PRESS DIGEST – British business – July 11

The Sunday Times

LEVENE LEADS IN BANKING BID

Lord Levene, chairman of the Lloyd’s of London insurance
market, said the public will be able to buy shares in Project
New Bank. The bidding vehicle will be listed on the Alternative
Investment Market to raise 50 million pounds initially. Once the
vehicle is up and running Levene is expected to open talks with
Lloyds Banking Group (LLOY.L: ) on the acquisition of 600
branches. Levene said the consortium setting up the vehicle has
secured guaranteed backing from top fund managers and would have
an estimated five billion pounds to buy assets. The remainder of
the cash would be raised with a second fundraising in which the
public could participate.

BP IN 12 BILLION DOLLAR SALE OF GIANT ALASKA FIELD

BP (BP.L: ), the energy group, is holding talks with Apache
Corporation, a U.S. rival, over the sale of 12 billion dollars
of assets. The sale would include a large stake in Alaska’s
Prudhoe Bay, the largest oil field in North America. The sale
would help meet BP’s costs of the oil spill clean-up operation
in the Gulf of Mexico. Apache is worth 29 billion dollars and is
one of America’s largest independent oil groups. Prudhoe Bay
produces 390,000 barrels a day. Sources have indicated the U.S.
government has given Exxon (XOM.N: ), the world’s largest oil
company, the go-ahead to examine a bid for BP.

RIVALS CAST EYE OVER DAILY MAIL REGIONAL TITLES

Daily Mail and General Trust (DMGOa.L: ), the publishing
group, plans to jettison Northcliffe, its regional newspaper
division. Talks have been held to offload it into Johnston Press
(JPR.L: ) or Trinity Mirror (TNI.L: ). DMGT would then swap the
division for a share of the group. The recession has hit
regional newspapers hard and the four major publishers are keen
to consolidate to cut costs and sell advertising on a national
basis. DMGT has one billion pounds of debt, but Viscount
Rothermere has ruled out a rights issue to strengthen its
balance sheet.

INTERCITY TRAINS IN 1.7 BILLION POUND SELL-OFF

A consortium of investors, including 3i Infrastructure,
Morgan Stanley Infrastructure and Star Capital, is in exclusive
talks to buy a third of Britain’s trains by acquiring the
rolling-stock leasing business owned by HSBC (HSBA.L: ). The
consortium has been given a period of exclusivity to complete
the deal and a price of 1.7 billion pounds is close to being
agreed. HSBC decided to sell the business following a clash with
regulators, after the Department for Transport asked competition
authorities to investigate what it believed to be excessive
profit making in the sector.

The Sunday Telegraph

HSBC CHIEF WARNS OVER PLANS TO BREAK UP BANKS

HSBC (HSBA.L: ) chairman Stephen Green has said the likely
structure of the planned Basel III agreement on banking could
risk “overly gold-plating” capital requirements for investment
banks. He said a proposed “net stable funded ratio” system of
regulating liquidity, part of the next stage of the Basel rules,
would have “massive” implications for banks. Green also
expressed concerns that any attempt to break banks up by
splitting retail and investment operations would be “very
difficult to do”. Green will discuss the future of banking at
the British Banking Commission conference this week.

HESTER TO TAKE ON TURNER’S “SOCIALLY USELESS” BANKS JIBE

Stephen Hester, the chief executive of the Royal Bank of
Scotland (RBS.L: ), is to tell the British Bankers’ Association
annual conference on Tuesday that the state-backed bank is
focusing on being “socially useful”, responding to criticism
from Lord Adair Turner that much of the financial sector is
involved in “socially useless” activity. The speech will be
Hester’s first in a year. He is expected to give a positive
assessment of the UK economy based on a recent tour of RBS’s
operations. Senior regulators and politicians, including new
Treasury Select Committee chairman Andrew Tyrie MP, will attend
the BBA’s conference.

MCCALL FLIES IN TO SET UP EASYJET REVIEW

Carolyn McCall, easyJet’s (EZJ.L: ) new chief executive, will
undertake a business review of the budget airline. A key area of
the review is the speed of growth and its consequent fleet
requirements. It is understood McCall is keen to re-examine the
target of 7.5 percent annual growth in seats approved by the
board in light of impending government spending cuts that could
affect oil prices, exchange rates and consumer confidence.
Stelios Haji-Ioannou, the airline’s founder and major
shareholder, wants the company to start paying dividends.

