PRESS DIGEST - Financial Times - March 3

The Financial Times

TAXPAYERS TO FOOT BILL FOR RESCUE OF PFI DEALS

Taxpayers are to inject large amounts of cash into private finance initiative projects in a bid to safeguard a series of deals that are hit by a lack of credit amid financial market problems. A new Treasury unit, which will be staffed by up to 15 or so bankers with relevant experience, will lend potentially billions of pounds at market rates alongside the banks. The PPP Forum, the body that represents the PFI business, welcomed the scheme but Jeremy Barker, a director for global infrastructure at KPMG, said the plan "is potentially at odds with the philosophy underlying the PFI". Details of the scheme will be revealed on Tuesday.

STANSTED PLANNING INQUIRY IS POSTPONED

Hazel Blears, the communities and local government secretary, has decided to postpone the start of the planning inquiry into the building of a second runway and second terminal at London Stansted by BAA FER.MC due to the uncertainty over the future ownership of the airport. A landmark report by the Competition Commission is expected to demand in March the fragmentation of BAA, calling for the sale of Gatwick and Stansted and one of either Glasgow or Edinburgh airports. "I am certain that we should neither be seen to second guess the contents of the final report (by the Commission) nor the response of the airport operator (BAA) until after they have had time to consider its findings and implications," Blears said.

DEMAND FOR EMPLOYEES AT LOWEST LEVEL SINCE 1992

New figures by the purchasing managers' institute index have revealed that demand for staff in British manufacturing hit a record low in February with the employment subcomponent falling to 33.2, its lowest level since the survey began in January 1992. Hetal Mehta, senior economic adviser to the Ernst & Young Item Club, said the data showed companies are cutting jobs in an attempt to survive the deepening economic crisis. The Bank of England is watching the PMI indices closely as they are understood to be major indicators of economic activity.

BP QUITS FAILED RUSSIAN TEST AREA

BP (BP.L) said on Monday its joint venture with Rosneft had abandoned the Sakhalin 4 oil exploration area in Russia after wells drilled there came up dry. The disappointing news comes as BP unveils its annual strategy on Tuesday for analysts and investors. The oil giant is expected to report it was the only group out of the sector's "big five" companies to increase production last year. However, it faces questions about how it can maintain investment for future growth if the price of oil remains at 45 dollars a barrel.

PERSIMMON RENEGOTIATES DEBT TERMS

Leading UK housebuilder Persimmon (PSN.L) has renegotiated the terms of its existing debt with its banking partners and private note holders, bringing its total credit facilities to a little more than one billion pounds. However, the company, which reports its full-year results on Tuesday, will have to pay increased interest rates on the loan, 75 percent higher compared to the previous ones. As part of the new agreement, the total funding will be reduced to 560 million pounds by 2011. The company said it expected the new banking facilities to provide "ample headroom and support" for the efficient management of the business over the next few years.

SENIOR POISED FOR FURTHER JOB CUTS

A further 500 jobs are to be axed at engineering group Senior (SNR.L) in the first four months of 2009, chief executive Mark Rollins has said. The additional cuts, following 500 last year, are expected to reduce costs by 19 million pounds in 2009. The announcement came as the company unveiled strong results for 2008, with pre-tax profits jumping 50 percent to 51.3 million pounds on revenue up 19 percent to 564.2 million pounds. The job cuts are seen as a result of weak land vehicle markets and poor business jet and regional markets.

XCHANGING TO BENEFIT FROM TOUGHER REGULATION

Full-year pre-tax profits in Xchanging (XCH.L), the financial back-office outsourcer, rose 53 percent from 32 million pounds to 49 million pounds on revenue up from 468 million pounds to 558 million pounds. Despite the economic downturn, the company anticipates continued growth in the current financial year as tougher regulation and a shift in business processing are expected to boost business in the group. David Andrews, the group's chief executive, said: "At the moment Fortune 500 companies have outsourced just three percent of their non-core processing. In the next few years, we are going to see that explode."

WHI IN DEAL WITH BLUE OAR

WH Ireland has agreed to pay 16.2 million pounds in cash and shares to merge with Blue Oar in a deal that will create one of the UK's largest financial advisory groups by number of clients. WH Ireland shareholders will own 51 percent of the new company, while Blue Oar investors will get 49 percent plus one penny per Blue Oar share. Richard Ford, the chief executive of WH Ireland, will run the combined entity, while Justin Lewis, chief executive of Blue Oar and one of its largest shareholders with four percent of the stock, praised the deal, describing it as "logical".

EMI LOOKDS TO BE "MORE SELECTIVE" WITH ARTISTS

EMI is poised to become "more selective" with its artist relationships, an annual report from Terra Firma, the private equity group that bought the leading music label in 2007, has revealed. Earnings at EMI Music, the recorded music division, jumped from 12 million pounds to 104 million pounds in the nine months to December, while earnings from the music publishing division rose from 81 million pounds to 91 million pounds. However, revenues were 1.6 percent below budget. In 2008, 123 million physical albums were sold in the UK, down from 131 million in 2007 and 151 million the year before.

RBS AWARDS CHAIRMAN 1.5 MILLION POUNDS IN SHARE OPTIONS ON TOP OF SALARY

The Royal Bank of Scotland (RBS.L) has given chairman Sir Philip Hampton a reward package of 1.5 million pounds in share options, on top of a salary of 750,000 pounds a year. The news follows the recent row sparked after the revelation that Sir Fred Goodwin, the bank's former chief executive, is being paid a 693,000 pounds annual pension. Despite being unusual for chairmen to receive performance-based pay, the move has been backed by leading investors and UK Financial Investments, the body created to handle the government's bank stakes, as strict performance clauses have been inserted. RBS said the package was designed to align Sir Philip's interests with the long-term interests of the bank's investors, adding that it reflected "the scale and complexity of the job he agreed to do at a critical time for the company".

Prepared for Reuters by Durrants