Thousands of retail investors risk losing their money in Sirius Minerals (SXX) after it admitted its plan to build a fertiliser mine in Yorkshire was on the brink of collapse and the Government appeared to rule out a rescue. The company warned that it had been unable to sell a $500m (£400m) junk bond it needed to unlock $2.5bn in debt financing from JPMorgan, throwing the future of its ambitious scheme to mine under the North York Moors into doubt. Up to 1,200 jobs are at risk as Sirius has only enough cash to last six months. It will wind down construction work at its site near Whitby as it desperately seeks alternative financing or a partner to save the mine. Sirius lost more than half its market value after the update, with £460m wiped off the shares to close at 4.67p. The collapse left the company worth just £326m, down from a peak of more than £1.5bn a year ago.
Thomas Cook Group (TCG) is seeking to break the deadlock in a stand-off with creditors over its £1.1bn rescue plan by declaring itself bankrupt in US – a move that would become a test case for the global $10 trillion credit default swaps market. The embattled travel agent filed for Chapter 15 bankruptcy protection in New York on Tuesday, a move that could trigger an event of default that allows derivatives held by hedge funds to pay out. The 178-year-old company needs to get the approval from the hedge funds to complete a debt-for-equity rescue led by Fosun. The hedge funds have refused to back the restructuring owing to a technicality in it that means the credit default swaps (CDS) will not pay out and would be rendered worthless.
Struggling fashion chain French Connection Group (FCCN) admitted it has had no luck in finding a buyer as sales fell again. The retailer reported a 12% slide in revenues to £51m for the first half of the year, while losses narrowed by £200,000 to £5.3m. The sales fall came after it shut nine sites this year. It has also opened one new store in central London after it had to shut its Oxford Street shop. It has 90 outlets in total, including concessions and three YMC stores. Its like-for-like sales, which strip out sales from new stores, rose 1.4%, thanks to US shoppers.
Ocado Group (OCDO) could start selling Marks & Spencer Group (MKS) products on its website ahead of its September deadline next year, if its current partner Waitrose agrees. Duncan Tatton-Brown, the online grocer’s finance chief, said: “There is a chance it may come forward but we have a contractual arrangement with Waitrose, so that would require all three parties to agree to that. “That’s not something in our gift to make happen on our own, but there is of course a chance that we might bring it forward or at least partially bring forward that transition date.” Last week Waitrose revealed it had severed ties with tech start-up Today Development Partners (TDP) two months after it was announced with great fanfare in May.
Barratt Developments (BDEV) chief executive received an £893,000 pay bump this year, taking his total annual remuneration at Britain’s biggest housebuilder to £3.6m. David Thomas’s salary and benefits edged up £27,000 to £949,000, while his bonus and incentives jumped £866,000 to £2.66m, Barratt’s annual report revealed. The increases came despite annual revenues dipping 2.3% to £4.8bn. However, the revenue decline was offset by higher profit margins, with pre-tax profits rising 8.9% to £910m. Executive pay at UK housebuilders has come under fire recently, with accusations that profits are being driven by the taxpayer-funded Help to Buy scheme rather than chief executives’ leadership.
Barclays (BARC) fell 4.3p to 149.2p after a critical note by Independent Research analyst Pierre Drach, who downgraded his recommendation on the stock from “hold” to “sell”.
Woodford Patient Capital Trust (WPCT) was forced to slash the valuation of its holding in Benevolent AI last week, after a $90m injection from Singaporean sovereign wealth fund Temasek cut the value of the artificial intelligence company in half. Benevolent AI was estimated to be worth close to $2bn in April 2018, with around a fifth of the shares held across Mr Woodford’s now-suspended flagship equity income fund and the Woodford Patient Capital Trust (WPCT) by September last year. Last week WPCT said it had slashed the valuation of one of its holdings on the advice of fund supervisor Link but stopped short of revealing the name of the company. At the time, the Patient Capital board said the markdown would knock around 4p off the group’s net asset value, which analysis by Citywire showed would take more than £42m off total gross assets.
