The City regulator is facing questions about whether trading in Thomas Cook Group (TCG) shares should have been suspended weeks before its collapse and about the lack of disclosure over the company’s rescue talks with lenders. The travel company collapsed yesterday under the weight of its debts after it failed to secure a £1.1 billion rescue package. Desperate attempts to clinch a rescue deal with Fosun Tourism Group its lenders and other stakeholders unravelled suddenly on Thursday after it emerged that its banks, including Royal Bank of Scotland and Lloyds Banking Group, had requested £200 million. This was to be used as a seasonal standby facility over the winter period, on top of the £900 million injection of new capital. It has emerged that Thomas Cook was notified of this additional £200 million funding requirement as far back as September 9.
Burford Capital (BUR) hit back yesterday at Muddy Waters. In a 45-page rebuttal, the group claimed to have earned more than $1 billion from legal cases that either had concluded or were close to being resolved. It also rejected accusations that it routinely ascribed “aggressive” valuations to continuing litigation, insisting that it had upgraded forecasts for only a third of its cases, and defended its earnings estimates for legal action that it has bankrolled relating to the 2012 nationalisation of YPF, Argentina’s largest oil company.
“Market conditions” have prompted Metro Bank (MTRO) to halt a plan to raise £250 million from a bond issuance to investors. The bank said late yesterday that it had “decided not to proceed at this time”. Metro had struggled to drum up interest among investors to raise £250 million, despite offering a yield of 7.5%, described by analysts as generous. It said in the prospectus for its bond last week that Financial Conduct Authority and Prudential Regulation Authority inquiries had broadened to include senior management and could lead to “criminal and/or civil liability for the bank” or suspension of its regulatory permissions, while “making redress and the cost of any regulatory sanctions may involve significant expense”.
Grainger (GRI) has been linked with allegations that sales of residential properties that it managed on behalf of Lloyds Banking Group (LLOY) were “corrupt”. Agents appointed by Grainger marketed London flats and houses that were sold at an “undervalue” and in some cases to “connected parties”, including an estate agent’s father, according to claims that have emerged in a High Court case. The allegations came to light in a legal battle between Ventra Investments, a property company, and Bank of Scotland. Ventra argues that it was damaged by loans that it claims it was mis-sold by the bank, a subsidiary of Lloyds. In order to settle its debts, Ventra’s properties were managed on behalf of Lloyds by Grainger, one of the UK’s largest professional landlords, which had an agreement to look after the bank’s insolvent properties.
Shareholders in Ocado Group (OCDO) have brushed aside the prospect of a lengthy legal fight between the online grocer and one of its founders. The company’s shares closed 6p higher at £13.12 yesterday, even as Lord Rose of Monewden, its chairman, said that the company would “go to any lengths” to protect the intellectual property used at its futuristic warehouses. Last week The Times revealed details of the legal battle between Ocado and Jonathan Faiman, its co-founder. Mr Faiman left in 2010, months before Ocado went public. This year he set up Today Development Partners, which in May agreed to replace Ocado as Waitrose’s online grocery partner. The deal followed the sale of half of Ocado’s domestic business to Marks & Spencer Group (MKS).
Marks & Spencer Group (MKS) shares drop on the news that Marks and Spencer is set to lose its finance director. Shares that had lost more than a third of their value over the past year tumbled yet again as analysts said that the departure “raises red flags” about the group’s leadership.
The banking sector weighed heavily on the Footsie, with Lloyds Banking Group (LLOY), Royal Bank of Scotland Group (RBS) and Barclays (BARC) taking a beating. That was on the back of bearish commentary from JP Morgan Cazenove, which expects the struggles of Britain’s banks to continue over the next year as Brexit unfolds. Its economists reckon that there will be a “forced extension” to the October 31 deadline, after which they believe a fresh general election is be the most likely outcome. “This would be a lose-lose situation for UK bank share prices in our view,” the bank’s analysts said. “Based on current opinion polls, our economists see a potential majority for the Conservatives and the Brexit party, which could lead to increasing probability of a no-deal [Brexit] scenario post-election. The next most likely alternative outcome of a Labour-led coalition would also be negative for domestic UK bank share prices in our view.”
Low & Bonar (LWB) agreed to be taken over by Freudenberg, a German textiles specialist. Its share price has slumped after a few “challenging” years, which culminated in the resignation of its chief executive in May. Freudenberg has offered 15½p in cash for each share, more than double their value at the close on Friday.
Shares in Strategic Minerals (SML) slid by more than 10% after the mining minnow took one of its main customers to court. Strategic’s main customer at Cobre has been struggling to keep up with its contractual obligations, having been hamstrung by regulatory and financial issues over the past year.Despite making amendments to the contract in an effort to help out the unnamed client, the Aim-listed company said that it had been forced to go to court to claim back the money it was owed after a “breakdown in negotiations”. It is seeking $2.3 million in outstanding payments, as well as a further $19 million for products that should have been taken under the contract but were not. A claim will be lodged for punitive damages.
Tempus – Law Debenture Corp. (LWDB): Hold. Defensive trust supported by professional services business brings diversity, but it needs to get through its recent weakness
Tempus – MJ Gleeson (GLE): Buy. Highly focused, offering growth and a generous yield
