Sydney, July 4, 2008 (ABN Newswire) - Solomon Lew's Premier Investments says it could abandon its $809 million hostile takeover bid for Just Group a day after Just downgraded earnings and sales because of the slump in retailing.

"We are currently considering our position in relation to our bid,'' Lew was quoted as saying in the statement to the ASX.

Using a "material adverse change'' clause in its bid to scrap the takeover would allow Melbourne-based Premier to retire its offer and perhaps return with a lower bid.

Or it could abandon the offer all together; much in the way Spotless pulled out of its bid for Programmed Management Services when the latter's pre-tax profit did not meet a conditional level in the Spotless bid.

Premier said it cannot believe that the Just board hasn't now changed its mind and recommended the Premier offer.

Just Wednesday cut its month-old profit forecast by up to 13% because of the slump in retailing.

Ironically the downgrade came the same day as official figures showed retail sales rising a stronger than expected 0.7% in May.

Just blamed slowing sales from May onwards and poor returns from New Zealand where first half growth contacted, and may have done so again in the June 30 half.

Just told shareholders to knock back the Premier cash and share offer as being "neither fair nor reasonable''.

But in its statement yesterday Premier said it "has no confidence in anything that the Just board says about its future performance. A core skill of any good retailer is the ability to predict and respond to market conditions.''

Just rose 12c to $2.90 yesterday. Premier shares were unchanged at A$7.70. Just's valuation is still well over $220 million short of the Premier offer.

Premier is offering 0.25 of its shares and A$2.095 in cash for each Just Group share, valuing the bid at A$4.02, based on yesterday's closing prices.

The offer is due to close July 18.

Despite a rise in the price of gold yesterday Newcrest Mining Ltd, Australia's largest independent gold producer, saw its share price fall $1.01 or more than 3% to $30 as it revealed it had been forced to spend more than the $1.5 billion originally estimated to complete the closeout of its hedgebook.

But Newcrest said the $1.67 billion spend to close out the existing four million ounces in the company's hedgebook was more than offset by increased revenue (from the rising price of gold in recent months).

Gold prices rose past $US946 overnight Wednesday, before easing in Asian trading.

Newcrest says it didn't need to draw on any debt facilities, as originally forecast for the closeout (of the hedgebook last year), which was completed at the end of June at an average price of $868 per ounce.

Newcrest led the way for several other gold producers including, Lihir Gold and Newmont Mining Corp, to close their hedgebook's to gain greater exposure to the rising price of the metal.

The local spot gold price climbed from about $US653 an ounce a year ago to over $US1,000 an ounce in March before falling to around $US865 an ounce a month ago, and then rebounding to yesterday's level.

Newcrest expects to producer about 1.8 million ounces of gold from its operations in Australia and Indonesia in the 2007/08 financial year.

Its huge Telfer mine had been hit by the West Australian gas crisis, but the company late last week said that it reached an agreement to obtain enough energy to maintain output at full pace.

"Newcrest has reached an arrangement for interim gas supply from North West Shelf sufficient for full production until the end of September, if required.

"This will substantially reduce Telfer's reliance on diesel for power generation," Newcrest told the ASX last Friday.

"Supply of other key consumables is sufficient to sustain production.

"There are increased costs associated with the interim arrangements.

"The combination of additional maintenance and energy costs during June will add approximately $15 million to costs. During July and August increased costs will add approximately $25 million against plan.

"Gold production in June has been impacted by 20,000 to 25,000ozs plus associated copper resulting in full year production at Telfer of approximately 590,000ozs in the 2007/08 financial year.

"Telfer gold production is expected to be in the range of 700,000 to 750,000ozs for the 2008/09 financial year," the company said.

Newcrest says it is keeping its insurers updated on developments with the gas supplies and the impact of the crisis.


 

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