PRESS DIGEST - Financial Times - March 27

Financial Times

INVESTORS RUSH TO PULL CASH OUT OF FUNDS

Figures from the Office of National Statistics have shown a large amount of withdrawals from life and pension funds by institutional investors during the last three months of 2008. The trend in recent years to close schemes to new investors has disrupted the supply of net new money given to fund managers, and many members of funds are beginning to withdraw funds as they reach retirement age. Institutional investors are also tending to sell the assets which remain relatively valuable.

PLUNGE IN SALES ADDS TO RETAILER WOES

Sales volumes in February fell by 1.9 percent on the month, a far greater drop than the 0.9 percent predicted by a variety of economists in a Reuters survey. Office of National Statistics data showed a 0.4 percent increase in sales from February 2008, a sharper decline from the 3.8 percent year-on-year increase recorded in January. "Today's figures from the ONS are the clearest indication yet of the weakening retail market in the UK," said Deloitte's head of retail, Tarlok Teji. It is also possible that underlying retail sales were even weaker, as the statistical device used by the ONS to calculate sales volumes from the value of retail sales may be obsolete.

RIO REVEALS ITS 'PLAN B' ON FUNDING

Guy Elliott, Rio Tinto's(RIO.L) chief financial officer, has reassured investors that the company have alternative fundraising strategies in place in case the planned investment in the company by the Chinese miner Chinalco is obstructed by regulators or shareholders. Elliott went on to say that Rio would "consider a rights issue, bond sale, or additional asset sales or debt rescheduling" to pay off $8.9 billion of debt by October and 10 billion dollars more in October 2010. The shares rose 163 pence to close at 23.82 pounds, the highest figure in four months.

RECESSION PROVIDES A SILVER LINING TO MOSS BROS SUITS

Menswear retailer Moss Bros has announced pre-tax losses of 9.3 million pounds ($13.57 million) in the year to January 31. Exceptional charges accounted for 4.3 million pounds worth of losses. Sales were down 3.2 percent on a like-for-like basis, but the group says the six weeks to mid-March have seen a 20 percent rise in suit sales. Shares were up 36 percent to 11.25 pence.

PROPERTY MARKET EXPOSURE HURTS LENDER

Davenham (DAV.L), an asset-backed lender to small and medium businesses, fell 30.4 million pounds into the red in the first half. Chief executive David Coates said that loans to small developers of residential housing, which had accounted for half the company's business, have been discontinued, and that the company is now focusing on recouping the money. Total revenue for the six months to December 31 was up just over one million pounds to 27 million pounds. Provisions were at 37.9 million pounds, with 31 million pounds worth being related to specific losses.

NATIONAL EXPRESS CHIEFS IN VOLUNTARY CUTS TO BONUSES

National Express(NEX.L) group chief executive Richard Bowker and UK chief executive Ray O'Toole have voluntarily deferred 2008 bonuses until 2010, when they will be paid half in shares and half in cash. Both will see a substantial reduction in the size of their bonuses. National Express's other directors have also agreed to freeze their salaries for 2009. BlueOar Securities analyst Douglas McNeill said that shareholders, expecting a dilutive rights issue in the future, would welcome the decision.

3I SIGNALS NEW WRITEDOWNS IN ASSET PORTFOLIO

3i's(III.L) new chief executive, Michael Queen, has warned that more writedowns are likely on the group's portfolio in the latest quarter. Queen said that the private equity company "had already raised 181 million pounds from disposals in January and February," and that he expects 3i to continue investing in infrastructure deals. He said, however, that buy-outs would not restart until the economy had seen six to nine months of recovery. Shares, down two-thirds in a year, fell 3.25 pence to 262.25 pence.

PRINCIPLE SHAREHOLDERS OUST MYERSON

Activist shareholders threw out Brian Myerson as chief executive of Principle Capital and as manager of Principle's flagship fund, Principle Capital Investment Trust, on Thursday. The shareholder group, including New York hedge fund QVT Financial, Invesco and fund of hedge funds EIM, wants to see PCIT wound up and cash returned to investors. Three other directors were thrown out along with Myerson, and Crystal Amber Asset Management has been appointed as manager. Myerson will attempt to reverse the decision at a second emergency meeting.

DEBT MOUNTAIN WEIGHS HEAVILY ON YELL SHARES

Concerns over the capital structure and the ability to refinance have been reflected in a 70 percent fall of directory publisher Yell's(YELL.L) share price over the past three months. Ratings agency Moody's warns that revenue declines of "high single-digits" could threaten the group's ability to meet its senior credit facility covenants. The group expects a 12 percent fall in sales in the three months to the end of March, and its net debt of 4.3 billion pounds stands against a market capitalisation of 102.1 million pounds.

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