PRESS DIGEST - Financial Times - June 4

Financial Times

FUNDS THREATEN TO QUIT UK OVER DRAFT EU INVESTMENT LAWS

According to several hedge fund managers, some of the UK's largest funds have already begun making backup preparations to move to either Switzerland or New York unless a draft European directive on alternative investment fund managers is rewritten. At a meeting between representatives of the FSA, the Treasury and a dozen of London's top managers this week, officials stated that they would fight for changes in the directive. The City minister, Lord Myners, also told MPs on Wednesday that he was confident that the draft directive could be improved, and accused the European Commission of producing 'naïve' proposals.

INDUSTRY ACCUSES BANKS OF SLOWING RECOVERY

According to a survey from the EEF manufacturers' organisation, 45 percent of businesses reported a rise in borrowing costs in the past two months, compared with 37 percent in the first quarter. The survey also found that 68 percent of companies had been affected in the past two months through credit insurance either being withdrawn or reduced -- up from 66 percent in the first quarter. EEF's chief economist, Steve Radley, said: "By taking a 'blanket' approach to lending to manufacturers as a group, banks may be failing to understand some companies are in a better position than others when it comes to the risk they represent to the lending agency."

MYNERS WARY OF BRUSSELS SCRUTINY PLAN

According to the City minister, Lord Myners, European Union proposals for financial regulation are too intrusive and could 'trample' on the independence of national supervisors. The minister told MPs on Wednesday that he was concerned by three aspects of the draft proposals, including plans to give EU authorities the power to change decisions taken by national supervisors through a binding system of mediation. Myners said that he was unhappy with plans for EU-level supervision of entities with pan-European reach, such as central clearing houses and credit ratings agencies. The minister also said that he had concerns over the creation of a systemic risk council for the EU, which he said should be fully independent of the European Central Bank.

HERON RESUMES DIVIDENDS WITH 17 MILLION POUNDS

Heron International is to pay a dividend of 17.2 million pounds to investors this year, its first dividend payment since the beginning of 2007. The property company's accounts for 2008, which are to be filed at Companies House next month, show that Heron's net asset value at the end of 2008 was reported at 384 million pounds -- down from 409.6 million pounds in 2007. Heron's gross assets stood at 697 million pounds, with the company holding 137 million pounds of cash at the end of the year.

MONKS' 'INACCURATE VIEW OF WORLD' HURTS ITS NET ASSET VALUE

The Scottish investment company Monks Investment Trust(MNKS.L) said the company's value has fallen by over a third in the year to the end of April. Monks reported its value on April 30 as 681 million pounds, a fall of 350 million pounds in a year. Monks chairman, James Ferguson, said the trust sustained most of its losses in September and October, but recovered in the second half of the fiscal year with its asset value rising 7.9 percent -- compared with a 3.6 percent rise in the FTSE World index. A final dividend of 5 pence was recommended, bringing the company's total dividend to 6 pence with earnings per share at 6.97 pence, up from 4.53 pence last year.

NEW LOOK HOLDS ON FLOAT

Fashion chain New Look will not return to the stock market in the immediate future, but has not ruled out a public listing in 2010. Chief executive Carl McPhail said that any decision on an initial public offering would be taken by owners Apax and Permira, adding: "To make a move on the market today would be a big deal for somebody to do, and it doesn't seem that deals like that are being done. We don't have any plans other than trading the business." A potential 2007 listing was dropped after investors balked at the 1.8 billion pound price tag.

DEBENHAMS AIMS TO PAY DOWN DEBT WITH 400 MILLION POUND.

Debenhams(DEB.L) is expected to announce plans to raise up to 400 million pounds through a placing and open offer of shares as the department store chain looks to reduce its one billion pound debt burden. Shares, which were down 1.25 pence at 92.25 pence Wednesday, are expected to be priced at between 75 and 80 pence. It is not expected that Debenhams' private equity backers, TPG and CVC Capital Partners, will either take up new shares or seek to offload their stakes.

ROYAL LONDON CONFIDENT PEARL LOAN WILL BE REPAID

Mutual life assurer Royal London is confident that it will not have to take a writedown on the 300 million pounds it is owed by Hugh Osmond's Pearl Group as Pearl undergoes a debt restructuring that is expected to see banks take a 400 million pound hit on three billion pounds of loans. Royal London lent Pearl the 300 million pounds to help fund the acquisition of Clive Cowdery's Resolution(RSL.L), and the mutual said at its May 20 annual meeting that it expects the money to be repaid in full.

AMLIN BUYS FORTIS INSURANCE DIVISION

Lloyd's of London insurer Amlin(AML.L) has acquired the corporate insurance business of Fortis(FOR.BR) from the Dutch government for 350 million euros. The deal will be funded mostly out of cash reserves, though Amlin also raised 76.4 million pounds on Wednesday through the placing of 23.5 million new shares at 325 pence. Amlin said that the deal would increase its European presence while diversifying risks, while chief executive Charles Philipps said that the insurer may also look to make acquisitions in the U.S. market.

HIGHER ENERGY COSTS ARE A DRAIN ON NORTHUMBRIAN

Pre-tax profits at Northumbrian Water(NWG.L) fell from 170.3 million pounds to 152.7 million pounds in the year to March 31, though analysts had predicted a steeper decline. The drop in profits came on the back of a 56 percent increase in energy bills to almost 39 million pounds and a rise in interest payments. After a deferred tax payment, the company recorded a net loss of 11.9 million pounds, but finance director Chris Green said he was "optimistic that things are improving."

Prepared for Reuters by Durrants