What future fund?
According to ABC news
“Future Fund head David Murray says the financial crisis means the Government will not have the money it wants to set up three new infrastructure funds.”
Not unexpected really…and in other news James Packer has jumped the good ship Consolidated Media, part owners of PBL. For those with bad memories, James sold off the family jewels to private equity, collected a bucketload of cash but retained an interest via CMH. The board of CMH has also declared it won’t be coffing up any more lucre to keep PBL affloat. Oh dear!
But in what is quite revealing in today’s financial environment is this bit from Crikey
“The new capital is wanted by the end of the year because PBL Media has an estimated $120-$130 million in interest and principal due to its banks by the end of the year. It paid around $100 million in interest at the end of September and has yet to learn from its banks if they think PBL Media is still within the terms of the covenants on its $4.2 billion in debt.
For the new money to be sought now means there are fears that it is close to breaking its covenants with the banks and a capital boost is needed to keep them happy. That debt is chewing up just under $40 million a month in interest. The company earned $463 million in the year to June and lost money in the second half of 2008. People are still losing their jobs at Nine and at ACP magazines as the cost cutting goes on.”
Now TV and Print media isn’t what it used to be in terms of a cash cow, which is precisely why Packer jnr sold it off. But the devil here is just how technology and a plunging exchange rate have dealt this group a heavy blow. Earning about half a billion aussie dollars a year is suddenly worth a lot less to overseas creditors. And the interest payments on the capital invested in this group looks like choking it to death.
But if you think about it, the events at PBL are a microcosm of what the Australian business landscape has become in recent times, which is why we have such appalling terms of trade and why we are in such deep shit now the floor has fallen under our currency. Of course currency traders also know this which only adds to the dollars woes. The so-called future funds of the government are the first casualties, they wont be the last.
But people like Eddie McGuire are ok, he should be able to cope with $4,000,000 in his pocket even if they are only aussie dollars. If he’s smart he probably will convert them to something else as soon as he can.