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Lateline Business -

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(generated from captions) Iran's money isn't worth what

it used to be, thanks to a

galloping 16% inflation rate.

So it's printing more money,

releasing a new bank note worth

more than twice the face value

of the previous most valuable

note. The new note's worth less

than A$7 and a close inspection

of the design reveals a map of

Iran superim posed with a

nuclear symbol.

TRANSLATION: It's a very nice

design. It reminds us that we

should resist until the end to

achieve our nuclear right.

TRANSLATION: I think because of

the sensitivity that Western

countries have over Iran's

nuclear issue, it's not a good

move. Russia accuses Iran of

falling behind in its $25

million monthly payments for

nuclear fuel and it's suspended

delivery. It's also stopped

work on building Iran's new

billion dollar nuclear power

pland in Bushehr. But there's

also a touch of politics.

Privately Russian officials

reported as saying Moscow has

grown tierd of Tehran lefring

its relationship with Russia to

pursue a nuclear weapon. The

news hasn't gone down well in

Tehran. We have adhered to our

commitments an hope the

Russians will act in line with

their commitments an ship the

fuel by the appointed time. The

impasse isn't expected to have

a long-term impact on Iranian

nuclear ambition s. The country

with the most to lose if Iran

does acquire a nuclear weapon

Israel is hoping diplomacy will

work on Iran and dodging

questions about a military

strike if it doesn't. I do hope

that the problem can be solved

economically and politically

and psychologically and I don't

think that they have to add to

it speculations which in itself

will worsen the situation. Mr

Perz reiterated Israel's

so-called strategic amby guity

about its own nuclear arsenal. Many people are

suspicious that Israel has a

nuclear capacity. We learned

that suspicion is enough.

Because we are looking for

deterrent, they're not looking

for bombs and as long as people

are suspicion we have -

suspicious we have it we're

satisfied. The UN Security

Council talks continue

tomorrow. Finally back to

Australian politics an 10 days

after losing a frontbencher for

meeting Brian Burke , John

Howard is standing by a

minister who has fallen foul of

his code of conduct. The Aged

Care Minister Santo Santoro has

admitted he owned shares

related to his portfolio. Well

they've now been sold and Mr

Howard says it would be

unreasonable to take any

further action against the

senator. Regrettable is how

Santo Santoro describes his

mistake but he won't cop any

suggestion he should lose his

job. I think that I've done

nothing wrong and I'm very

happy to state that. Senator

Santoro's trouble stems from

$6,000 of shares he bought as a

backbencher in 2005 in Brisbane

company CBio which develops

drugs to treat arthritis. When

he ai was appointed Aged Care

Minister in January last year

he should have sold them. He

says he frot they existed until

four months ago. It was an

honest oversight. There was

obviously no deliberate

intention on my part not to

declare, you know, that small

parcel of shares. After telling

the Prime Minister, Senator

Santoro sold shares in October,

doubling his original

investment. The $6,000 profit

was handed to the family

council of Queensland, the lobby group representing

churches, anti-abortion,

anti-drug and anti-feminist

organisations but not a

charity, as Mr Howard has

suggested. I was quite certain

that my conduct was proper, it

was decisive and I was very

pleased to do that. He made an

error. John Howard agrees C

Bio's research did fall within

the realm of the aged care

portfolio but he says no

advantage was obtained or given

by Senator Santoro. He decided

last October not to sack him

and he hasn't changed his

mind. The view was taken then

and I hold to that view very

strongly now that any further

action would have been unreasonable. The code of

conduct is turning into a

complete farce. John Howard's ministerial conduct rules are

like Melbourne's weather - they

change every few hours. There's

a clear double standard here.

One standard for Ian Campbell

and appears to be another

standard for Santo Santoro. Having watched one

minister fall by the way side

10 days ago, Santo Santoro's

colleagues have no doubt he's

secure. When I spoke to him

today he souned as though he

was relaxed and comfortable

about the way he was operating

as a minister. No seller's

remorse. 'Lateline Business' is coming

up at a moment but if you would

look to like at our interviews

or transcripts you can visit

our website. Now here's

'Lateline Business' with Ali Moore.

