futures Exchange at the March share price index contract was 33 points higher at 3557 on a volume of 18,607 contracts.
Oil prices drop sharply
OIL prices fell sharply overnight on fresh fears the worst global slowdown in years will undercut energy demand, traders said.
New York's main contract, light sweet crude for delivery in February, dropped $US2.21 to $US34.30 a barrel.
The February contract expires at the close tomorrow to be replaced by the March contract.
In London, Brent North Sea crude for March slid $US2.16 to $US44.41.
Analysts said that trading volumes were expected to be light with Wall Street markets shut today for a public holiday.
Underlying weak global demand for crude "remains a dominant factor" affecting the market, said David Moore, a commodity strategist for the Commonwealth Bank of Australia in Sydney.
Sucden Financial Research analyst Nimit Khamar said the US holiday made for quiet trade, leaving the market "awaiting fresh news and even initiatives from the US as a new president and Congress come into office this week".
Last week, both the Organisation of the Petroleum Exporting Countries (OPEC) cartel and the International Energy Agency, energy policy adviser to major industrialised countries, lowered their demand forecasts for this year.
OPEC, whose member nations together pump about 40 per cent of world crude, would consider further cuts to oil production if prices continued to fall, Algerian Energy Minister Chakib Khelil said on Sunday.
Another cartel member, Venezuela, said at the weekend it was prepared to reduce its oil production in a bid to boost prices.
"Only when OPEC has implemented large-scale cuts will prices start to recover," Macquarie Research said in a report.
It said the cuts would have to reach 3.0 to 3.5 million barrels per day, while prices should start to recover in the second half of this year.
During the first six months, prices should range between $US40 and $US50 a barrel on the assumption that world oil consumption will fall and high stock levels would continue,
