PRESS DIGEST – British business – May 10

Monday May 10 2010

The Times

RELUCTANT PRU INVESTORS TO BE ASKED TO PAY EVEN MORE.

Insurance group Prudential (PRU.L: ) is to ask its
shareholders to agree to less attractive terms for funding its
$35.5 billion acquisition of AIA, the Asian arm of US insurer
AIG (AIG.N: ). Last week, Prudential’s $21 billion rights issue
was blocked by the Financial Services Authority and it must now
ask for an additional one billion pounds from its investors in
order to gain the regulator’s approval of the deal. Prudential
is also to raise 3.4 billion pounds ($5.26 billion) in “junior”
instead of “senior” debt, costing millions of pounds more in
interest.

STRINGENT HEDGE FUND DIRECTIVE STRIKES A BLOW AT CITY

The hung parliament in the UK has constrained the country’s
ability to negotiate on the final terms of a new EU directive
that is intended to bring hedge funds and private equity under
heavier regulation. The directive is expected to require
alternative investment managers to disclose more information
about their strategies and their employees’ pay. Lisa Cawley,
regulatory partner at law firm Kirkland & Ellis, said: “There is
a real concern that the UK election result leaves a major part
of our financial services industry without a voice at a critical
point in the EU legislative process.”

ORANGE TO SWITCH ON TO TV AFTER BT DEAL

Mobile telephone operator Orange last month outsourced its
fixed-line network to telecommunications firm BT (BT.L: ), giving
it access to a nationwide internet network. Orange has now
resumed plans to offer TV services over its broadband network.
The launch of the service would make Orange more competitive
with other telecommunications companies, such as Virgin Media
(VMED.L: ), BT and BskyB (BSY.L: ), as it would enable it to bundle
TV services with its other products. Virgin Media is currently
the only company to offer mobile, fixed-line, broadband and TV
in one package.

The Daily Telegraph

BP CHIEF ‘JUDGED PERSONALLY’ AS CAP FAILS TO STOP OIL LEAK

Following the environmental and public relations disaster of
a leak on its sunken Deepwater Horizon oil rig in the Gulf of
Mexico, the chief executive of BP (BP.L: ), Tony Hayward, has said
that the future reputation of the company and himself depends on
the effectiveness of the company’s response. Questions have been
raised about the lack of additional testing on the cement
sealing the rig’s oil well, which is believed may have prevented
the leak.

FOCUS ON START-UPS DOES LITTLE FOR JOBS, SAY ERNST & YOUNG

An influential economic forecasting group has criticised the
government’s focus on aiding very small start-up businesses and
the self-employed. All political parties have stressed the
importance of encouraging small businesses as a means of
combating unemployment, but the Ernst & Young ITEM club would
prefer aid to be given to companies with at least 10 workers.
The group cites a recent study by the National Endowment for
Science, Technology and the Arts that indicates more jobs could
be created by helping “mid-sized businesses”.

ORBIS DEAL IS A BOOKMAKING WINNER

Orbis (OFGS.L: ), a supplier, of games and computer technology
to betting shops, is to buy Alphameric Solutions (ALM.L: ), a
company which provides display and till systems to the same
market, for 15.5 million pounds. The company believes that the
merger will allow it to combine retail and online gambling
systems at bookmakers. “With our expertise in online betting
technology we are confident this acquisition will drive the
retail betting sector in a new and exciting direction,” stated
Orbis’ chief executive, David Loveday.

MPC EXPECTED TO KEEP RATES STEADY AMIDST UNCERTAINTY

The Bank of England’s Monetary Policy Committee is unlikely
to change its stance on interest rates or quantitative easing
when it meets on Monday, considering that the situation for the
markets is already unstable enough without adding to the general
uncertainty. Interest rates are expected to be held at 0.5
percent, with the stock of asset purchases under the
quantitative easing programme remaining at 200 billion pounds.
The Bank will further illuminate current financial policy with
the release of the quarterly inflation report on Wednesday.

The Independent

SMALL FIRMS RUNNING OUT OF TIME TO PAY TAXMAN

Syscap, an independent finance provider in the IT sector,
said that it has seen a doubling in rejected applications to HM
Revenue & Customs’ “Time to Pay” VAT scheme. The scheme allows
viable businesses to defer tax payments in times of financial
difficulty. Data obtained by Syscap under a Freedom of
Information request shows that over 11 percent of applications
were rejected in the first quarter of this year, up from 5.3
percent in the same period of 2009.

The Guardian

PARTIES MUST NOT PANIC, BUT NOR MUST THEY DELAY, SAYS CBI

The Confederation of British Industry, Britain’s leading
employers’ organisation, has called on the country’s political
parties to quickly end post-election uncertainty. CBI director
general Richard Lambert said: “What’s happening in the Eurozone
adds some extra urgency.” Lambert said that, while Britain was
better-placed than many eurozone countries, “markets are
starting to look at sovereign risk in a jaundiced way”. Analysts
expect that, with politicians yet to resolve the uncertainty,
trading is likely to continue under the nervous conditions seen
at the end of last week.

BT TO REPORT RETURN TO PROFIT AND 5,000 EXTRA JOB CUTS

This week, telecoms company BT (BT.L: ) is expected to
announce a return to profit. The company, which in 2009 saw its
first loss for eight years, is also expected to announce that it
has cut 5,000 more jobs than expected. Chief executive Ian
Livingston is expected to report a profit of between one and 1.1
billion pounds, and will say that the company made 35,000 job
cuts over the past two years, ahead of the expected 30,000.

Growth Stocks

($1=.6465 Pound)

PRESS DIGEST – British business – May 10