Tonight - deal or no deal, a

number of high profile private

equity bids seem in serious

trouble. Our investors are not

just going to roll over. Our

investors are going to look at

these things and make a

long-term decision as well as a

short-term decision to make

sure that it stacks

up. Uncertain times - Fortescue

Metals faces overruns in the

wake of cyclone George. If I

was an analyst I would put in

delays but we're certainly not

to announce them, it's way too

early. And - So where the

bloody hell are you. Tourism Australia's campaign doesn't

translate into Japanese.

getting a higher

price. Six months ago you could

have been forgiven for thinking

private equity was taking over the Australian business

landscape but many of the big

deals are in trouble as

institutional investors flex

their muscles an refuse to sell

for what they believe are

bargain basement prices. If

they do accept a bid and they

end up with a large wad of

cash, they've got the challenge

to reinvest those funds so

they're not going to accept

just any offer. Already the

private equity-led management

buyout of Flight Centre has

been defeated. At Qantas the

$5.45 a share offer has prized

only 15% of the airline's stock

away from its owner. Some

retail shareholders are holding

on for sentiment value. Others

are taking the advice of their

brokers and waiting so see

whether UBS and Balanced Equity

Management sell their 9.5 %

stake. But it's the lack of

forward guidance and a conflicted management team that

has many small and large

shareholders questioning the

value of selling now only to

buy back in at a much higher

price in three to five

years. It is a bit odd that

their results didn't do what

they have done every year which

is give some sort of earnings

guidance. So yes, a bit odd and

you would expect it and I would

dare shai they're under

pressure to provide

it. Institutions are also

threatening to block Archer

capt's arse bid for Rebel

Sport, that's despite majority

shareholder Gerry Harvey urging

them to accept the $4.60 a

share offer when it goes to a

vote this Thursday. At APN news

and media it's a similar story.

Rodney Brott is head of

equities at Tricom. He believes

the big investors are right to

stand their ground. These institutions manage very large

sums of money so they've got a

responsibility to the people

that have deposit ed those

funds with them to get the best

outcome. So if they think a

company is too cheap why should

sthai sell it. Price is also

the issue at Coles but it's the

board rather than shareholders

who have rejected the private

equity bid. Coles is now trying

to illicit a higher office from

the Kohlberg Kravis Roberts led

consortium. For Australian

shareholder association

director Ian Currie who's been

a long-time Coles watcher, it's a strategy fraught with

danger. They have an obligation

to ensure if the company is on

the market that the best offer

arrives so they're caught

between trying to get the best

offer, allow access to more

than one party and achieving

the outcomes that they believe

are appropriate. An indication

of how Coles has benefitted

from takeover speculation can

be seen in its share price. In

August last year it was trading

at $10.60. On February 23 this

year it hit a 12-month high of

$15.95 while today it closed at

$15.65, 40 cents above KKR's

second offer. If the consortium

walks away, foreign retail

giant such as Wal-Mart or Tesco

are tipped to enter the fray

but Ian Currie fears their bids

will be a lot lower. The price

could well fall and that might

lead then to a hostile offer

from someone else at a price

lower than that which the

directors believe is

appropriate or indeed that

which was suggested by KKR in

the first place. Buying and

selling any asset resolves

around price and if the price

is right owners will sell. Private equity firms traditionally work on the

strategy of a knock out bid

first time round to get

directors on side and access to

the target's books. Rodney

Brott believes the lesson from

the current situation is that

those opening bids have been

too low. Our investors are not

just going to roll over. Our

investors are going to look at

these things and make a

long-term decision as well as a

short-term decision to make

sure that it stacks up. The

ball in all the deals currently

being mooted is now well and

truly back in the bidders'

courts. Of course Coles Group

has already done a deal with

private equity selling Myer

last year for $1.4 billion. The

new owners have made rapid

changes to the department store

chain and now plan to sell its

properties in Melbourne for an

estimated $400 million plus.

