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.