Mike Ashley has been given a week to make a formal bid for Debenhams (DEB) or face losing his entire investment in the company. Ashley, 54, was backed into a corner after the department store secured a £200m lifeline from its lenders – leaving him with no option other than a takeover if he wants to stop his stake being wiped out. The money has been divided into two tranches, with Debenhams getting £101m now and another £99m when its long-term future has been secured. If the business is taken over by the boss – who already owns a 29.7% stake – then this would satisfy the lenders’ demands. But if he does nothing the department chain is likely to fall into pre-pack administration and will be seized by its lenders, rendering shareholders’ investments worthless. Ashley has until April 8 to make his move.
The Boeing safety crisis that grounded its 737 Max planes across the world could cost travel firm TUI AG Reg Shs (DI) (TUI) £259m in profits. It owns 15 of the planes and has a further eight due by the end of May, and would take the hit from the cost of replacing the aircraft, higher fuel bills and other related expenses. The planes were grounded after an Ethiopian Airlines flight crashed this month, killing all 157 passengers and crew. If the disruption lasts until July, it is expected to cost Tui £173m. But this could swell to £259m if it does not become clear in the coming weeks that the planes will resume flying by mid-July. Russ Mould, investment director at broker AJ Bell, said: ‘As if Tui needed another headache. Doubts about the economy and disruption from Brexit bubble away in the background. ‘After 2018 saw the wrong weather – Europeans sunning themselves at home – executives could be forgiven for brushing up on a rain dance to force sun-seekers on beach holidays.’
Almost 6% was wiped off the value of drugmaker AstraZeneca (AZN) after it unveiled plans to tap investors for £2.7 billion – ostensibly to fund a Japanese breast cancer deal that could eventually cost the Anglo-Swedish firm £5.3 billion. Just over £1 billion from the cash call will go into the commercial tie-up with Daiichi Sankyo, which has developed a potential breakthrough treatment for HER2-positive strains of the disease. The rest of the money will be used to pay off a tranche of debt and for ‘general corporate purposes’. But the transaction brings with it some risk, according to Nicholas Hyett of the investment group Hargreaves Lansdown. He said: ‘The drug in question has yet to make it out of the labs and hasn’t been approved in any markets. ‘There’s always the risk it falls at the final hurdle and ends up being worth nothing at all – but then that’s a fundamental part of the pharmaceutical industry. ‘The risk of failure probably goes a long way to explaining why Astra has decided to fund the deal with an equity raise rather than debt – there’s no obligation to pay shareholders if things don’t work out as expected, whereas lenders demand their pound of flesh regardless.’
Shares in Numis Corporation (NUM), the City broker, dropped 2%, or 5p, to 250p after it said its second-half revenues would be around a quarter lower than those posted in the first six months. In February, it sounded the alarm by saying that Brexit and a fall in equity prices had hit its performance.
BowLeven (BLVN), the Africa-focused exploration group, halved its losses in the last six months of 2018. But this didn’t stop the shares falling 9.3%, or 1.25p, to 12.23p as a special dividend cut its cash balance to £5.3m from £54m.