Myer will lease back its

flagship zi store in Bourke

Street. A number of potential

buyers have been mooted

including Westfield. To a

private equity deal by a different name and the

management-led buyout of merge

provider Alinta is also proving

hard work. The bid by former company executives is backed by

Macquarie Bank but it's yet to

win over their replacements and

there's serious competition for

the asset s from a rival

consortium. After more than two

months, the share price offers

calculated by the back room

strategists still haven't

proved enticing enough to

Alinta's management. The nation's biggest energy

transmission company has

confirmed interested parties

will now have at least another

fortnight to finalise their

bids. Analysts believe the sale

will go ahead and rejects

suggestions the longer it drags

on the more pressure their

there is on acting chairman

John Akehurst to accept an

external offer. No, I think

John Akehurst is a very

sensible chap, looking at his

history, not that I know him

personally and I'm sure he's

going to do what's in the best

interest of Alinta

shareholders. After all the

real winners out of this series

they started off with a company

worth less than a billion and

they've got one worth seven

times now. Shares in the

utilities group have surged 30%

from around $11.#r50 per share

to today's close of $14.61. But

it's a compli pli Kated

purchase. With potential buyers

having to evaluate so-called

hard infrastructure for

generating an carrying gas and

electricity as well as the

asset management side of the

business. No-one understands

those issues better than the

buyout team led by former

Alinta executives John pointon

and Bob Browning. They're part

of a Macquarie-led consortium

up against investment bank

Babcock and Brown with rumoured

partner Singapore

Power. Singapore Power has an offshoot in Australia that

could naturally own the infra

fra structure asset of Alinta

and Babcock and Brown has a

large number of infrastructure

assets. No-one in the business

isn't going to be buying if

they can't make a decent return

out of it. The real challenge

for suitors is settling on a

share price offer. Speculation

about unrealistic $18 levels

excited the markets but the

winner is expected to pay

around $15.50 per

share. None None of the high

profiled by id bidders were

prepared to comment to Lateline

Business today but when the

deal goes through, it will significantly reshape the

energy sector. It could have a

large number of impacts just

depending on the structure

that's actually adopted. It

could set new benchmarks for

valuation. There are a number

of partly owned businesses that

Alinta has. Whoever ends up

with Alinta's assets, it's generally accepted the resulting consolidation will

mean a better deal for

consumers. And in the last hour

Macquarie Bank-led consortium

has made a $3.5 billion US bid

for spirit finance corporation.

Spirit is a real estate

investment trust listed on the New York Stock Exchange. The

offer price represents an 11%

premium on Friday's close and

has been recommended by the

board. Well markets in Europe

have been trading for a number

of hours an for the latest news

we're joined by George wimpbts from Seven investment

management in London. So far

the FTSE's pretty much

mirroring the performance in

this region? Yeah, the FTSE's

off about 30 points today

following what's happened, as

you say n Asia and Australia.

Really there's some worry out

there about the strength of the

US economy going forward,

there's some key retail data

coming out later today and also

there's a couple of companies

have announced profit warnings

in the UK market today which is

not good news and the market

hasn't taken it too well. If we

look at some of those key

companies that have announced

profit warmings HMV Group

that's probably one of the most

significant? Yeah, HMV which is

Europe's largest DVD and music

retailer, is off 14% today. The

shares have fallen. And they

expect profits to be ?10

million lower this year so

that's a big knock. It's the

second profit warning they've

announced in three months. So

things are not going well for them. Basically they've not

moved with the times, everyone

is now downloading their music

off the Internet. HMV is still

trying to sell hard copy DVDs.

They need to close down some

store x put in place a ?30

million cost savings exercise

over the next three years an

this will include refurbished

stores poovem people will be

able to download music in

stores. It's a great brand so

it's got every hope of doing

but needs to move now. On the

merger an acquisition front

which seems to be in the

headlines both here and, there

the pharmacy group Boots has

given KKR the boot? Yes,

yesterday it was announced that

the Boots board rejected the

?10 billion from KKR. However

shares are still going up. Up

3% today bucking the trend in

the market. The market really

does believe that KKR will come

back with a revised bid or

otherwise we could see other bidders come out of the woodwork. Who knows who that

might be but this is an

interesting story. It will

carry on to run and run. Shares

are up 25% since last Friday

since the bid was announced so

watch this space on that

one. Someone's obviously hoping

for a higher bid. Finally

what's the outlook for Wall

Street given we're waiting for

those US retail sales? The S

and P futures are predicting 0

.5% fall so things not looking

good in the US and also there

are worries over the mortgage

market and the subprime lending

market. So we're expecting the

US to open down today. Thanks

for bringing us up to

date. Thank you.

