PRESS DIGEST – British business – May 30

The Mail on Sunday

ANGRY HOUSEBUILDERS WAIT ON CREST NICHOLSON TALKS

A number of housebuilders, among them Redrow (RDW.L: ) and
Berkeley Group (BKGH.L: ), have expressed anger at the fact that
they have been denied the first opportunity to buy builder Crest
Nicholson. The company, estimated to be worth 400 million pounds
and is owned by a consortium of banks including Lloyds Banking
Group (LLOY.L: ), has granted Hugh Osmond’s Horizon Acquisition
Group the right to exclusive negotiations. Steve Morgan,
Redrow’s founder, said: “In all my time in the industry I have
never heard of an investment company being given exclusivity to
buy a house builder. It is the board’s duty to get maximum value
on a sale.”

LLOYDS SCRAPS MORTGAGE CAP

Lloyds TSB (LLOY.L: ), owner of financial services company
Cheltenham & Gloucester, is the latest mortgage provider to
scrap its lifetime rate guarantee. The promise that the interest
rate will never be more than two percentage points above the
Bank of England base rate remains for existing customers —
unless they switch lenders or remortgage with another Lloyds or
Cheltenham & Gloucester product. However, new customers, once
their introductory rate has expired, will now be offered the
‘Homeowner Variable Rate’ of 3.99 percent, which has no lifetime
guarantee. Building society Nationwide made a similar move in
2009, which resulted in 450 million pounds in lost profits,
while Skipton Building Society increased its “revert to” rate to
4.95 percent.

TOP JOBS GO AT EMI IN DRIVE TO CUT COSTS

EMI, the record label owned by Guy Hands’ Terra Firma
private equity group, is considering a string of redundancies
among senior management in an effort to cut costs. It is
understood that around six managing director roles will be axed
as part of a restructuring of its European arm. Terra Firma has
until June 14 to raise 105 million pounds from investors in
order to avoid defaulting on the money lent by Citigroup to buy
the label. Private equity firm KKR and music publisher BMG are
rumoured to have shown an interest in buying a stake in the
label’s publishing business, which includes the songs of Amy
Winehouse.

The Sunday Times

BANKS CHECK IN FOR OCADO FLOAT

This week, online grocery retailer Ocado is set to appoint
five more investment banks to advise on a potential one billion
pound stock market float. Ocado is expected to announce the
appointment of Barclays, Lloyds Banking Group, Numis, HSBC and
Jefferies to work alongside Goldman Sachs, JP Morgan Cazenove
and UBS. The appointments will be viewed as a clear sign that
Ocado will go ahead with an initial public offering in July.
Ocado directors spent over seven hours making a presentation
about the IPO to analysts at the company’s Hertfordshire base on
Friday.

PHOENIX TO AGREE TRUCE WITH OSMOND

Life assurer Phoenix Group, formerly known as Pearl, is
close to a 170 million pound deal with entrepreneur Hugh Osmond
that could lead to an 800 million pound London listing. The
agreement follows a settlement with the Financial Services
Authority under which Osmond’s Sun Capital investment firm,
along with private equity group TDR Capital, surrendered control
of Pearl in exchange for a series of “contingent rights” in the
firm. Phoenix cannot float while the rights are still
outstanding, but its chairman Ron Sandler has been in talks with
both Osmond and TDR’s principal, Manjit Dale, to swap them for
ordinary shares.

OIL GIANT SEEKS NEW BOSS

Tullow Oil (TLW.L: ), the oil group, is looking for a new
chairman to replace Pat Plunkett. When Plunkett joined in 2000,
Tullow was worth 180 million pounds. Today it is worth ten
billion pounds, a member of the FTSE 100 and Britain’s
third-biggest oil group behind Royal Dutch Shell and BP.
Plunkett’s tenure as chairman runs counter to corporate best
practice which recommends chairmen serve no more than three
three-year terms. Over the next couple of weeks, Tullow is
expected to complete the 1.5 billion dollar buyout of Ugandan
oil blocks from Heritage Oil. It has also agreed to sell stakes
in the oil blocks to Chinese national oil company CNOOC and
French petroleum company Total.

SHAREWATCH

Forth Ports (FPT.L: ) (Shares sank ten percent to close at 11
pounds and 12 pence last week)

The Sunday Telegraph

FORTH PORTS REBUFFS 15 MILLION POUND SHARE BID

It has emerged that Northstream, the consortium that
withdrew its takeover approach for Forth Ports (FPT.L: ) last
week, only did so after being informed by leading investors in
the Scottish ports group that even an offer of 15-pounds-a-share
would not be enough. Having had an indicative offer of
14-pounds-a-share rejected by Forth Ports’ board in April, and
facing a June 1 “put-up-or-shut-up” deadline from the Takeover
Panel, the consortium, which owns a 27.4 percent stake in the
company, approached other investors with a final
15-pounds-a-share offer, which was rebuffed on the basis that it
did not fully value Forth’s property prospects.

