Monday May 10 2010
RELUCTANT PRU INVESTORS TO BE ASKED TO PAY EVEN MORE.
Insurance group Prudential PRU.L is to ask its shareholders to agree to less attractive terms for funding its $35.5 billion acquisition of AIA, the Asian arm of US insurer AIG AIG.N. Last week, Prudential's $21 billion rights issue was blocked by the Financial Services Authority and it must now ask for an additional one billion pounds from its investors in order to gain the regulator's approval of the deal. Prudential is also to raise 3.4 billion pounds ($5.26 billion) in "junior" instead of "senior" debt, costing millions of pounds more in interest.
STRINGENT HEDGE FUND DIRECTIVE STRIKES A BLOW AT CITY
The hung parliament in the UK has constrained the country’s ability to negotiate on the final terms of a new EU directive that is intended to bring hedge funds and private equity under heavier regulation. The directive is expected to require alternative investment managers to disclose more information about their strategies and their employees’ pay. Lisa Cawley, regulatory partner at law firm Kirkland & Ellis, said: “There is a real concern that the UK election result leaves a major part of our financial services industry without a voice at a critical point in the EU legislative process.”
ORANGE TO SWITCH ON TO TV AFTER BT DEAL
Mobile telephone operator Orange last month outsourced its fixed-line network to telecommunications firm BT BT.L, giving it access to a nationwide internet network. Orange has now resumed plans to offer TV services over its broadband network. The launch of the service would make Orange more competitive with other telecommunications companies, such as Virgin Media VMED.L, BT and BskyB BSY.L, as it would enable it to bundle TV services with its other products. Virgin Media is currently the only company to offer mobile, fixed-line, broadband and TV in one package.
The Daily Telegraph
BP CHIEF ‘JUDGED PERSONALLY’ AS CAP FAILS TO STOP OIL LEAK
Following the environmental and public relations disaster of a leak on its sunken Deepwater Horizon oil rig in the Gulf of Mexico, the chief executive of BP BP.L, Tony Hayward, has said that the future reputation of the company and himself depends on the effectiveness of the company's response. Questions have been raised about the lack of additional testing on the cement sealing the rig's oil well, which is believed may have prevented the leak.
FOCUS ON START-UPS DOES LITTLE FOR JOBS, SAY ERNST & YOUNG
An influential economic forecasting group has criticised the government’s focus on aiding very small start-up businesses and the self-employed. All political parties have stressed the importance of encouraging small businesses as a means of combating unemployment, but the Ernst & Young ITEM club would prefer aid to be given to companies with at least 10 workers. The group cites a recent study by the National Endowment for Science, Technology and the Arts that indicates more jobs could be created by helping “mid-sized businesses”.
ORBIS DEAL IS A BOOKMAKING WINNER
Orbis OFGS.L, a supplier, of games and computer technology to betting shops, is to buy Alphameric Solutions ALM.L, a company which provides display and till systems to the same market, for 15.5 million pounds. The company believes that the merger will allow it to combine retail and online gambling systems at bookmakers. "With our expertise in online betting technology we are confident this acquisition will drive the retail betting sector in a new and exciting direction," stated Orbis' chief executive, David Loveday.
MPC EXPECTED TO KEEP RATES STEADY AMIDST UNCERTAINTY
The Bank of England’s Monetary Policy Committee is unlikely to change its stance on interest rates or quantitative easing when it meets on Monday, considering that the situation for the markets is already unstable enough without adding to the general uncertainty. Interest rates are expected to be held at 0.5 percent, with the stock of asset purchases under the quantitative easing programme remaining at 200 billion pounds. The Bank will further illuminate current financial policy with the release of the quarterly inflation report on Wednesday.
SMALL FIRMS RUNNING OUT OF TIME TO PAY TAXMAN
Syscap, an independent finance provider in the IT sector, said that it has seen a doubling in rejected applications to HM Revenue & Customs’ “Time to Pay” VAT scheme. The scheme allows viable businesses to defer tax payments in times of financial difficulty. Data obtained by Syscap under a Freedom of Information request shows that over 11 percent of applications were rejected in the first quarter of this year, up from 5.3 percent in the same period of 2009.
PARTIES MUST NOT PANIC, BUT NOR MUST THEY DELAY, SAYS CBI
The Confederation of British Industry, Britain’s leading employers’ organisation, has called on the country’s political parties to quickly end post-election uncertainty. CBI director general Richard Lambert said: “What’s happening in the Eurozone adds some extra urgency.” Lambert said that, while Britain was better-placed than many eurozone countries, “markets are starting to look at sovereign risk in a jaundiced way”. Analysts expect that, with politicians yet to resolve the uncertainty, trading is likely to continue under the nervous conditions seen at the end of last week.
BT TO REPORT RETURN TO PROFIT AND 5,000 EXTRA JOB CUTS
This week, telecoms company BT BT.L is expected to announce a return to profit. The company, which in 2009 saw its first loss for eight years, is also expected to announce that it has cut 5,000 more jobs than expected. Chief executive Ian Livingston is expected to report a profit of between one and 1.1 billion pounds, and will say that the company made 35,000 job cuts over the past two years, ahead of the expected 30,000. ($1=.6465 Pound)