Now for a quick look at the

major movers on our market

today.Health scope shares rose

3%. Fosters also had a good

day.Investors bailed out of

alco- Finance, one of the

suitors for Qantas, on fears

the takeover went go ahead. Australia's oil production

was cut in half in the wake of

cyclone George which caused

widespread devastation in the

north of WA. The threat of

another storm caused even

further delays but now Woodside

petroleum and Santos say

they'll reconnect offshore rigs

tomorrow. BHP's iron ore mine's

already back to full

operations. The company hardest

hit by the cyclone was

Fortescue Metals with the death

of two workers at a railway

construction camp 100

kilometres south of Port

Hedland. Fortescue is

developing a $3.7 billion iron

ore project in the Pilbara with

an ambitious time frame of

first shipment early next year.

Now with the full extent of the

damage still to be assessed,

the company faces the prospect

of a credit rating downraid and

CEO Andrew Forrest is not

ruling out project delays with

questions being raised about

safety procedures at the

construction camp, a number of

inquiries including the company's own are now under

way. I spoke to Andrew Forrest

from Perth earlier this

evening. Welcome to Lateline

Business. Thank you,

Ali. Clearly it's early days

but from where you sit now and

given there was no evacuation, are you confident your management did the right

thing? Yes, I've since been

fortunate enough to actually

review the cyclone emergency

procedures and they were

followed. It was an extremely

difficult situation. There was

a cyclone bearing down on the

only point which they could

evack wait to - evacuate to and

they would have been driving

into the face of one of the

experienced in Western worst cyclones which had been

Australian history. I can

certainly understand why they

decided to stay put. So they

did consider evacuation but

ruled it out as too

dangerous? Yes. The

consideration was for the

safety of our team-mates at all

times and the very difficult

decisions were taken by the

team at the site. I was

overseas and I fully endorse the bravery and the

intelligence of their

decisions. If they went so far

as to consider evacuation, why

were workers allowed to stay in

their huts and no not told to

go to the mess hall, which was

tied down? Because the

emergency procedures state that

you go down to your tied down

accommodation, all the

accommodation was tied down,

and that was considered safest.

In fact not everyone was

effected at all. There were

people who slept right through

the cyclone but some of the

huts experienced stronger winds

where we've had meteorologists

explain to us that you can get

mini tornadoes inside cyclones

and we had that very

unfortunate event. You're

saying that union claims that

the workers huts were not

properly secured are wrong,

that all the dongas, as they're

known, all the huts were tied

down? Look, I am concerned that

people are - might be advancing

positions but if they have

evidence then I would ask them

to bring that evidence forward

to the inquiry. We would

welcome that. We ask them to do

that at once and that is the

proper forum for their

views. But your understanding

is that they were tied

down? Certainly. Ratings

agencies Standard & Poors has

put Fortescue on watch for a ratings downgrade because of

quote uncertainty about the

development, timing and

liquidity of the iron ore

project, how great is that

uncertainty? I came to work

yesterday quite determined to

put the progress of this

project back. I've been

persuaded by my colleagues, by

my team-mates up in the

north-west, by even the people

who were injured to take heart

and to not in any way diminish

the prospects of this

project. But will there be time

and cost overruns? It's way too

early to say. I can only think

that there should be. I have as

much faith, probably even more

faith, Ali, in my team-mates'

abilities than what they do,

but I can't think that a

company could suffer a shock as

severe as this and not have it

impact the balance sheet.

However, my work-mates say that

they are not giving in so I'm

certainly not about to. There

is talk though of significant

delays to railway construction.

Do you think that overruns will

be material? No, I think that's

entirely premature. In fact I

was being briefed by our

railway one camp leadership,

the activities on the day was

to prepare for a cyclone

passing through the vicinity.

