Neil Woodford’s investment trust has surpassed a debt limit of 20% of its value after a writedown of one of its most prominent stakes. Link Fund Solutions, which oversees the corporate governance of Mr Woodford’s investment vehicles, lowered its estimated value for a speculative energy company linked with Brad Pitt. In a further blow to Woodford Patient Capital Trust (WPCT), Link’s latest revision means that Industrial Heat is now valued at less than a fifth of the level at which it was valued last autumn.
The storm that has raged through the high street swept Mothercare (MTC) into the arms of administrators yesterday, putting 2,500 jobs and 79 shops at risk. It also added the baby products specialist to an ever-lengthening list of bricks-and-mortar chains laid low by economic uncertainty, cash-conscious consumers, rising bills from rents to wages and the advance of online shopping. Its decision to appoint PWC to oversee its administration is a blow to retail landlords, including NewRiver REIT (NRR) and Hammerson (HMSO), that were already reeling from similar setbacks. Only a year ago Mothercare’s landlords and other creditors agreed a company voluntary arrangement that led to the closure of 55 stores. The insolvency mechanism gives companies breathing space to avoid collapse, giving them more time to pay back creditors, but for landlords, this means lower rental income and a knock-on effect on property values.
Damage caused by three storms that hit the United States, the Caribbean and Japan during the past three months has forced Hiscox Limited (DI) (HSX) to set aside $165 million to cover probable insurance claims. The insurer said yesterday that it was braced for heavy losses as a result of natural catastrophes during the third quarter, highlighting Hurricane Dorian and the typhoons Faxai and Hagibis. The storms, in which 162 people died, caused estimated losses of $33 billion as a result of damage to residential and commercial property and disruption to businesses. Hiscox said that the losses were markedly above its budget for the second half of the year. This, along with a forecast that fees and commissions would be below expectations, took the shine off an otherwise upbeat set of numbers covering the first nine months of the year.
Shares in fracking companies dived yesterday after the government banned the oil and gas extraction technique. Ministers imposed a moratorium on fracking at the weekend because of the “unacceptable” risk of earthquakes, saying that it was impossible to predict the scale or frequency of tremors. The ban came after a series of shocks near Blackpool, where Cuadrilla, a fracking company, had been exploring for gas. The most recent earthquake in September measured 2.9 on the Richter scale, forcing it to halt production. The ban sent shares in AJ Lucas, an Australian energy group that owns 48% of Cuadrilla, down by 23% yesterday. Shares in UK-listed fracking companies also fell sharply, with IGas Energy (IGAS) closing down 4p at 32¼p, and Egdon Resources (EDR) tumbling ¾p to 3½p.
International Consolidated Airlines Group SA (CDI) (IAG) has swooped on Air Europa, Spain’s third largest airline, in a €1 billion deal designed to extend its reach across Latin America and the Caribbean. The operator intends to strengthen Madrid into a “true rival” for Europe’s big aviation hubs, taking the fight to London Heathrow, Paris Charles De Gaulle, Amsterdam and Frankfurt, after agreeing to make the acquisition through Iberia, its Spanish carrier. However, IAG, which also owns British Airways, Aer Lingus and Vueling, another Spanish airline, immediately faced opposition within the industry. Michael O’Leary, chief executive of Ryanair, lamented “a bad deal from a competition point of view” as he led calls for regulatory intervention.
Ryanair Holdings (RYA) is to close bases and cut jobs because of the continuing delay in delivering the grounded Boeing 737 Max. Europe’s busiest short-haul airline expects delivery of its first 737 Max aircraft in March, or April at the earliest. “Sadly, due to the Max delivery delays, we will be forced to cut or close a number of loss-making bases this winter, leading to pilot and cabin crew job losses,” Ryanair said. The 737 Max was grounded in March after crashes in Ethiopia and Indonesia killed a total of 346 people. Several airlines have reported lower profits as a result.
The impact of civil unrest in Chile on Antofagasta’s mining operations in the country was writ large on its annual production guidance yesterday, as the copper miner admitted that the turmoil was having a bigger effect than it had expected. Antofagasta (ANTO) has four mines in Chile, including Los Pelambres, 150 miles northeast of Santiago, the capital. Less than two weeks ago, more than a million people took to the streets of the city to protest against low wages and the soaring cost of living. One of the main access roads to Los Pelambres was blocked by demonstrators, preventing supplies from reaching the mine, while some of the surrounding infrastructure was damaged. At Antucoya, another Antofagasta mine in Chile, workers walked out in a row over pay, although that strike has ended after the company and the union agreed a new deal.
easyJet (EZJ) was one of the big mid-cap risers as it clung to the coat-tails of Ryanair Holdings (RYA), its rival budget airline. The Irish carrier beat forecasts with its second-quarter performance, boosted by a big increase in the sale of extras such as preferred boarding and seat selection, which Easyjet is also known for.
Team17 (TM17) nudged 16p higher to 313½p. That was after the company, which is behind the Worms games, said that it had continued to experience “strong customer traction” from its new and established games, which meant that underlying earnings this year would be “ahead of market expectations”.
The boss of Hilton Food Group (HFG) has cashed in a chunk of his shares in the food packaging group, making £3.6 million. Philip Heffer sold 360,000 shares at £10 apiece yesterday. According to the latest annual report, the chief executive still owns about 3.8 million shares, worth just shy of £40 million. There was no official comment from Mr Heffer or the company on yesterday’s share sale, although it is understood that he is using the money to fund a personal investment.
Tempus – BlackRock World Mining Trust (BRWM): Avoid. Interesting and diverse portfolio, but performance has been patchy and the worldwide economic backdrop is unappealing
Tempus – AA (AA.): Buy. Evident progress is being made that share price ignores
