Interserve investors face being wiped out by rescue deal. Interserve (IRV), the government contractor that employs 45,000 people in the UK, has agreed the terms of a rescue deal with lenders that should mean it avoids a Carillion-style collapse but which will leave shareholders effectively wiped out. The proposed debt-for-equity swap will cut its bet to around £275 million through the issue of £480 million of new equity to lenders, leaving them with about 97.5% of the company. About £350 million of its existing borrowings will be set against RMD Kwikform (RMDK), its equipment services business and most profitable division. Lenders had been keen to spin off RMDK but the Cabinet Office was concerned that this would leave the rest of the company too weak to be awarded government contracts. It will remain part the group.
Robot-run Ocado warehouse seriously damaged in fire. A fire that broke out at an Ocado Group (OCDO) warehouse yesterday was worse than initially thought and raged through the night, leading to the collapse of part of the roof. The online grocer and technology group said that there had been substantial damage to its robotic warehouse in Andover, Hampshire. No one was injured. The news sent Ocado’s share price down nearly 7% to 965.25p in early trading. In a statement the company said: “Unfortunately the fire which started yesterday morning in a corner of the ambient grid was not contained as we believed and last night expanded. During the night part of the roof collapsed and there has been substantial damage.”
Barratt profits up 19% as buyers keep their cool. Britain’s largest housebuilder has posted a 19.1% increase in first-half pre-tax profits in fresh evidence that the sector is proving resilient despite Brexit uncertainty. Barratt Developments (BDEV) said that pre-tax profits for the six months to the end of December were £408 million, with margins up 2 percentage points to 22.6% on the back of improved operating efficiencies. The company completed 7,622 homes in the period. The average selling price was £282,000, slightly higher than the previous year.
BP’s new projects help profits treble to $10bn. Higher oil prices and production from a string of lucrative new projects helped BP (BP.) to more than treble its profits to $10 billion last year. The oil major cheered investors with a significantly better fourth-quarter performance than had been expected, sending shares up 27¾p, or more than 5%, to 547p and the top of the FTSE 100 yesterday. Bob Dudley, chief executive, said that record 96 per cent reliability levels across its oil and gas-producing assets and the start-up of six large projects with higher profit margins had compounded the benefit of stronger commodity prices. BP sold oil for an average of $65 a barrel in 2018, up from $50 a barrel in 2017, as global markets rebounded. The company also enjoyed what it called its “best ever year” in its refining and marketing division.
Interserve set to agree rescue despite opposition. Interserve (IRV) is close to announcing a rescue deal with lenders, despite opposition to a plan to spin off its most profitable unit from the Cabinet Office. A proposal for the outsourcer, which is a significant government contractor, had involved the ringfencing of RMD Kwikform, Interserve’s equipment services business. The plan was said to be favoured by Interserve’s lenders but was opposed by the Cabinet Office, according to the Financial Times. Officials are understood to have been concerned that it would have left a weakened rump too weak to be awarded new state contracts. Despite opposition from the Cabinet Office, Interserve is understood be closing in on a debt-for-equity swap that would secure its future, albeit with modifications to the initial plan. Sky News reported over the weekend that after months of talks an agreement in principle with Interserve’s banks on a restructuring could be announced as soon as this week. The deal could be confirmed today.
Car showrooms offer discounts to lure buyers as sales fall. New car registrations have fallen for a fifth month running and the slump in sales of diesel vehicles has continued, now making up less than a 30% of the market, an historic low. Sales of electric and hybrid vehicles offset some of the diesel fall out, increasing by 26% year on year. In January, one of the slacker sales months of the year, 161,013 new cars were registered, a fall of 1.6%. That continues the depression in the sector after car sales dropped 6.8% to 2.37 million in 2018. The talk in the showrooms is of widespread discounting to lure in motorists and lock them into three- or four-year finance deals before Brexit when, it is argued, interest rates could increase and the price of imported cars could also rise because of tariffs.
