Luke Johnson’s £20m comes to rescue for Patisserie Holdings (CAKE). Emergency funds will be used to pay off debts. Luke Johnson appeared to have pulled off a last-ditch rescue of Patisserie Holdings last night after providing the café and cake shop operator with a £20 million lifeline and backing a £15.7 million heavily discounted share placing. The emergency funds will be used mainly to pay off Patisserie’s immediate debts, including payments to HM Revenue & Customs, suppliers and other creditors. The fundraising highlights the crisis facing the operator of Patisserie Valerie. At the price of the share placing, the group will be valued at about £68 million, down from £446 million before this week’s events.
The chief executive of Patisserie Holdings (CAKE) was the boss of a listed gym chain that collapsed into administration and led to allegations by the company secretary of corporate law breaches. Paul May was chairman and Luke Johnson a director on the board of Healthy Living Centres, a holding company behind 36 outlets and nine franchises. They are Patisserie Holdings’s chief executive and executive chairman, respectively. Healthy Living stopped trading on Aim in September 2006. Motorcise, its trading company, later collapsed and its sites were sold for £1. Mr Johnson resigned from the lossmaking company, which was incorporated in Ireland, that month, according to filed documents.
US activist Greenlight Capital has eye on BT split with Openreach. A prominent American activist investor has built a stake in BT Group (BT.A) and indicated its interest in the telecoms company splitting from Openreach. Greenlight Capital, a New York-based hedge fund founded by the billionaire David Einhorn, has bought a “medium-sized position” in BT at a vulnerable time for the FTSE 100 company as it seeks a new chief executive. In a letter to investors last week, Greenlight said: “It is possible that new management will unlock value by splitting Openreach from the telecom service provider.” It is unclear whether Greenlight will adopt an aggressive, activist strategy and push for changes at BT, or will be a more constructive, private investor.
ITV pensioners have dibs on cash from headquarters sale. Part of the proceeds from the sale of ITV’s headquarters could be used to bolster its pension fund. The broadcaster announced the sale of its head office on the South Bank in London this week, retreating from plans to redevelop the prime site. The sale is expected to generate £200 million for ITV (ITV), which bought the property for £56 million four years ago. News of the sale excited City analysts, raising hopes that Dame Carolyn McCall, ITV’s chief executive, would return a large portion of the proceeds to shareholders. However, in 2014 ITV pledged the South Bank building as security for its retirement scheme. Under the agreement with pension trustees, it will have to put £50 million of cash into the fund, or an asset of similar value, when the office is sold. At the end of June the fund had a surplus of £86 million, compared with a deficit of £83 million a year before.
Sky chief executive Jeremy Darroch cashes in £38m of shares after Comcast takeover. The boss of Sky (SKY) has cashed in shares worth £38.2 million since Comcast won a battle to buy the satellite broadcaster this month. Jeremy Darroch has sold to Comcast his holding of Sky shares, worth £13.4 million, and £24.8 million of shares held in executive incentive plans, a stock market filing showed yesterday.
The world’s biggest fund manager has been chosen by Lloyds Banking Group (LLOY) to handle £30 billion of funds from customers of its Scottish Widows insurance division. Blackrock was selected after a bidding battle for one of Europe’s largest investment mandates. Lloyds has been searching for new managers for £109 billion of funds, having dropped Standard Life Aberdeen (SLA) after the creation of the company via the merger of Standard Life and Aberdeen Asset Management. Lloyds withdrew its funds because it considered the enlarged company to be a competitor. Standard Life Aberdeen disputes this and is seeking compensation from Lloyds.
Fund managers Man Group (EMG) and Ashmore Group (ASHM) hit sweet spot in volatile markets. Two of the City’s leading funds groups have defied turbulent financial markets to bring in new customers and profit from volatile swings in value. Investors placed a net $400 million of new money with Man Group during the three months to the end of September, lifting its total assets under management to $114.1 billion. New customers poured $1.9 billion into Ashmore’s funds over the same period, increasing its assets under management to $76.4 billion.
Ten years after Royal Bank of Scotland was rescued from collapse by a government bailout, the bank has rewarded its long-suffering shareholders with a dividend. Royal Bank of Scotland Group (RBS), still 62%-owned by the state, issued a dividend of 2p per share yesterday, with the promise of more to come. Ross McEwan, chief executive of RBS, said that the dividend was “a small return [to shareholders] after their many years of patience . . . We have created a smaller, safer bank that is generating more sustainable profits. Our capital position is above our target and we are also looking to return any excess capital as soon as possible to shareholders.” Brokers at AJ Bell have predicted that the payout for the whole year could be 8p and might increase to more than 15p for next year. Some investors are hopeful that the return of dividend payments will help to trigger the return of the bank to private ownership and the government to sell its stake.
The week’s sell-off of British stocks slowed after the global equity retreat cooled overnight in Asia and as the American earnings season started with decent results from the banks. However, it was not enough to lift the FTSE 100, which is in correction territory having fallen by more than 10% since May. The index closed down 11.02 points at 6,995.91, a fall of 4.4% over the week. The broader FTSE 250 rebounded by 145.70 points to 18,973.45, but its weekly loss came in at 4.7%
Bullish investors were poised to buy oversold stocks in anticipation of a stock market rebound. Scottish Mortgage Inv Trust (SMT) rose to the top of the FTSE 100 after shares in two of its largest holdings, Tencent and Alibaba climbed 8% and 2.6%, respectively, overnight in Asia.
Wizz Air Holdings (WIZZ), the budget airline that had fallen by 16% since the start of October, was a top pick. Opportunistic dealers bought into the dip, sending shares in the airline up 129p to £24.58.
Reports of a planned meeting between President Trump and President Xi at next month’s G20 summit in Argentina to try to resolve the trade conflict between the United States and China helped to ease some of the doubts hanging over miners, which have been hit by fears of reduced demand for metals. Fresnillo (FRES) gained 37½p to 876½p, Anglo American (AAL) rose 64p to £16.84 and Evraz (EVR) climbed 16¼p to 530¾p.
Tobacco stocks were out of favour after the US Food and Drug Administration again threatened to crack down on electronic cigarettes. The agency sent letters to units of Imperial Brands (IMB) and British American Tobacco (BATS), both of which make e-cigarettes, requesting information to assess if their products were being marketed illegally. Both companies said that they were in compliance with FDA rules and would supply the agency with information to prove it. Imperial Brands closed down 161½p, or 6%, at £25.17, while BAT fell 133p, or 3.9%, to £32.72.
Barratt Developments (BDEV) rebounded 26p to 513¾p, having fallen by 9.3% on Thursday as it traded ex-dividend. Analysts at Peel Hunt, looking ahead to the housebuilder’s trading update, were expecting it to report a “robust start to the new financial year, with demand from first-time buyers remaining strong”, but noted recent commentary from listed peers about second-time buyers being more cautious. Though Barratt’s shares have fallen by 18.6% over the year, Peel Hunt said that “given the likely upward pressure on forecasts, we think the shares look good value” and issued a “buy” recommendation.
