PRESS DIGEST - British business - Aug 11

The Times

COWDERY SET TO LAND FRIENDS PROVIDENT WITH 1.87 BILLION POUND BID

After protracted negotiations lasting two months, Friends Provident FP.L is likely to agree to an improved 1.87 billion pound bid from Colin Cowdery's consolidation vehicle, Resolution (RSL.L). Issues such as Cowdery's potential profit-share package and Resolution's low-tax domicile in Guernsey, both of which have drawn opposition from Friends shareholders and directors, appear to have been resolved. Shares in both companies have risen, the outcome being that Resolution's offer now values the insurer at 80.1 pence per Friends share.

HEATHROW GETS BUSIER AS JULY DEFIES DOWNTURN

The airports operator BAA (FER.MC) has reported that 6.5 million passengers used Heathrow Airport during July, a like-for-like increase of 0.9 percent. The rise in passenger numbers coincided with a three percent fall in the number of flights departing the airport. BAA attributed the increase to fare reductions and recent poor weather which discouraged consumers from staying in the UK. Overall, however, the number of passengers passing through BAA's seven UK airports fell by 2.4 percent last month, compared with July 2008.

BAE SHRUGS OFF MALAYSIA SETBACK WITH 1.75 BILLION POUND DEALS

BAE Systems (BAES.L) has been awarded contracts from the Pentagon and Ministry of Defence to produce vehicle visions systems and laser targeting systems for the former and torpedoes for the latter. The 1.1 billion pound Pentagon contract and 369.5 million pound MoD contract outweighs the loss of a 700 million pound contract to supply the Royal Malaysian Navy with two frigates, although an agreement for less expensive ships could still be reached.

The Daily Telegraph

ECO-BOILER COMPANY BOOSTED BY TWIN DEALS

Alan O'Brien, the founder and chief executive of eco-boiler company Sabien Technology (SNT.L), has seen the value of his 50 percent stake rise by 3.25 million pounds after the start-up signed contracts with Serco (SRP.L) and a subsidiary of British Gas. The contract to sell its M2G product saw Sabien's share price quadruple from 7.5 pence to 30.5 pence. The company is already in talks with all other major utility companies about selling the technology which is known to increase the efficiency of commercial boilers by 10 to 25 percent.

SOUTHERN CROSS SLUMPS AS IT STRUGGLES TO FILL BEDS

Southern Cross shares tumbled 6 percent as profits fell on the back of lower occupancy rates attributed to the recession and an increased tendency for families to provide care at home. The care home operator's mature occupancy rate, which excludes newly developed or acquired homes, ended the 14-week period to July 5 at 88 percent, down on the 90.3 percent of 2008. For the third quarter, adjusted earnings before interest, taxes, depreciation and amortisation fell 9 percent to 22.2 million pounds.

PORTMEIRION'S NEW LINES TURN A PROFIT

Portmeirion (PMGR.L) has recorded a 31 percent rise in first-half profits, boosted by a sales increase of 13 percent in the UK and 31 percent in South Korea. The homeware company reported that revenue rose 10.9 percent to 17 million pounds in the six months to June, while pre-tax profits rose from 406,000 pounds to 532,000 pounds. It is optimistic of delivering strong full-year figures. The collapse of rival Waterford Wedgwood also boosted production.

The Independent

ORGANIC FOOD GROUP NAMES NEW CEO

Following the departure of Duncan Gibson as the chief executive of the organic food home delivery company Abel & Cole, the creative director Stephen Richards has been promoted to the post. The market for organic food has been badly affected recently by customers switching to cheaper food during the recession, as well as a report from the Food Standards Agency stating that organic produce was no healthier than non-organic foods. "The FSA report is an incomplete picture, so although it is not helpful it is by no means indicative of the future of the organic market", said an Abel & Cole spokeswoman.

PAPERCHASE PROFITS TUMBLE BY 20 PER CENT

Pre-tax profits at the stationery retailer Paperchase fell 20 percent to 6.5 million pounds in the year to January 31 2009. Sales, however, rose by eight percent to 61.7 million pounds over the same period, helped by the company's expansion which saw it open eight standalone stores, as well as three further concessions at House of Fraser outlets. Doubts have recently arisen over the future of Paperchase concessions at stores of the bookseller Borders UK, after Borders was taken over in a management buyout last month.

STERLING ENERGY LOOKS AT FUND RAISING OPTIONS

The oil and gas exploration company Sterling Energy (SEY.L) may raise funds by offering equity at a "significant discount" to the present market price. Sterling also said it was engaged in ongoing negotiations with third parties about a sale of the company or its assets. The discovery of oil in Iraq's Kurdish region boosted Sterling's shares by 77 percent on August 7, and Monday's news sent the stock up a further 2.2 percent to 3.25 pence.

The Guardian

DOUBTS RAISED OVER LLOYDS' COMMITMENT TO KEEP LENDING FLOWING

The government is close to hammering out an agreement about how to insure loans granted to Royal Bank of Scotland (RBS.L) and Lloyds Banking Group (LLOY.L) under its 580 billion pound asset protection scheme (APS). Questions are being raised about whether Lloyds needs insurance for the 260 billion pounds of loans currently earmarked for the scheme, as speculation mounts that Lloyds wants to reduce its exposure. The government is trying to ensure that when loans covered by the insurance mature in the coming two years, the banks offer new loans to creditworthy customers.

CATTLES SELLS OF SUBSIDIARY TO RECOUP BAD DEBTS

Cattles CTT.L has agreed to sell off Cattles Invoice Financing, a small subsidiary, for 70 million pounds to repay debts. The sub-prime lender's decision to recoup funds for debt holders, after it discovered 720 million pounds of bad debts on its books earlier this year, is only a minor milestone for Cattles which is now led by former non-executive Margaret Young.

Prepared for Reuters by Durrants