By GILES PARKINSON
The Australian dollar is going down faster than a Waratah scrum on its own five-metre line, but it is not the only currency in peril from the huge shift in capital occurring in financial markets around the world.
The biggest losers from the shakeout on the Nasdaq, and in technology firms around the globe, have been the holders of great wads of inflated internet currency.
This currency has been used like Monopoly money to buy businesses and create mergers with valuations several zeros on the bullish side of optimistic.
Now the bubble has burst, the value of these shares has fallen like a lead balloon, trapping the proverbial lift boys and some of Australia's biggest companies well short of break even on some investments.
The market worth of most net companies on the Australian Stock Exchange has fallen more than 50 per cent in the past week, and some of the biggest deals ever engineered in the country are in danger of unravelling.
The latest to fess up to a rethink on valuations is Telstra, which now has two significant deals that look like being on shaky ground.
The only currency that Australia's biggest company has been able to deal with in the net merger mania has been cash or its own assets - because the 50.1 per cent stake held by the Government cannot be diluted.
That means if it loses on its investments it will be losing real money, and not just inflated paper.
On Friday, Telstra's golden boy of convergent business, Ted Pretty, said the company was now rethinking the terms of its involvement in the proposed $3.5 billion merger of Solution 6 Holdings and Sausage Software.
Telstra was supposed to emerge with 40 per cent of the merged entity and contribute some of its own assets into the group in exchange for more shares. But, Mr Pretty said: "Financial elements of the transactions may be adjusted to reflect changing market conditions."
Kerry Packer has already had to re-price the financial element of one of his net ventures, announcing that he would re-price and scale down the targeted raising of his CPH Investments by nearly half.
The units in FXF Trust, which had been a holding vehicle for the group's interest in John Fairfax, soared from 80c to more than $2.50 when the Packers announced plans to turn it into an investment vehicle and raise up to $760 million.
The shares are now back to where they started, and the pricing has been cut, and only $400 million will be sought.
Mr Packer also pulled the plug on negotiations to buy into C&W Optus' broadband cable network. That involved placing the network into a joint venture with ninemsn, and it seems the deal could have come unstuck on the valuation that could be ascribed to each business.nte
Internet minnow eisa is also doing it tough. It is trying to raise $360 million to pay for the purchase of OzEmail's residential ISP business, which it stole from under the nose of Telstra.
Fortuitously, it suspended its shares at the start of the Nasdaq crunch and managed to persuade Hastings Funds Management and John Fairfax to cough up money at the equivalent $2 per share. The stock is now trading at $1.16.
Eisa still needs to raise a further $120 million, which means it must find a couple of incredibly optimistic investors who do not read share tables or deal with aggrieved partners who have bought in at a significant premium to the other shareholders.
Finally, the market is waiting to see how the biggest deal of them all, Telstra's $5 billion alliance with Pacific Century Cyberworks, and that company's audacious $US38 billion ($77.75 billion) cash and stock offer for Hong Kong Telecom, survives the market slump.
Telstra insists the deal will go ahead but that might not make a lot of sense to some Telstra board members. Telstra's buy-in price for Cyberworks is a good 70 per cent premium over its current share price. Even the proverbial lift boy knows that is a dangerous game to play.
Internet victims count the cost
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