PRESS DIGEST - British business - March 27

The Times

PUNCH FACES PRESSURE TO WRITE DOWN VALUE OF PUB

Following the sale of some of its top London hostelries, Punch Taverns(PUB.L) is facing mounting pressure to write-down the 6.5 million pound ($9.49 million) value of its 8,400 pubs. The pub group, which is selling hundreds of pubs in order to reduce debts of 4.5 billion pounds, announced on Thursday that Spirit, its managed free house division, had agreed the sale of six pubs to London brewer Fuller, Smith & Turner for 21.1 million pounds against a book value of 25.6 million pounds. Punch has mainly been selling its lower-end leased pubs but recently appointed Sapient Corporate Finance to approach family brewers that might be interested in buying some of its best-managed houses.

RONNIE FIGHTS JJB CLAIM HE WAS SACKED

The Sportswear retailer JJB (JJB.L) told the stock market yesterday that former chief executive, Chris Ronnie, was sacked for gross misconduct. Ronnie immediately issued a statement through his lawyers Pannone stating: "Mr Ronnie maintains his position that he resigned after reaching a financial settlement with JJB on February 24. The sum agreed was sent from JJB to Pannone without qualification. As such the finding of misconduct is, in our opinion, wholly erroneous." Separately JJB sold its 55-gym chain to Dave Whelan on Wednesday for 83.4 million pounds in a deal that is likely to rescue JJB from falling into administration.

CANARY WHARF OWNER RISKS BREACH OF BANK COVENANTS

The Morgan Stanley-backed property company Songbird SBDb.L, which owns most of the offices in Canary Wharf, is in danger of breaking a clause in a loan given to it by Citigroup (C.N). Part of the loan's contract states that Songbird's properties must be worth at least 87.5 percent of the loan -- a covenant which may not be met due to a continuing decline in commercial property prices. Citigroup, however, is willing to grant a waiver if covenants are breached and Songbird has hired NM Rothschild as an adviser on financial restructuring.

Daily Telegraph

RIO HAS 'PLAN B' SHOULD CHINALCO DEAL COLLAPSE

Guy Elliott, finance director at Rio Tinto(RIO.L), said the company has a 'Plan B' if its $19.5 billion deal with Chinalco is blocked by investors or regulators. Elliot said: "We have plans in the eventuality that either the various governments or the shareholders prevent the deal going through." Were the cash injection to fail, Rio would consider the sale of more equity, bonds or assets. Elliot also reiterated the heavily indebted miner's stance that metals prices will recover in the second half of 2009 due to China's stimulus package.

CASH QUEST PROMPTS 3I TO REDUCE INVESTMENT

As part of plans to reduce its debt burden by the middle of 2010, 3i(III.L) has radically reduced its investment programme to conserve money. The private equity group invested 898 million pounds in the 11 months to February, far below the 2.15 billion pounds it invested in the same period the previous year. 3i has debts of 2.1 billion pounds, which it hopes to halve over the next 12 to 15 months, and is managing its existing portfolio to position itself "for the upturn".

BANKS MOVE TO BOLSTER CAPITAL BASE

Lloyds Banking Group(LLOY.L) and Royal Bank of Scotland(RBS.L) have moved to buy back their own debt from bondholders at a price that would realise a profit and improve their capital positions. Shares in the banks rose on the back of the news, which will see the banks pay a premium to the current market trading price but still a fraction of the issue price. Lloyds and RBS have offered to buy back upper tier two debt with new unsecured senior debt, which will improve their equity tier one ratios. A note from Credit Suisse(CSGN.VX) predicted that Barclays(BARC.L) may follow the lead of the two banks by offering to buy back its own debt as well.

The Independent

MOSS BROS SINKS TO 9 MILLION POUND LOSS BUT SALES REBOUND

Specialist suit retailer Moss Bros (MOSB.L) posted pre-tax losses of 9.23 million pounds for the year to the end of January 2009. The loss included exceptional costs relating to a failed indicative offer made by the collapsed Icelandic investor Baugur and a write-down in the fixed asset values of certain stores. Like-for like sales at the retailer fell by 3.2 per cent over the year and its total sales margin was level with last year.

KINGFISHER PROFITS FALL 75 PERCENT ON CHINESE WOES

The Kingfisher Group(KGF.L) recorded annual pre-tax profits of 90 million pounds before exceptional charges for the year to January 31. Like-for-like sales in the UK at the group's subsidiary DIY retailer B&Q fell by 6.1 percent, despite increasing bathroom and kitchen sales arising from the collapse of the furniture retailer MFI. B&Q's retail profit fell by 25 million pounds to 106 million pounds over the same period. Kingfisher's results were pulled down by its poorly performing Chinese division and costs associated with the closure of its Trade Depot business in the UK.

NEXT VOWS TO SHUN MASS DISCOUNTING AS PROFITS SLIP

The fashion retailer Next(NXT.L) has posted a 14 percent fall in pre-tax profits to 428.8 million pounds for the full year to January 2009. Total sales fell by 1.7 percent to 3.2 billion pounds and like-for-like sales fell by 6.5 percent. The retailer also revealed plans to open a further 10 standalone home stores as all but one of its existing 10 stores are profitable. Chief Executive Simon Wolfson said he expected conditions in the first half of the year to be worse than the same period in 2008.

The Guardian

UNION NAMES OPPONENTS IN MAIL BATTLE

The Communications Workers Union has reported that the Government's choice of a strategic partner for Royal Mail appears to be narrowing to just two suitors -- TNT(TNT.AS) and private equity group CVC. The strategic investor is expected to bring management expertise as well as investment funds into Royal Mail in a sell-off that has been opposed by the CWU and many Labour MPs. Critics of the proposals believe that Royal Mail's problems can be dealt with within the public sector.

CANARY WHARF OWNER BLAMES SLUMP FOR 1.8 BILLION LOSS

Songbird Estates, which owns 60 percent of the Canary Wharf development, has blamed plunging property values for a 1.8 billion pound loss that could leave it breaking its banking covenants on loans before the end of the year. The market value of its property portfolio fell by 19.8 percent to 4.9 billion pounds at the end of December from June last year. The deteriorating situation has prompted the property firm to appoint advisers to renegotiate an 880 million pound loan due to be repaid in 2010.

The Times

TEMPUS

Man Group(EMG.L) [Cautious buy]

United Utilities(UU.L) [Hold]

M&C Saatchi [Buy on weakness]

Daily Telegraph

QUESTOR

Plant Health Care [Hold]

London Stock Exchange(LSE.L) [Hold]

The Independent

INVESTMENT COLUMN

United Utilities(UU.L) [Buy]

3I Group(III.L) [Avoid]

Northern Foods(NFDS.L) [Buy]

Prepared for Reuters by Durrants ($1=.6853 Pound)