Bramson lays down the gauntlet at Barclays. Barclays (BARC) is bracing for a showdown with Edward Bramson at its annual shareholder meeting after the activist investor made a formal bid to secure a seat on the bank’s board. Sherborne Investors, Mr Bramson’s firm, which holds a 5.5% stake in Barclays, was rebuffed last year when it made an informal attempt to gain board representation in private talks with the bank. Yesterday Sherborne said it had submitted a resolution to appoint Mr Bramson to the board. This is expected to be voted on by Barclays shareholders at the bank’s annual meeting on May 2.
Fund manager fined over bid to collude on flotation price. A former City fund manager who ran more than £1.8 billion in assets has been fined £32,200 by the City watchdog for trying to influence share sales including the stock market flotation of a holiday company. The Financial Conduct Authority said that Paul Stephany, 39, who was working at Newton Investment Management, “failed to observe proper standards of market conduct” when he contacted rival fund managers in the hope of using their “collective power” to influence the price of the initial public offering of On The Beach Group (OTB) and a share placing in Market Tech. Mr Stephany has been fined 10 per cent of his annual earnings at the time after the FCA concluded that he neither intended, nor foresaw, that his actions would lead to a breach of the rules. On the Beach is an online travel agent that takes most of its bookings from Britain and sells holidays to destinations including Lanzarote, Tenerife and Majorca. Its shares were floated at 184p each in September 2015, valuing the company at £240 million.
Glaxo agrees £3.2bn cancer therapy deal. Britain’s biggest pharmaceuticals company has agreed a tie-up with a German rival worth up to £3.2 billion as it seeks to accelerate its drug development programme. GlaxoSmithKline (GSK) has struck a partnership to develop and commercialise a cancer treatment in clinical development at Merck, which the companies hope could treat multiple cancer types and may be used with other drugs. The deal is the latest as Glaxo seeks to boost research and development and revive its under-performing pharmaceuticals business. Oncology, a fiercely competitive area for global drugs companies, has been identified by Emma Walmsley, Glaxo’s chief executive, as a key area. Under Sir Andrew Witty, Ms Walmsley’s predecessor, Glaxo offloaded the bulk of its oncology business in an asset swap with Novartis, the Swiss company.
Rise of online rivals prompts closure of 120 LSL estate agencies. Hundreds of jobs were put at risk yesterday when one of Britain’s leading property groups detailed a radical plan to shut about 120 of its estate agencies as part of a restructuring. LSL Property Services (LSL), a regional estate agency and surveying business, said that it would pull down the shutters on scores of Your Move and Reeds Rains outlets as part of an overhaul that will affect staff nationwide. After a rethink of the company’s approach to selling homes, undertaken amid an online revolution in the residential property market, LSL said that it was embarking on a transformation programme that would slash its total branch numbers from 404 to 280. Each Your Move and Reeds Rains outlet employs between three and six staff on average but at least 500 and as many as 800 jobs could go. Some staff may be moved to the larger branches that will be created through the restructuring. LSL employs about 4,000 staff.
Indivior takes hit as court gives copycats green light for opioid addiction therapy. Challengers are lining up to take market share from the British maker of a treatment for opioid addiction after a court decision in the United States. Indivior (INDV) is braced for potential generic competition to its blockbuster Suboxone Film product from next week after the US court of appeals refused to reconsider a decision to lift an injunction on a rival company’s launch. It means that Dr Reddy’s Laboratories, of India, as well as Alvogen and potentially Mylan, two American drugs companies, can sell copycat versions. The decision triggered a renewed sell-off in Indivior’s shares in London. The shares, which have fallen by 68% over the past two years, closed down 10¼p, or 9%, at just under 103p, valuing Indivior at £750 million.
Ocado shrugs off warehouse fire and losses. A fire at one of its high-tech warehouses yesterday dealt a blow to Ocado Group (OCDO), on the same day that it reported a rise in annual losses and announced a new one-hour delivery service. The online grocer and technology group said that the fire had broken out at its robotic warehouse in Andover, Hampshire — one of four centres — early yesterday. No one was hurt, but operations were suspended, leading to cancelled orders and angry customer reactions. It also disclosed that its pre-tax loss had widened from £8.3 million to £44 million, hit by investment in its technology solutions business, and launched Ocado Zoom, a one-hour grocery delivery service in London.