Those preparations were

adequate and I would assume

that the from the reports I

have read, which is a major

construction site, was almost

completely unscathed and the

preparations for the cyclone

passing through the area by the railway team were also

effective. So do you have some

sense of scale about just what

the impact will be? Will it be

months before you will be able

to start work again? I would

say that work will start very,

very soon, Ali, I would say

within days, I would say not

within weeks. And work can

continue while investigations

are under way? Well see we had

five construction camps, only

one, Ali, was affected. The

others were absolutely fine. In

fact there were several other

sites in the Pilbara which were

affected as badly as ours but

our other four sites, in

particular the port and rail

village two, the cloud break

mine camp, they were unaffected. Standard & Poors,

as I said, talks about

liquidity risks. At what point

would any delay affect the

project debt arrangements? We

have, at the end of this project, several hundred

million dollars of buffer. I

don't think that a cyclone will

in any way affect our ability

or our work force's

determination to make this

project a great success. Your

project debt does include a

$198 million contingency

account which I understand is

already down to 145 million, do

you think you'll have to draw

on that? That contingency, Ali,

is part of the fully engineered

cost and if it were fully drawn

we'd still be completely on

budget over and above that,

there is another $150 million

of buffer, a further $150

million of interest provision

and at any point in time we

could go and draw from the

market further capital. There

is, I believe, no risk that

this company will suffer from

lack of liquidity. The plan was

for the first shipment of iron

ore for Fortescue from Port

Hedland to happen in the first

quarter of 2008. Right now that

stands? Ali, as I've said, I

believe, as I drove into work

horrified by what has happened,

that we would inevitably be

announcing delays. By work-mates, and particularly

those on the ground are saying

to me don't do that, they can

recover from this but, you

know, as I have said, if I was

an analyst I would put in

delays but we're certainly not

about to announce them, Ali,

it's way too early. But it's

possible? It's certainly

possible. We've just had the

severest cyclone in 30 years an suffered tremendously as a

result but the work force

morale is as strong as I've

ever seen it. Andrew Forrest,

many thanks for talking to

us. Thank you very much, Ali.

Conditions for Australian

business have never been this

good, according to the latest

National Australia Bank survey.

Profit yeablt, sales and

employment all grew strongly in February helping business

confidence rise to a 10-month

high. Not surprisingly,

conditions are best in mining

and financial services while

the retail sector is showing

resilience in the face of three

interest rate rises last year.

Finding labour remain askey

issue, a fact backed up by the

ANZ's monthly job survey which

recorded a #.5% rise in ads

last month. Well Japan and

Australia may have sign add ground-breaking defence pact

but whun when it comes to

tourism the Japanese are not so

keen. In January alone the

number of Japanese tourists

visiting Australia fell 20%.

It's further evidence of the

steady decline in Japanese

visitors reported over the past

decade, a problem exacerbated

by the most recent advertising

campaign which missed the mark

in Asia. ADVERTISEMENT: So where the

bloody hell are you? It may be

one of the most impolite

tourism campaigns in years and

one of the most made fun of.

