PRESS DIGEST - Financial Times - June 14

The Financial Times

BANK SET TO EXPLAIN INFLATION RISE

For only the second time in its 10 years of independence, the Bank of England is expected to provide the Treasury with a written explanation of why inflation is rising so quickly. The Bank's governor, Mervyn King, is required to write a letter to the Chancellor of the Exchequer if consumer price inflation moves more than a percentage point from its target rate of two percent, outlining the reasons for the shift and what the Bank is doing to address it. The Treasury said: "The open letter system is an important part of the inflation targeting framework that ensures accountability."

TORIES CALL FOR URGENT ACTION TO HELP BUYERS

The Tories have called on the government to intervene with measures to help consumers buy homes to prevent the housing market downturn becoming an all-out crash. Grant Shapps, shadow housing minister, said the most urgent need was for stamp duty to be scrapped for most first-time buyers buying homes worth less than 250,000 pounds. Home information packs and density targets that encouraged housebuilders to produce flats rather than family homes could also be scrapped, Shapps said.

FT HOUSING INDEX SHOWS SLOW FALL

According to the latest FT House Price Index, house prices fell by 0.6 percent in May in England and Wales. It shows a much slower pace of decline than that suggested by other house price surveys. "These figures do challenge the perception of a housing market in steep decline as suggested by some other indices," said Peter Williams, chairman of Acadametrics, the company that prepares the index. The FT data show house prices suffering their third consecutive monthly drop in May and the sharpest one-month fall since February 1995.

UMBRELLASTREAM SWEETENS EXPRO BID

Umbrellastream, the Candover-led private equity consortium, made the unusual move of bidding against itself on Friday in a "pre-emptive strike", sweetening its 1.8 billion pound bid for Expro International EXR.L to deter a counter-bid for the oil services group from Halliburton (HAL.N). The consortium, which includes Alpinvest Partners and Goldman Sachs, upped its offer price for Expro from 1550 pence to 1615 pence, valuing its equity at 1.81 billion pounds. "If these guys (at Halliburton) want to buy the business they are going to have to pay close to 17 pounds per share for it," said a person close to Umbrellastream.

RBS AND MIZUHO TAKE ON 20:20 EQUITY

Doughty Hanson, the private equity owner of 20:20 Mobile, has been told by its banks Royal Bank of Scotland (RBS.L) and Mizuho (8411.T) that they will swap 175 million pounds of debt for equity in the struggling mobile phone distributor if Doughty ploughs an extra 15 million pounds into the business. The debt restructuring would reduce 20:20's total debt from 265 million to 90 million pounds, according to a source familiar with the agreement.

LAURA ASHLEY GATHERS MOSS

The frocks and furnishings chain Laura Ashley (ALY.L) has raised its stake in Moss Bros (MOSB.L), the menswear retailer it is stalking to 10.05 percent. The stake-building occurred just ahead of Moss Bros reporting deteriorating trading, with like-for-like sales declining 1.5 percent in the 19 weeks to June 7. Referring to the recent collapse of bid talks with Icelandic investment group Baugur, Moss Bros chief executive Philip Mountford said: "With the distraction of a potential takeover bid now removed, management's attention and energy will be refocused on driving the business."

FREIGHTLINER SETS SIGHTS ON AUSTRALIA

The new owner of Freightliner, the UK's second-biggest rail freight business, has said it would look at expanding internationally, including potentially in Australia. Arcapita of Bahrain agreed a deal on Friday for Freightliner and will pay a total of 340 million pounds, including assumed debt. "Australia is a very interesting market for us with great growth potential because of the boom in commodities in that country," said Qaisar Zaman, head of Arcapita's European asset-based business.

LADBROKES WINS ECJ APPROVAL

Ladbrokes (LAD.L) has won a small victory in the long battle being fought by betting companies to open up restrictive European markets. Its appeal against a ban on taking online bets from Dutch citizens was referred to the European Court of Justice by the Dutch Supreme Court, which upheld the country's gaming laws after a six year case but asked for guidance in the context of European law. Ladbrokes's shares rose eight pence on the news, closing at 291.75 pence. "At last the Dutch courts have recognised that its laws on betting must be viewed in the context of European law," said a delighted John O'Reilly, head of Ladbrokes's e-gaming division.

AEA SWINGS ON RIGHTS

Shares in the climate change consultancy AEA Technology (AAT.L) fluctuated wildly on Friday, falling heavily in early trading on news it would issue nearly 100 million new shares at a 50 percent discount to fund a U.S. acquisition before recovering most of its losses by the close. "The market got a bit jittery because of the current climate," said Andrew McCree, chief executive. The share price dropped to 55 pence from its opening 80 pence, before recovering to 78 pence by the close of the day.

HYDROGEN TUMBLES ON PROFITS WARNING

Shares in the specialist recruitment group Hydrogen (HYDG.L) tumbled 27 percent after the company told investors its full-year profits would be lower than expected. "The business has performed well in most areas," said executive chairman Ian Temple, "but the slowdown in the investment banking market has frustrated our ability to achieve our expectations this year." The shares closed down 52.25 pence at 142.5 pence.

Prepared for Reuters by Durrants