PRESS DIGEST - Financial Times - June 19

RECORD RISE IN PUBLIC SECTOR BORROWING

Net public sector borrowing rose by a larger-than-expected 19.9 billion pounds last month, the largest rise since monthly records began. The figure compares to a 12.2 billion pound rise a year ago and brings the 12-month rolling total deficit to 104 billion pounds, compared to 40.9 billion pounds in the year to May 2008. The total budget deficit of 30.5 billion pounds for the first two months of the 2009-10 financial year means that public sector net borrowing is on course to meet the 175 billion pounds forecast in the budget.

WEAK STERLING HAS YET TO SPUR EXPORTS

Two surveys published on Thursday showed that the falling pound has yet to lead to a rise in export orders for UK manufacturers. An Office for National Statistics survey found that retail sales by volume declined in May, though the value decline was not as pronounced, suggesting that suppliers are paying more for imported goods. The CBI monthly Industrial Trends survey, conducted in early June, found that 58 per cent of manufacturers are experiencing below-par levels of export orders.

RETAIL RENTS TO DROP BY A FIFTH

The influential annual mid-summer report on retail property from property consultancy Colliers CRE predicts that retail rents will fall by 11 per cent by the end of 2009, falling a further nine per cent in 2010 and returning to growth only in 2012. Some landlords are offering rent-free occupation for up to six years as they look to attract tenants. The Colliers report comes as Office for National Statistics figures show a larger-than-expected 0.6 per cent decline in retail sales in May.

CREDITORS CHASE FOUR SEASONS

Heavily indebted care homes group Four Seasons Healthcare will be sold if no agreement is reached on a last-ditch attempt by lenders to enact a restructuring which would roughly halve Four Seasons' 1.5 billion pound debt. Sources close to the process say that the special servicer of the loans, who represents the interests of creditors and has the power to sell the company, put forward a debt-for-equity swap proposal on Wednesday. All senior creditors and 75 per cent of junior creditors have until July 6 to agree to the deal.

MICRO FOCUS LIFTS BID FOR BORLAND

Micro Focus International (MCRO.L) is the favoured candidate to secure Borland Software after raising its cash offer from one dollar to 1.15 dollars per share, valuing Borland's equity at 88 million dollars. Micro has been pursuing Borland for two years and had planned to purchase the company for 75 million dollars alongside the 58 million dollar acquisition of Compuware. Evolution Securities analyst Roger Phillips said: "Without Borland, Micro Focus would have been accused of a lack of scale in testing, and this catapults it into the number two or three global position alongside HP and IBM."

PRUDENTIAL SET TO CONFIRM TAIWAN SALE

Prudential (PRU.L) is expected to confirm on Friday that it has sold its Taiwanese agency to China Life, after the insurer received regulatory approval for the deal this week. As part of the deal, Prudential has brought a 9.9 per cent stake in China Life for around 45 million pounds. Prudential said that despite the sale it remains committed to Taiwan as part of its Asian operations and has retained its distribution partnerships in Taiwan - with the banks Standard Chartered (STAN.L) and E.Sun.

GKN LAUNCHES 423 MILLION POUND RIGHTS ISSUE

The aerospace and car parts manufacturer GKN (GKN.L) has announced a 423 million pound rights issue and committed itself to further jobs cuts in order to deal with declining sales and upcoming debt renegotiations. Underlying sales at GKN fell 32 per cent in the first five months of 2009 as the company was adversely affected by the contraction in global demand and production. Sir Kevin Smith, GKN chief executive, said that the capital raising was a cheaper option than rearranging the company's borrowing facilities with its lenders, after the firm lost its investment grade status last year.

MARSTONS RAISES MONEY TO FUND MORE PUB GRUB

The pubs and brewery group Marstons (MARS.L) said that it will use 140 million pounds of the proceeds from its discounted rights issue to take advantage of the weakening property market and secure sites on attractive terms. Ralf Findlay, chief executive of the group which currently owns 2,200 managed and tenanted pubs and also brews the beer Pedigree, said: "There are few other people in a position to bid for sites at the moment so we've got a unique opportunity to step ahead." If the rights issue is approved at an extraordinary meeting on July 6, the company expects to open 15 new pubs in 2010 and 20 to 25 new sites in 2011.

CHALLENGING MARKETS SPARK ALERT AT SIG

SIG (SHI.L) announced that the group's full-year underlying profits will be at the bottom end of expectations - which ranged from 63 million pounds to 83 million pounds - following the announcement that shares in the building supplier fell 25 pence to 90 pence on Thursday. Numis Securities analyst Howard Seymour cut his pre-tax profit forecast for the company from 90 million pounds to 54 million pounds. "The group is only now starting to see the real impact of construction activity slowing in these markets," he said.

MOUCHEL SHARES FALL BY A THIRD ON PROFIT WARNING

Analysts downgraded their pre-tax profit expectations for maintenance and outsourcing group Mouchel (MCHL.L) from 47 million pounds to 40 million pounds after the group's management issued a profit warning following a poor performance at the company's rail and Dubai operations. Mouchel chief executive, Richard Cuthbert, confirmed that the group would exit its work for Network Rail after losing a recent inspection contract to rival Amey. "We were confident of winning that and we budgeted for all the work to come our way," he said.

Prepared for Reuters by Durrants