PRESS DIGEST - Financial Times - June 12

Financial Times

DANGERS LURK AMID UPBEAT FORECAST FOR GDP GROWTH

The National Institute for Economic and Social Research has predicted gross domestic product growth of 0.6 percent for the three months to the end of May. The figure is slightly below the 0.7 percent that prevailed over the three months to the end of April but still relatively healthy and in line with its long term trend rate. The institute said, however, that the economy still faces fallout from the Greece debt crisis, which has undermined UK exports by making the euro weaker than the pound. The institute's forecast comes after the Office for National Statistics said that both manufacturing and industrial output dipped by 0.4 percent each in April.

MORE DIRECTORS FACE TAX PENALTY

Independent finance provider Syscap has discovered a 24 percent jump in the proportion of directors of insolvent companies facing disqualification proceedings after failing to pay corporate taxes. Research from Syscap revealed that 813 directors had proceedings issued against them in court for non-payment of company tax in the 12 months to March 31. Chief executive Philip White described the figures as a "wake-up call for directors of companies encountering cash flow difficulties" and warned business owners that employing a strategy to avoid paying HMRC in order to pay suppliers' bills could backfire and result in insolvency.

EXPORTERS HIT BY CURRENCY WOES

The Forum of Private Business, a business support organisation, has found that currency fluctuations are impacting upon the export prospects of most small businesses in the UK. According to the FPB's study, commissioned by foreign exchange group Global Reach Partners, 35 percent of business owners polled said uncertainty in currency markets was impeding the business planning process. Meanwhile, 26 percent of business owners interviewed described currency fluctuations as positive for profitability. But concern was raised after 44 percent reported that they were actively engaged in managing foreign currency risk.

SANTANDER TRIMS OFFER FOR RBS BRANCHES

Spanish bank Santander (SAN.MC) has scaled back its offer for 318 bank branches being sold by Royal Bank of Scotland (RBS.L), from its initial indicative offer of two billion pounds in April to about 1.7 to 1.8 billion pounds. The decision by Santander to reduce its bid follows scrutiny of the quality of the bank's loan portfolio and has been made to account for potential further impairments and broader economic uncertainties. To comply with state aid rules, government-supported RBS has been required to sell some of its branch network but RBS said it will only agree to a deal offering good value for the taxpayer.

EASYJET BRAND DISPUTE LOOMS

Sir Stelios Haji-Ioanou, founder and shareholder of low cost airline EasyJet (EZJ.L), has initiated High Court legal proceedings against the airline to determine whether a brand licensing agreement has been breached. Restrictions under the agreement, for which Haji-Ioanou earns royalties of one pound a year, mean the airline is limited by the amount it can make from so-called ancillary services, to 25 percent of total income. The agreement was made to prevent EasyJet from turning into a conglomerate, which could swamp Haji-Ioanou's EasyGroup businesses. If successful, EasyJet could be forced to pay Haji-Ioanou additional royalties. Haji-Ioanou said he believes the airline operates above the 25 percent limit on ancillary revenues.

TESCO TO BUY BACK ONE BILLION POUNDS OF DEBT.

Supermarket chain Tesco (TSCO.L) has become the latest company to announce it will be buying back debt, with a one billion pound buyback plan, to benefit from the decline in debt prices since the financial crisis struck. Tesco is seeking to exploit its high cash reserves, 2.8 billion pounds of cash or equivalents, in order to save money on its borrowings, of which it is paying 5.2 percent on average on some bonds outstanding. Tesco said its strategy of retiring some of its "senior debt" would help to "improve net finance costs on an ongoing basis" and follows a "successful execution of cash generation initiatives in the group over the past 18 months".

HALABI CITY OFFICE BLOCK SOLD FOR 65 MILLION POUNDS

Property group Hammerson (HMSO.L) has described its 65 million pound acquisition of the Leadenhall Court office building in London as being in line with its strategy to take advantage of "attractive opportunities offered by the current market conditions". The development was part of a portfolio of properties owned by the family trusts of entrepreneur Simon Halabi, backed by a 1.15 billion pound loan securitisation which defaulted last year when the value of the properties almost halved. The securitisation was wound up last September and buyers are being sought for the constituent properties.

TERRA FIRMA BUYS TIME FOR EMI WITH 105 MILLION POUND INJECTION

EMI has won a year's reprieve in its battle to avoid being taken over by its lender Citigroup (C.N) after Guy Hands, chairman of its private equity owner Terra Firma, won the approval of 80 percent of his investors to inject 105 million pounds into the music group. Focus now shifts to whether Hands can either convince Citigroup to restructure the 3.2 billion pound debt or raise more money by selling of part of the company. According to a source familiar with the group, Hands is still considering approaches to acquire 49 percent of EMI's music publishing business.

JOHN LEWIS RECORDS ANOTHER WEEK OF DOUBLE-DIGIT GROWTH

John Lewis Partnership [JLP.UL] reported another week of double-digit revenue growth at its John Lewis department stores. The retailer has seen sales rise by almost ten percent or more year-on-year for nearly every week this year. Director of selling operations David Barford cautioned that the group was up against softer comparisons in the first half of the year than it will face in the second half, but noted that, to the half year, it was 11 percent up on year before last.

Prepared for Reuters by Durrants