QUESTOR

Ocado (avoid)

The Mail on Sunday

LLOYDS: 289 MIILION POUND LOSSES REVEALED

Uberior Investments, the private equity arm of HBOS
(HALp.L: ), has issued its latest report which reveals a loss of
289 million pounds in 2009, up from 80 million pounds the year
before. The deficit was a result of huge writedowns in the value
of its investments, from 954 million pounds to 596 million
pounds, as well as 11.6 million pounds in interest payments. The
news came after Lloyds Banking Group (LLOY.L: ), owner of HBOS,
announced the sale of stakes in 40 companies including fitness
chain David Lloyd Leisure, shirt maker and retailer TM Lewin and
D&D Restaurants.

OCADO “NEEDS FLOAT TO STAY IN BUSINESS”

Ocado, the online grocer, faces doubts over its future after
it was disclosed that the company would not be considered a
going concern unless its stock market flotation succeeds.
Auditors have said they will only lift their caution if the
company can successfully raise 200 million pounds in new money,
an achievement that will allow them access to a 100 million
pound loan facility. The price of the shares places a value on
the business of about one billion pounds, although independent
stockbroker Collins Stewart and Schroders fund manager Andy
Brough believe the company is worth only 500 million pounds.

PENSION TRUSTEES TAKE BT TO COURT

BT (BT.L: ), the telecommunications company, is being taken to
court by its pension scheme trustees in a case that will
determine how much of BT’s pensions liabilities will be
guaranteed by the state. BT has a pension deficit of 7.4 billion
pounds and has in place a 17-year plan to pay it off. The
company will make an emergency payment of 525 million pounds
this year, rising to 856 million pounds by 2025. However, the
Pensions Regulator has yet to approve the plan after it flagged
up “substantial concerns” over the deal in the spring.

MIDAS

Titan Europe (TSW.L: ) (buy)

Rockhopper (RKH.L: ) (investors should make sure they book
some profits — then stay on board)

The Independent on Sunday

RIO TO SELL SOUTH AFRICA PROJECT

FTSE 100-listed mining group Rio Tinto (RIO.L: ) has invited
bids for its Chapudi coal exploration assets in South Africa. A
preferred buyer is understood to have already been lined up and,
according to a source familiar with the situation, a sale is
just “one of the opportunities being pursued”. Rio’s chief
executive Tom Albanese recently visited South Africa to
demonstrate the group’s commitment to developing projects in the
country. As well as seeking joint ventures, the company intends
to develop more mining deposits.

PRUDENT M&S PUTS MARKET RESEARCH FIRST

Marks & Spencer (MKS.L: ) has initiated an extensive market
research programme, in order to asses the impact tax rises and
austerity measures set out in the Budget will have on customers.
New chief executive Marc Boland, who took up the post in May, is
no longer willing to rely on outside indicators and will use the
internally generated data to determine the retailer’s course.
M&S also hopes to head off an investor revolt at Wednesday’s
shareholder meeting over Boland’s remuneration package.

INVESTORS QUERY FAIRVIEW LISTING

Institutional investors are reportedly shunning next week’s
500 million dollar listing of Fairview Energy due to concerns
about a loan and future liabilities. The North Sea oil explorer
and producer believes it has adequately accounted for the
decommissioning of its key Dunlin field cluster 500 kilometres
off Dundee, after having received a number of independent
reviews of the decommissioning costs. Last week chief executive
Mark McAllister visited potential U.S. shareholders to allay
their fears.

The Observer

JARVIS STAFF TO LOSE 28 MILLION POUNDS

Over 1,000 employees of failed engineering firm Jarvis
(JRVS.L: ) look set to lose 28 million pounds to which they are
entitled in holiday pay, back wages and other benefits,
according to Deloitte, the company’s administrator. Deloitte
said the failure to sell off assets beyond the 17 million pounds
needed to pay secured lenders meant unsecured creditors, such as
former staff, were unlikely to get the money they were owed.
Trade creditors were also unlikely to be paid. Jarvis blamed
government spending cuts for its collapse in March.

Prepared for Reuters by Durrants

PRESS DIGEST – British business – July 11