SHELL CAUGHT BY OBAMA DRILLING PLAN

The moratorium on drilling imposed by the U.S.
administration, following the BP (BP.L: ) oil spillage in the Gulf
of Mexico, is likely to affect the operations of fellow oil
giant Royal Dutch Shell (RDSa.L: ). Shell’s rigs continued to
operate over the weekend as the group waited for further
guidance and clarification from the U.S. Department of the
Interior, but it is thought that all companies with operations
in the region will be ordered to stop work. A spokesman for
Shell said the company respects and understands the decision and
is currently “evaluating the implications of the announcement”
on its business plans and current activity.

NATIONWIDE LOOKS TO CUT PENSION BENEFITS

According to sources with knowledge of the situation,
Nationwide Building Society (POB_p.L: ) is contemplating closing
its defined benefit pension schemes. The UK’s largest mutual has
launched a review of its final salary and career average pension
schemes and, although a decision has yet to be made, both are
understood to be at risk. Asked about potential changes to the
schemes, which would affect more than 9,000 employees, chief
executive Graham Beale said: “I can’t comment but we are looking
at compensation arrangements for the group from me downwards.”

QUESTOR

Aviva (AV.L: ) (Buy)

Electrocomponents (ECM.L: ) (Buy)

The Independent on Sunday

WHITBREAD TO RAISE 100 MILLION POUNDS IN NEW SHARES

Leisure company Whitbread (WTB.L: ), owner of the Premier Inn
chain, has revealed plans to raise 100 million pounds through a
private placement. Alan Parker, Whitbread’s chief executive,
said: “A private placement would give us choices, options. We’re
looking to test the market with that kind of instrument to raise
debt.” It is expected Whitbread will use its regular advisers,
Barclays, Royal Bank of Scotland and Lloyds Banking Group.
Whitbread’s latest annual results showed the company has 513.4
million pounds of net debt, with credit facilities to be reduced
by 450 million pounds by the end of 2012.

PREMIER DITCHES PENSION SWAP PLANS AND TAKES ON RISK

Trustees of Premier Foods (PFD.L: ), the UK food producer,
have abandoned proposals to sell off the risk that members of
its two billion pound pension fund will live longer than
planned. It is believed that Jim Smart, Premier’s finance
director, was “implacably against any longevity deal”. A source
said: “He knows insurers and simply didn’t think the deals on
the table were worth it.” The group had promised to inject money
into the 120 million pounds pension deficit when it purchased
Rank Hovis McDougall in 2007.

JUPITER’S MANAGEMENT UNSURE OVER TIMING OF FLOTATION

Fund manager Jupiter is set to publish the prospectus for
its forthcoming 220 million pound public listing next week. A
source close to the deal said: “This is a great company, so
there is no suggestion the deal won’t get away. The question is
whether it gets away at the right price in these market
conditions.” A series of meetings with investors will begin on
Tuesday led by Edward Bonham Carter, the firm’s joint chief
executive.

Prepared for Reuters by Durrants

The Observer

BA CABIN CREW WALK OUT AGAIN AS TALKS GO NOWHERE

British Airways’ (BAY.L: ) cabin crew will proceed with
planned strike action on Sunday after talks with the Unite union
broke down. A further walk out is scheduled for June 5. Derek
Simpson, Unite’s co-leader, said Willie Walsh, the airline’s
chief executive, refused to reinstate travel concessions in full
despite it being made clear the strike would be suspended if he
did. Unite said BA had lost 84 million pounds during the 12 days
of strikes since March. A further 70 million pounds could be
lost if further strike action is not averted.

NOW BP FACES MULTIMILLION CLAIM FROM UK PENSION FUND

BP (BP.L: ), the oil company, is being sued by the Lothian
pension fund amid allegations it lost money when BP’s share
price fell after a pipeline leak in Alaska four years ago. The
pension fund looks after retirement benefits for council workers
in Edinburgh and the Midlothian area. Lothian will argue its
funds have suffered due to BP’s management of the leak. The
action claims BP knew about pipe corrosion and failed to
undertake proper maintenance despite repeated warnings. Lothian
lawyers said the latest spill in the Gulf of Mexico provides
further evidence for its case and both accidents
demonstrate that BP’s operating procedures need to be reformed.

Stock Market Investing

PRESS DIGEST – British business – May 30