Graze provides tasty snack for Unilever. Unilever (ULVR) has snapped up Graze, the healthy snacking brand, as it continues its “bolt-on” acquisition strategy focusing on fast-growing companies. The Anglo-Dutch consumer goods group group, which makes hundreds of products including Magnum ice cream, Lynx deodorant and Surf detergent, said that it had bought Graze as it was a “truly multichannel brand” that offered convenience and nutritional benefits while attracting millennial consumers. The price was undisclosed, but it is thought that the purchase was completed at less than £100 million, about a third of the £300 million asking price.
Credit firms’ role at Flybe is questioned. The banking executive fighting to get on the board of Flybe Group (FLYB) has said that he wants to investigate the role of credit card processing companies in its stricken situation. Eric Kohn is working with Flybe’s largest shareholder in an attempt to derail a proposed takeover that values the business at 1p a share. Flybe, founded in 1979, is a regional airline which flies 80 to 100-seat aircraft. It has struggled for years to be profitable. A consortium named Connect Airways made the 1p-a-share offer last month, valuing the business at £2.8 million. Connect is made up of Cyrus Capital Partners, a private equity firm, Virgin Atlantic, the airline, and Stobart Group, a listed company that operates Southend airport.
Finance chief heads for door at Carpetright. Carpetright (CPR) is parting company with its finance director after the struggling floorings specialist reported another quarter of falling underlying sales. The retailer of carpets, tiles and beds said that Neil Page would be leaving the board this month after more than a decade, but would stay on until April 30, when the company’s financial year ends. Mr Page joined Carpetright in July 2008 after previous jobs at Marks & Spencer and Superdrug. After spending more than 30 years in retailing, Mr Page, 55, is to quit full-time work at quoted companies in favour of part-time and consultancy work, most likely at privately owned businesses. He will be replaced by Jeremy Simpson, the former finance chief at Sureserve, a property group that specialises in social housing.
Value Act, the hedge fund, has increased its stake in Horizon Discovery Group (HZD) from 14.3% to 18.3%, after buying more shares from Neil Woodford, the renowned stockpicker. Value Act is now the largest shareholder in the company. It installed Margarita Krivitski on the board in November. Woodford Investment Management now has a 10.4% stake, down from 14.5%. The share-buying spree, which was revealed in a regulatory filing yesterday, led investors to wonder what Value Act knows about Horizon that the market doesn’t. The company builds cell models that harbour the genetics of human disease. The cells are used for a range of products and services, providing researchers and drug developers with insights that they need to develop medicines and cell and gene therapies. It is thought that Value Act has been attracted to Horizon’s CRISPR-based gene editing technology, which it acquired through the purchase of Dharmacon, an American biotechnology company, in 2017. It obtained a licence last month from Rutgers University in New Jersey to develop a gene-editing tool with the technology, with potential applications in cancer and genetic disease.
Data showing a bounce in retail sales in January supported retailers despite the weaker sterling. Burberry Group (BRBY) gained 70p to £18.78. Kingfisher (KGF), which owns B&Q, rose 7¾p to 231¼p. Among the smaller stocks, Gama Aviation (GMAA) plunged 20p to 67½p after it said that it had identified the receipt of two overpayments, in error, from its US Air associate company. The company said that both overpayments totalling $7.8 million had been repaid in full.
Amino Technologies (AMO) tumbled 12½p to 96p after the maker of set-top boxes for pay-TV operators said that it expected revenue and profit to fall by 20% and 10%, respectively, in 2019. It said the change was a result of its transformation programme, which involves exiting low-margin, commoditised hardware activites.
Maxcyte (DI) (MXCT) completed a placing of 5.9 million shares at 170p per share to raise £10 million. The company said that it planned to use the money to expand its cell therapy pipeline and invest in its medical instruments business.
Shares in Numis Corporation (NUM) fell more than 12% after it warned that transaction volumes were significantly lower across the market. The corporate broking and advisory firm said that it had completed about 25% fewer deals in the first four months of the financial year compared with the same period last year. Equities have been affected, too, with institutional income about 25% lower over the same period owing to “depressed market activity” levels. The company said that average deal fees were in line with the previous year. It did not anticipate a material change in payments for its research and sales this year, despite the fact that the market is still adjusting to Mifid II, the regulation slate introduced last year.
