PRESS DIGEST - Financial Times - Jan 13

Tuesday 13 January 2009

Financial Times

BIG PAPER LOSSES FOR STATE OVER RESCUES

Government-held stakes in Lloyds TSB (LLOY.L) and HBOS HBOS.L are currently incurring a loss of 5.4 million pounds. Less than one per cent of institutional shareholders in both banks have subscribed for their government-backed share offers, which were intended to raise 5.5 billion pounds for Lloyds and 11.5 billion pounds for HBOS. This is due to the banks' shares currently trading below the offer price. The government is to hold 43.4 per cent of the lenders when they merge.

PENSION CORPORATION TAKES ON 230 MILLION POUND LEYLAND SCHEME

The Pension Corporation is to take on the Leyland DAF Pension Scheme's 230 million pounds of assets on the condition that it pays a pension to each of the Leyland scheme's 5,000 members. The chief executive of Pension Corporation, Edmund Truell, stated that he hoped to "give the pensioners hopefully a slightly bigger pension than they currently enjoy" with his company's management of the assets. Truell also claimed that the market for taking on pension assets is still buoyant, despite predictions from contemporaries that it will suffer a slowdown during 2009.

GALLIFORD PUTS HOUSEBUILDING ON A FOUR-DAY WEEK

The housebuilder Galliford Try (GFRD.L) has reduced its operation to a four-day week in a bid to save on expenses and avoid laying-off staff. "By reducing people down to a four-day week it has meant we've not shut any offices and we've basically kept the fabric of the division intact", said Greg Fitzgerald, Galliford's chief executive. "I think we're the first housebuilder to do so, but we won't be the last". The company also warned that it expected to halve its interim dividend; Fitzgerald commented that this measure would provide the group with extra money to take advantage of opportunities such as distressed land sales.

LLOYD'S TAPS NAMES FOR CAPITAL

Lloyd's of London is returning to Names as a source of underwriting capital. Amlin (AML.L) raised 50 million pounds from private investors in the first three weeks of December to fund its new syndicate 6106, and other Lloyd's insurers are looking to similar avenues. Alistair Wood, head of research at Hampden Agencies, said: "We are talking to a number of insurers who are interested in raising private capital this way and investors are eager to take advantage of an improving market."

LAND OF LEATHER RUNS OUT OF SUPPORT

Land of Leather has gone into administration with Deloitte citing "exceptionally difficult trading conditions and the lack of liquidity in the banking system." Lee Manning, joint administrator at Deloitte, says that there are a small number of prospective buyers, though it is unlikely any would buy all 109 Land of Leather stores. Manning also expects some of the company's 1,060 employees will lose their jobs. Shares were suspended at 3 pence on Monday.

POUNDLAND BOOSTED BY PENNYWISE CUSTOMER

Poundland saw an increase in sales over the Christmas period, with like-for-like sales up 3.9 per cent on last year for the five weeks to January 4. Total sales were up 24.3 per cent. The rise reflects a wider trend of positive figures among budget retailers with Peacocks, Greggs (GRG.L) the bakers and Domino's Pizza all benefiting from increased Christmas sales, while more upmarket stores such as Marks and Spencer (MKS.L) and House of Fraser saw a fall in sales. Poundland intends to open 30 new stores next year, creating an estimated 1,000 jobs.

INCHCAPE CONSIDERS EQUITY FUNDRAISING

Shares in UK-based car dealership Inchcape (INCH.L) were down 2.75 pence at 42 pence on Monday as the group confirmed that a "rapid and unprecedented decline" in new car sales had led to the consideration of an equity fundraising. Inchcape said it was "evaluating a range of options for its capital structure including a potential equity issue." This follows last month's profit warning and the announcement of the scrapping of the final dividend for 2008. The group also plans to cut 1,900 jobs - more than 10 per cent of its global workforce.

BROWN SAYS INFLATION IS STILL A DANGER

The government and the Bank of England have implied that Britain faces inflationary pressure, indicating that there may be no need for the Bank to cut interest rates to zero. The statements played down suggestions that Britain may have to introduce "quantitative easing," by printing money to stave off deflation. In an interview with BBC Radio, Gordon Brown argued that British interest rates were at 1.5 per cent and had some way to go before they reached zero, or thereabouts, as they have in the US. However, many economists believe inflation, as measured by the consumer price index, will fall below zero this year, particularly in late summer.

LITTLE WELCOME FOR 2,500 POUND GOLDEN HELLOS

At a "jobs summit," Gordon Brown unveiled a 500 million pound package to pay employers to hire the unemployed. However, as the prime minister outlined the plans, companies in sectors ranging from retail to construction equipment revealed plans to cut about 3,000 jobs. Businesses argued that the subsidy payment of up to 2,500 pounds was better suited to a recovery than a severe downturn and urged Brown to supplement the scheme with initiatives to "stop people being made unemployed in the first place."

50 BILLION POUND 'GREEN' ENERGY MARKET PREDICTED

It is estimated that by 2020, the 'green' energy market will be worth more than 50 billion pounds, according to David Clarke, chief executive of the Energy Technologies Institute. Tuesday will mark the launch of four projects backed by ETI, which aims to encourage the commercial development of low-carbon energy sources. The four projects will receive a total of 60 million pounds in funding from the ETI, with three focusing on offshore wind and one on wave or tidal power. The ETI is backed by just six companies, with each promising to contribute 50 million pounds over 10 years, and will look to cut the cost of relatively expensive 'green' electricity sources so that they can compete with coal and gas-fired power stations.

Prepared for Reuters by Durrants