PRESS DIGEST – British business – July 25

The Sunday Times

EASYJET ROW OVER PILOTS’ TEA LEAVES PLANES AT GATE

Pilots’ union Balpa and airline Easyjet (EZJ.L: ) have been
locked in discussions in an attempt to fix the company’s poor
time-keeping. Internal figures from Gatwick Airport, where
Easyjet has its biggest base, show that in June fewer than 50
percent of its international flights departed on time. Separate
analysis of Civil Aviation Authority figures has shown Easyjet’s
performance has been deteriorating while rivals have improved.
Industry sources say the talks focused on Easyjet’s temporary
freeze on hiring pilots, rows regarding rostering, recruitment
of first officers and removal of free tea and coffee for pilots.

DESMOND SLAMS ITV “ARROGANCE”

Richard Desmond, the Daily Express owner, has outlined his
plans for channel Five after buying the broadcaster for 104
million pounds. Desmond has drawn up a five-year, one billion
pound turnaround plan with the aim of doubling the channel’s
market share from seven percent to 14 percent, while providing
advertisers with a stronger alternative to “arrogant and
monopolistic” ITV (ITV.L: ). It is believed Desmond is ready to
spend up to 100 million pounds a year on programming and has
hinted that he will call for a competition probe of the three
billion pound television advertising market after criticising
ITV’s “aggressive sales tactics”.

ANGLO READY TO RESUME PAYOUT

Anglo American (AAL.L: ), the mining group, is set to resume
its dividend payouts. The company suspended payouts last year
following its struggles with the downturn in commodity prices
and a cash call from De Beers, of which it has a 45 percent
stake. It is also expected that rival companies Rio Tinto
(RIO.L: ) and Xstrata (XTA.L: ) will both return to half-year
dividend payouts. Shares in Anglo closed last week at 2522.5
pence, up nearly a third on a year ago.

The Sunday Telegraph

VIRGIN ACTIVE GETS IN SHAPE FOR ONE BILLION POUND SALE

Virgin Active, the gym chain, has held talks with a select
group of private equity firms over a possible sale. Sources
suggested these include KKR, Blackstone, Advent and CVC. Virgin
Active continues to work on a possible flotation but stock
market volatility has hampered these plans. The chain is 76
percent owned by Sir Richard Branson’s Virgin Group. Sources
close to Virgin said the company would likely keep a sizeable
stake in Virgin Active as part of any deal. The chain’s main
focus of growth is in South Africa and Italy, but the group is
considering a move into the U.S. market.

MCLAREN WINS 260 MILLION POUND CASH CALL

McLaren Automotive, the new sports car manufacturer, has
confirmed it has raised 260 million pounds from investors. The
sports car business, spun out of the McLaren Group, said it has
orders for “well over” a year’s production and will produce its
first car, the MP4-12C, in the spring of 2011. McLaren
Automotive is offering a 48 percent stake to new investors,
valuing the company at around 500 million pounds. The remaining
52 percent will be made up of the Bahrain sovereign wealth
group, Tag Group and Ron Dennis, the executive chairman of
McLaren Group and McLaren Automotive. All are existing McLaren
shareholders.

GMG REJECTS BIDS FOR RADIO ARM

Guardian Media Group, the owner of the Guardian newspaper,
has rejected two bid approaches for its loss-making radio
division, GMG Radio. UTV, the Northern Irish broadcaster, and
Orion Media made preliminary approaches, but both bids were
rejected as too low. It is believed that both Orion and UTV
valued GMG Radio at less than 100 million pounds, far below
GMG’s valuation of 115 million pounds. GMG’s chief executive
Andrew Miller said he is reviewing all GMG’s assets in order to
shore up the loss-making national newspaper division. Despite
cost-cutting measures, GMG’s losses in the latest financial year
rose to 171 million pounds.

QUESTOR

Imperial Tobacco (IMT.L: ) (buy)

Britvic (BVIC.L: ) (sell)

The Independent on Sunday

GDF SUEZ DEAL IN TWO WEEKS

FTSE-100 energy group International Power (IPR.L: ) is
expected to complete a merger with French giant GDF Suez
(GSZ.PA: ) within two weeks, in order to cement the deal ahead of
International Power’s interim results in mid-August.
Shareholders are thought to be satisfied with the deal,
particularly since it is a merger and not a takeover, as selling
outright would mean a poor payout in the current economic
climate.