The Japanese do surfing in

your bloody wave. The Russians

are in your bloody spa. And in

Japan, Australia's most

important market, where the

bloody hell are you didn't even

translate. It had to be changed

to so why do you not come to Australia? Most cannot

understand what the image of

Australia is. But Australia's Tourism Minister says the ad

campaign is not the reason for

the fall in Japanese

tourists. The numbers were

falling in Japan long before we

started our advertising

campaign. The point I'm making

is that the advertising

campaign is refreshing

Australia as a product. In 1997

a record 814,000 Japanese

tourists came to Australia, the

backbone of the tourism sectors

export earnings. But since then

the market has been in decline

and last year just over 650,000

Japanese visited, a drop of 5%

from 2005. There's been a problem for the last 10 years

and I think we really haven't

been - we haven't really

tackled the problem adequately and it's just gone from bad to

worse. Over the next decade

tourism authorities expect the

number of Japanese visitors to

drop by another 9%. Despite

that the Government has put in

place a multimillion dollar

action plan to try and turn

that around. But some in the

industry say the plan is all

talk and no action. With the

Japanese markets in decline,

they say the money is better

spent elsewhere. Visitor

numbers from other Asian

countries are growing with the

number of tourists from places

like China and India on the

rise. And if Japanese tour is

can't be lured back,

Australia's $18 billion a year

tourism industry is going to

have to change its flight

plan. It's fast, it's glamorous

and once again it's British,

the Aston Martin car company

has been purchased by a British-led consortium for

almost $2 billion. Motor

sporting identity David

Richards is heading the buyback

with extra farms from Kuwait i

and American investors. It

might be a dream today but it's

clearly roll your sleeves up

and it's going to be hard work

for everyone concerned tomorrow. There's great

opportunity. Ford have left the

company in very good shape and

exciting times ahead of us. The

classic marque has been the

property of the Ford motor

company for the last three

decades and was sold to raise

much needed cash. The Aston

Martin of course carries extra

kudos as the car of choice of

James Bond. A look at

tomorrow's thin business diary.

We get last month's lending

finance figures from the Australian Bureau of Statistics

an Westpac and the Melbourne

institute will release their

monthly consumer sentiment

survey. Before we go a look at

what's making news in the business secs of tomorrow's

paper. There's a lot of agreement about the top story for tomorrow. The age argues

the absence of a profit forecast threatens to sink the

$11 billion takeover bid for

Qantas. The the 'Australian'

says international hedge funds

are now betting against the

deal proceedings an the 'Sydney

Morning Herald' agrees. While

the 'Australian Financial

Review' says companies are

enjoying the best trading

conditions for six months. And

that's all for tonight. As I

leave you the FTSE is down 29

and the Dow futures are down

33. If you want to review any

part of tonight's program you

can visit our website at mpt

You can now watch the entire

program online or download it

as a Vod cast. We'd love to get

your feedback. Our email smplet

I'm Ali Moore. Goodnight. Closed Captions by

CSI

ETHNIC MUSIC WOMAN: This is Cabramatta,

a small outer suburb in Sydney. Most of the people living here are Vietnamese and Indo-Chinese, but the town is also home to hundreds of other nationalities. You're getting a few empty seats in the front now.

Darling, you don't expect full house throughout the whole bloody thing. You just don't. This is a pretty good crowd still - you know, look in the middle. My husband, Markus Lambert, worked here for over 10 years as a public relations officer for the local council. He saw the area grow and prosper and witnessed its deterioration as well. In 1998, I set out to make a film about Cabramatta in response to the negative media coverage it was getting. Once tagged as a prime example of a successful cultural melting pot, it had become notorious as the heroin capital of Australia. And ever since the murder of State MP John Newman in 1994, it had gained a reputation as a centre of Asian crime. There's only one problem - I've only got $5 left. Are you... Do you know me well enough to give me credit?

Against this backdrop, Markus embarked on a mission to restore Cabramatta's sinking image by organising a new year flower festival. But getting the whole community behind it was always going to be a huge challenge. To guarantee widespread support, he needed the backing of councillor Phuong Ngo, a man who wielded a great deal of influence in the Vietnamese community.

At that time, both Phuong and Markus were working - each in their own way - to change the face of Cabramatta. What we couldn't have known then was that within the year, Phuong would be charged with conspiracy to murder State MP John Newman.

I believe that Cabramatta... needs some large festivity...

..that draw more people to our township of Cabramatta... ..and to tell the people who don't live in Cabramatta or who never come to Cabramatta... ..Cabramatta is not just about drug, not just about crime, but we are a township of festivities. This year, Phuong wants to make a big impact in Cabramatta,

holding a traditional flower festival to open the new year celebration. One councillor said to me, "I want the big festival," and nobody argued with him. No. So what I'm saying is, the vision that you're gonna have for the Vietnamese-Chinese new year festival is what the council's gonna run with, so I'm saying to you if you want me to coordinate a big festival for Sydney,

we've got to have a meeting and discuss it. Yes, OK, we get together - just me and you - we discuss. We organise a floral market day for those three days. Just traditionally we always have it in China or in Vietnam.

But we will be playing the coordinating role. And we make the decision, that's it. Simple as that. But we have lunch now - it's time to have lunch. I've got one question. I've got one question. You've got a very precise picture of how you want that festival to be.

We need that in here. Now, the problem is, when I'm out there with those groups and they don't agree with me, I don't want to have to send them to you every time. The flower festival will be held here in Freedom Plaza, the heart of Cabramatta.