Department for Transport officials did not tell the then transport secretary about a plan that could have prevented a costly legal dispute between rail operators and the government, the high court has heard. Stagecoach Group (SGC) and other rail firms are seeking tens of millions of pounds in compensation in a claim that could have far-reaching implications for a privatised rail system that lawyers acting for the firms said was “in crisis”. The rail company Arriva settled with the government over the East Midlands franchise on the eve of the trial but the case went ahead on Monday. A court heard that the DfT was responsible for a “long series of missteps and mistakes” when it was run by Chris Grayling between July 2016 and July 2019. Stagecoach had been bidding for the Southeastern, East Midlands and West Coast franchises, the latter in partnership with Virgin and the French state rail firm, SNCF. The lawsuit revolves around the department’s decision to exclude the bids last year because the rail companies would not promise to fund enough of any future increase in the railways pension scheme deficit, currently estimated at £7.5bn.
Shares in Intu Properties (INTU) fell sharply after the indebted shopping centre owner confirmed it would push ahead with a cash call thought to be worth as much as £1bn. Intu, which owns shopping centres including the Trafford Centre in Manchester and Lakeside in Essex, said it would attempt to tap investors for funds alongside its full-year results at the end of the February, confirming reports. The company has been hit by the weak backdrop for high street retailers, with struggling groups including Arcadia and Debenhams occupying a lot of space in its centres. While Intu did not confirm how much it planned to raise, the figure is thought to be around the £1bn mark.
Fevertree Drinks (FEVR) has warned on profits and cut its sales forecast for the second time in two months, blaming a slowdown in consumer spending. The maker of premium tonic and mixers said it faced tough trading conditions in the UK over Christmas caused by general belt-tightening among consumers. Shares plunged 24% after the company said it expected full-year profits to be about 5% lower in 2019 than in 2018, when Fever-Tree reported a 34% jump in pre-tax profits to£76m. Its shares were trading at £15.05 on Monday, the lowest level for the former stock market darling since April 2017. Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said Fever-Tree’s trading update made for “ugly reading”. “Falling sales in the UK will inevitably spark fears the gin boom has turned to bust, while guidance for weaker sales in the US and lower margins undermine Fever-Tree’s long-term pitch that it can replicate its success across the pond,” he said.
