PRESS DIGEST - Financial Times - June 27

Financial Times

BANKS FACE VOLUNTARY TAX CODE

Banks may face being investigated by Revenue & Customs if they refuse to sign a "gentleman's agreement" to curb aggressive tax avoidance. The voluntary code is to be published on Monday in an effort to assuage public anger at support for banks which engage in complex schemes that drain the exchequer of hundreds of millions of pounds. The Treasury is confident board members and other senior bank members will sign up to the code which has already been discussed between officials and banks. However, while some British banks are supportive, others complain they will be put at a disadvantage because foreign competitors will face less intense moral pressure to comply.

HOUSE PRICES START TO STEADY

Figures published on Friday by the UK Land Registry reveal house prices showed more signs of stabilisation in May, with overall rises in half the regions in England and Wales. House prices fell 0.2 percent in May, the same decline as in April and the smallest drop since the previous February. Prices are 15.9 percent lower than in May 2008 and 17.4 percent below the peak prices of January 2008. Prices were down most in the northeast, where they were 4.3 percent lower than in April. Prices also fell in the east Midlands, London, the southwest and Yorkshire. Prices rose most in Wales. The average property in England and Wales is now worth 152,497 pounds, compared with a peak value of 184,493 pounds.

NORTHERN ROCK PLAN TO SPLIT RAISES CONCERN IN BRUSSELS

The proposal by Northern Rock (NRKx.L) to split itself in two has raised concerns from the European Commission which, because of state aid rules, must approve the restructuring plan. Northern Rock has submitted a plan to separate out a "good" bank which would take over 19.5 billion pounds of retail deposits, wholesale deposits and some mortgage loans. The remainder of the bank's mortgage assets would be placed into a "bad" bank. The Commission said on Friday it "doubts at this stage that the aid measures included in the new restructuring plan are compatible with the common market".

EASYJET LOSES GATWICK FEES CASE

EasyJet (EZJ.L) has failed in its effort to block a big increase in user charges at Gatwick airport. The airline's case was rejected by the High Court in a judicial review of the way the Civil Aviation Authority had approved the increase in fees levied by Gatwick's operator BAA. The present five-year price cap regime for Gatwick came into force in April 2008 and the CAA set the maximum charge per passenger at 6.79 pounds for 2008-09, an increase of 1.18 pounds or 21 percent in real terms from the previous charge for 2007-08. Charges in each of the following four years can be increased by no more than RPI inflation plus two percent.

HOME RETAIL PAY ALERT

The Association of British Insurers has warned over proposed changes to pay plans at Home Retail (HOME.L). The "red-top" alert could spark abstentions and "No" votes against the company's remuneration report at the annual meeting on July 1. The owner of Homebase and Argos said in its annual report that it would adjust its pay policy for current economic conditions and other factors. Executive and senior management salaries are to be frozen and the group will replace a co-investment plan, whereby directors and members of the operating board defer receipt of part or all of their annual bonus and invest it in shares. Home Retail is also planning to increase awards under its performance share plan from 100 percent of salary to 150 percent.

PERMIRA BID FOR JUST RETIREMENT GAINS BACKING

Langholm Capital has given irrevocable undertakings to accept a potential 226 million pound takeover offer from Permira, the private equity group, for the Aim listed life insurance company Just Retirement JR.L. Langholm Capital, a buyout fund backed by Rabobank and Unilever, has a 53 percent stake in Just Retirement. According to a person familiar with the talks, Just Retirement is growing frustrated at the slow speed of negotiations with Permira which began in November. The life insurance firm has agreed to pay 2.3 million pounds to cover Permira's due diligence costs if it makes an offer of at least 76 pence by August 20 that is not recommended or is subsequently outbid.

LOOKERS IN 81 MILLION POUND PLACING TO EASE LOAN PACKAGE BURDEN

In order to ease the burden of expensive loan facilities agreed last month, the car dealership Lookers (LOOK.L) is to raise 81 million pounds in a placing and open offer of shares. In May, chief executive Ken Surgenor signalled that Lookers would be looking to raise further funds to "repay the loans with the highest margins first" as banks applied higher margins and fees on facilities. The company expects to raise 76.5 million pounds net of expenses via a placing and open offer pitched at 40 pence a share -- which represents a 19 percent discount to Lookers' closing share price of 49.5 pence on Thursday. The fund-raising is backed Tony Bramall and Trefick, the two investors in control of 45 percent of the company's current equity.

VERTU BUYS UP BROOKLYN ASSETS

Vertu (VTU.L), the UK's ninth biggest motor retailer, continued its push for growth with the acquisition of some of the businesses and assets of Brooklyn Motor, a Mazda and Ford dealer trading in the Worcestershire area. Vertu will fund the 7.9 million pound deal through the 30 million pounds it raised from the share placing that was approved earlier this month. Brooklyn Motor went into receivership on Friday. Vertu has acquired four of its franchised outlets and an authorised repairer. Vertu's chief executive Robert Forrester said the new outlets would strengthen Vertu's presence in a core market and provide its first Mazda franchise.

APPLE INCREASES IMAGINATION TECHNOLOGIES STAKE TO 9.5 PERCENT

Marking the latest escalation in a recent buying spree for shares in Imagination Technologies (IMG.L), Apple (AAPL.O) has raised its stake in the Hertfordshire-based British designer of microchips used in laptops and smartphones. As a result of the latest shares acquisition, Apple's stake stands at 9.5 percent. Both Apple and Intel (INTC.O), who license design technology from Imagination, have been snapping up shares in the group. "These are forward-looking companies, they see key technologies and they want to have all options open," said Arun George of Nobel Securities. However, analysts doubt either will make an outright bid for the group, as complete ownership by any one competitor might upset many of Imagination's other clients. Shares in Imagination closed three pence down at 139.75 pence.

NORTHGATE DEBT AGREEMENT INCLUDES FUND RAISING

As part of a refinancing package that has been agreed in principle with its major lenders, Northgate (NTG.L), the biggest van rental in the UK and Spain, is to launch an equity fund-raising. The firm is expected to seek more than 100 million pounds from equity investors. While awaiting the completion of the fund-raising, Northgate's lenders have agreed a second deferral of the date of certain banking covenant tests to August 31. With a market capitalisation of 78 million pounds, Northgate's net debt is believed to have stood at 900 million pounds at its year end on April 30, against borrowing facilities of around 1.14 billion pounds.

Prepared for Reuters by Durrants