PINNACLE AND HSBC NEAR TO 600 MILLION POUND DEAL

A consortium planning to construct one of London’s biggest
skyscrapers and its development manager, Arab Investments, are
close to finalising a deal that will see HSBC (HSBA.L: ) bank
leading the 600 million pound financing for the project. As lead
arranger and underwriter, HSBC would become responsible for
ensuring financing from other banks for the Pinnacle skyscraper
for the U.S. and Middle-Eastern consortium, which includes
wealth management firm Sedco.

BP BOARD TO DECIDE ON HAYWARD

Board members at oil major BP (BP.L: )will convene a meeting
on Monday to determine whether chief executive Tony Hayward
should resign over his involvement in the Gulf of Mexico oil
spill. According to industry insiders, Hayward has already
informed the board that he is prepared to offer his resignation
on Tuesday, when the oil giant delivers its half-year results
and estimates for the cost of the oil spill. A spokesman for BP
said a decision about Hayward’s future would be discussed at
Monday’s meeting when the board sign off the company results,
but for now he “has the full backing of the board and there is
no plan for his departure at this stage”.

The Observer

BP ACQUITS ITSELF OF SOLE BLAIM FOR GULF SPILL

Oil giant BP (BP.L: ) is set to announce this week that it has
cleared itself of gross negligence after conducting an internal
inquiry into what caused the Deepwater Horizon explosion. U.S.
politicians have accused BP of ignoring standard industry safety
practice to save cash, but BP believes evidence will emerge of
the part other oil firms and contractors played in causing the
Gulf of Mexico oil spill. BP accepts that it will take some
blame for the crisis. The full findings of its inquiry will be
published next month.

AVATAR PROTEST AGAINST MINER

Campaign group Survival International will stage a rally
outside the London annual general meeting of Vedanta (VED.L: ),
protesting over claims the miner has abused the rights of local
people in Orissa in Eastern India. The campaign group, which
wants to liken Vedanta to the evil multinational corporation in
the film Avatar, has hired make-up artists to paint protesters
so they resemble the blue-faced Na’vi rebels from the movie.
Several organisations, including the Church of England, have
disinvested from Vedanta over alleged pollution and crop damage
in the Niyamgiri Hills, home to 8,000 members of the Dongria
Kondh tribe.

BRITISH GAS CUSTOMERS TO LOSE OUT AFTER PROFITS SOAR

Although analysts predict that British Gas will announce
that profits have nearly doubled in the first half of 2010, the
company is likely to reject calls to cut household bills. Parent
company Centrica (CNA.L: ) has benefited from the coldest winter
for 30 years and lower wholesale energy costs, but is expected
to dismiss demands to cut bills, arguing that new rises in
wholesale costs mean its margins will be squeezed later in the
year. Citigroup analysts forecast that British Gas will announce
a 583 million pound profit from domestic sales of gas and
electricity, a 95 percent increase on 2009.

The Mail on Sunday

LLOYDS “IN TALKS” ON RETAIL SALE

Lloyds Banking Group (LLOY.L: ) is understood to be in the
midst of discussions about the sale of 140 million pounds worth
of retail assets. The decision to sell the LXB Three portfolio,
which includes buildings leased by retailers such as Tesco and
House of Fraser, is part of a review of the group’s investment
portfolio that could result in the sale of more assets. The bank
has held talks with numerous parties including Legal & General
Property.

NEW TARGET FOR FOUR SEASONS

Care homes operator Four Seasons Health Care is in talks to
buy mental health service Care Principles, which is being sold
by banking group Barclays (BARC.L: ). A spokesman for Four Seasons
said Care Principles would be a “good strategic fit” with Four
Seasons’ mental healthcare-focused subsidiary Huntercombe Group.
Four Seasons is also courting bond holders to extend a 600
million pound loan, meaning it will avoid breaking banking
covenants. It said bond holders’ responses had so far been
“positive”.

MIDAS

Cluff Gold (CLUF.L: ) (CLUF.L: ) (buy)

SSL International (SSL.L: ) (SSL.L: ) (hold)

Stock Basics

PRESS DIGEST – British business – July 25