Hundreds of customers with smart meters will cook their Christmas Dinner without paying a penny for their power, after Octopus Energy said it would offer four free hours of energy. The challenger brand said it would enable the price pause by tweaking its so-called “time of use” tariff, which is available to people with smart energy meters. Octopus is making the festive gesture following fears that smart meters might cause bills to spike at times of high demand because of “surge pricing”. Greg Jackson, the chief executive, said the supplier wanted to show that “plunge pricing” was possible too. He said smart tariffs could help customers to cut their bills by using cheap energy when there was plenty in the system, and avoiding times when supplies were tighter and power more expensive.
One of Stagecoach’s biggest investors has called for its train operations to be “mothballed”, raising fresh questions over whether the company will walk away from Britain’s railways. The Aberdeen-headquartered company, once one of the country’s largest train operators, has just two major franchises remaining, both of which are subject to re-tenders. It is bidding on a third. Stagecoach Group (SGC) last week pledged to concentrate on UK bus and rail after selling its North American coach arm. But it is understood to have low-balled bids for East Midlands, South Eastern and the West Coast main line – its joint venture with Virgin – a decision that could put it at a disadvantage in fiercely competitive tender processes. On Friday, the Government delayed a decision on the West Coast by a year.
A pack of Wall Street hedge funds is circling Carpetright (CPR) as its lenders look to slash their exposure to the embattled flooring chain. It is understood that investors including Apollo, TPG and Carlyle are considering snapping up slices of the company’s debt from the high street banks that provide the bulk of its main borrowings. Mainstream lenders Royal Bank of Scotland and Allied Irish Bank are keen to get out after Carpetright’s torrid year. Together, their position is worth around £45m. This month Carpetright revealed that losses had ballooned by £11m as it counted the cost of a dramatic store closure programme, which boss Wilf Walsh said reflected a “transitional” year. The business blamed a 16% plunge in sales on “negative sentiment”. Carpetright raised £65m in a rights issue in May but sources claim that the business is also burning through a second high-interest £17m loan from major shareholder Meditor, which already owns a stake of nearly 30%
Norwegian Air, Gatwick Airport’s third-largest airline, may have to go cap in hand to investors this Christmas as it spirals towards a new year cash crunch. Danske Bank analyst Martin Stenshall fears the carrier will breach banking covenants at the end of the year unless it finds fresh capital. A breach could see the airline “land in an evil spiral and the crisis will escalate”, he said. The airline is in talks over selling part of its fleet, and major shareholders, such as boss Bjørn Kjos and British Airways owner International Consolidated Airlines Group SA (CDI) (IAG), could also be called to bail out the debt-laden operator. The airline dismissed the analyst comments as “pure speculation”. The alarm comes as Norwegian Air faces a bill stretching into millions of pounds from the recent Gatwick shutdown.
Emma Walmsley has rejected speculation that her decision to spin out GSK’s consumer goods division was prompted by pressure from shareholders and chairman Sir Philip Hampton. When Ms Walmsley became boss of GlaxoSmithKline (GSK) 18 months ago, she joined an elite club made up of the country’s most powerful business leaders. Her appointment signalled to many that the pharmaceutical company was not heading for the imminent break-up so many major shareholders had been calling for – and which her predecessor Sir Andrew Witty had spent most of his tenure resisting. That was proved wrong last week with the announcement that GSK and US drugs giant Pfizer had penned a deal to merge their consumer goods divisions with the aim of creating a separately listed company within three years.
Thomas Cook’s banks grant operator extra time. Thomas Cook Group (TCG) has been handed additional breathing space by its lenders as it grapples with the fallout from a grisly 2018. After agreeing to reset the testing of key financial ratios over the next two quarters, it is understood that Thomas Cook’s syndicate of 17 banks has also granted the travel giant an option to reset its banking covenants next year. The move is fresh evidence that the travel operator’s banks continue to back boss Peter Fankhauser. The Swiss has previously insisted lenders are “supportive” of his turnaround strategy. Failure to operate within ratios can leave a company in default of its banking terms.
A shareholder rebellion against Just Eat (JE.) is gathering momentum after two of its biggest investors threw their weight behind activist demands. Top-five shareholders Capital Group and Fidelity are supportive of a highly critical letter penned by Cat Rock Capital, according to City sources. Angered by Just Eat’s recent “significant underperformance”, Cat Rock attacked the “flawed metrics” behind bonuses to top executives. It is concerned that linking management incentives to revenue, rather than profits, “destroys shareholder value”.
Dividends paid out by London-listed housebuilders hit a record high of more than £2bn this year as the industry rode a wave of looser mortgage lending, government support and demand from first-time buyers. The bumper figure compares with payouts of just £50m in 2012, when several major players scrapped their dividends, and a peak of around £500m before the financial crisis. Among the biggest payers was Taylor Wimpey (TW.), whose dividends totalled £450m, Barratt Developments (BDEV) – Barratt Homes, which paid out £435m, and Persimmon (PSN), which returned £417m. The figures show how housebuilders have benefited from the easy availability of mortgages, which have been kept affordable by years of low interest rates. They have also been buoyed by the introduction of the Government’s Help to Buy scheme, launched in 2013, which offers buyers a zero-cost equity loan to allow them to buy with a small deposit. The total number of new homes built rocketed from a low of 124,000 in 2012 to 222,000 this year – though that’s still behind the Government’s target of 300,000.
Britain’s crisis-wracked retailers have seen almost £20bn wiped off their value in a devastating year as markets brace for a tough Christmas that could cause more high street casualties in the new year. Fears of another torrid festive period for the sector have mounted in recent weeks after gloomy warnings from high street stalwarts and Asos, the online fashion giant. The total market capitalisation of UK retailers has plunged 29% to £49bn in 2018 with Debenhams, Asos and Carpetright enduring the heaviest losses. Many stores’ “new year” sales are already well under way and the sell-off of high street shares has intensified in the run-up to Christmas amid worries that shoppers have tightened their belts as the UK edges towards a no-deal Brexit. Stagnant or negative real wage growth in recent years and consumer confidence sliding to a five-year low have amplified tectonic shifts already ramping up the pressure on high street stores as shoppers increasingly browse online instead.
SSE (SSE) has signed a £380m deal to hand Infracapital a 50% stake in its telecoms business as it moves on from the failed attempt to spin off its energy supply business. Under the terms of the deal Infracapital will pay the embattled utility around £215m when the deal closes in June next year. SSE will be in line for an additional payment of £85m provided the business achieves its objectives, and further payments totaling £80m over the next five years, depending on whether the telecoms unit meets its financial targets. It comes as a welcome windfall for the troubled energy giant just days after its plan to spin off its supply business in a merger with Big Six rival Npower collapsed due to the pair’s shakey balance sheets.
Questor: put some Big Yellow Group (BYG) shares into safe storage as Brexit turns us all into hoarders. Questor share tip: big firms are already stockpiling supplies and Britain’s army of entrepreneurs may follow suit
