Weekend Financial Press Review
Paul Kettle
W/E Press Round-Up -3 min read
07:38, 14th April 2019

Below are the key weekend headlines from the Financial Times, The Times, The Telegraph, The Daily Mail & more - see the full Press section here.

Struggling travel firm Thomas Cook Group (TCG) FOLLOW flies into turbulence over the sale its £1.6bn debt pile. Struggling Thomas Cook has suffered a new blow after the value of the company’s debt dropped to less than two thirds of its original value. The travel firm has a £1.6 billion debt pile, some of which has been sold to City investors as company bonds. Bonds, typically only traded by major institutions, are normally seen as more stable than shares. But the sudden drop in value of the bonds, which are expected to be paid back in 2022 and 2023, implies there are doubts over the firm’s ability to pay them back. One veteran debt investor said the bonds’ status was now categorised as ‘stressed’. The value of the 2023 bonds have declined to less than 65p for every £1 paid originally.

Stagecoach launches legal attack on Chris Grayling over decision to block train line bids. Stagecoach Group (SGC) FOLLOW has dramatically raised the stakes in its battle with Chris ­Grayling over his decision to derail its train operation, with a threat of court action against the embattled Transport Secretary. The row over pension liabilities ­intensified this weekend as Stagecoach’s lawyers issued the Department for Transport with demands for information about its exclusion from bidding on train franchises. The letter, extracts of which have been seen by The Sunday Telegraph, is understood to be a prelude to potential High Court action.

British American Tobacco investors’ fury over £7.5m golden parachute for ex-chief executive. British American Tobacco (BATS) FOLLOW has been plunged into a pay crisis for the second year in a row as investors fume over a multimillion-pound golden parachute handed to its former boss. The cigarette titan, the world’s second-biggest and one of Britain’s largest companies, has enraged shareholders by awarding ex-chief executive Nicandro Durante at least £7.5m. Almost £60bn was wiped off the value of the Dunhill and Lucky Strike owner last year. Shares halved as US regulators discussed restrictions on menthol cigarettes and vaping. BAT is particularly exposed to the US market by virtue of its $49bn (£37.4bn) takeover of Reynolds, an acquisition Mr Durante spearheaded in late 2017.

Centrica faces strike threat amid worker outrage over Iain Conn’s pay rise. British Gas owner Centrica (CNA) FOLLOW is on a collision course with trade unions after handing its chief executive a bumper bonus while cutting thousands of jobs, raising the threat of strikes. The energy giant will enter talks with Britain’s biggest trade unions tomorrow to negotiate pay for thousands of front-line workers after revealing what was branded a “perverse” pay hike for chief executive Iain Conn. Centrica angered workers days before unions are due to begin annual pay talks for 8,000 call centre staff by laying bare Mr Conn’s £2.4m pay packet, including a £388,000 cash bonus.

Corporate raider Melrose has cut nearly 900 jobs at engineer GKN since its controversial takeover. Corporate raider Melrose Industries (MRO) FOLLOW has cut nearly 900 jobs at GKN since its highly controversial takeover of the historic British engineer, The Mail on Sunday can reveal. It follows the news last week that Melrose was shutting a GKN factory near Birmingham that makes plane parts, with the loss of up to 170 jobs. That has sparked a row about whether the FTSE 100 conglomerate has broken promises made to the Government as part of its £8 billion takeover of the car and plane parts maker a year ago.

Ocado admirers deliver a near £10bn valuation following its supply agreement with M&S. Ocado Group (OCDO) FOLLOW came within a whisker of reaching a milestone £10 billion valuation last week after investors snapped up shares in the weeks following its supply agreement with Marks & Spencer Group (MKS) FOLLOW. The company’s share price closed at a peak of £14.35 on Wednesday, its highest ever, which left the business exceeding a £9.9 billion value. The shares settled back to £13.96 on Friday evening. M&S agreed in February to replace Waitrose as its main delivery partner next year. Ocado’s value now exceeds the combined value of M&S, at £4.5 billion, and rival grocer giant Sainsbury’s, worth £5.2 billion. Ocado’s revenues of £1.6 billion are still dwarfed by the pair which bring in sales of £10.7 billion and £28.5 billion respectively.

Stagecoach mulls a takeover of the UK’s largest bus operator Arriva after it goes up for sale. Stagecoach Group (SGC) FOLLOW is considering a bid for some or all of rival Arriva, the UK’s largest bus operator. City sources said the FTSE 250-listed transport giant is particularly interested in buying Arriva’s bus business. London Overground operator Arriva – acquired in 2010 for £1.5 billion – has been put up for sale by German Transport giant Deutsche Bahn. In the UK, Arriva runs rail franchise Northern, which has been hit by a long-running dispute with the RMT union over the role of guards on trains. Arriva, which operates more than 5,000 buses in Britain, also has divisions across Europe. Last year, Arriva, which handles all of Deutsche Bahn’s regional transport services outside Germany, generated revenues of €5.44 billion (£4.7 billion).

Gambling bosses at Ladbrokes signed off each other’s share sales. The chairman and chief executive of Ladbrokes owner GVC Holdings (GVC) FOLLOW signed off each other’s mammoth share sales last month, The Sunday Times can reveal. It is understood that chairman Lee Feldman and boss Kenny Alexander gave each other permission to sell a combined £20m worth of shares — a highly controversial move that wiped 20% from the bookie’s valuation in a day. There is no suggestion of wrongdoing by the directors, but the revelation is likely to stoke debate at a company that has repeatedly fallen foul of investors. GVC’s pay report has provoked a significant shareholder rebellion for the past two years and the group was relegated from the FTSE 100 index last month.

Asos founder Quentin Griffiths accuses BDO of bungling move offshore. One of the founders of the online fashion retailer ASOS (ASC) FOLLOW is suing accountancy firm BDO, claiming it gave him incorrect advice on how to avoid tax. Quentin Griffiths, who launched the site with Nick Robertson in 2000, said BDO was “negligent” and “made a basic and fundamental error” when it advised him on how he could avoid tax on share sales, costing him more than £4m. He said that in 2013, he told BDO partner Andrew Lines he was selling shares in Asos and Achica, an online retailer he also co-founded, and wanted to avoid capital gains tax by moving offshore.

Tesco boss Dave Lewis trials price cuts for loyalty card members. Tesco (TSCO) FOLLOW is experimenting with giving its Clubcard holders lower prices at the till, as chief executive Dave Lewis steps up plans to create an Amazon-like loyalty scheme. Tesco is understood to have lowered prices for Clubcard holders on 20 randomly selected groceries across 50 stores, in a week-long trial that will end today. Clubcard, introduced in 1995, was a key force in Tesco’s march to the top of the supermarket industry and now has 17m members. However, shoppers have become fickle as the discounters Aldi and Lidl have extended their reach.

JD Sports sprints ahead of Mike Ashley. JD Sports Fashion (JD.) FOLLOW is set to rub salt into Mike Ashley’s wounds when the sportswear retailer reports annual results on Tuesday. Ashley — who has just seen his £150m investment in Debenhams wiped out — once boasted that he would put his rival out of business, but JD Sports boss Peter Cowgill has outmanoeuvred him by securing exclusive products from Nike and Adidas and focusing on “athleisure”. The City expects JD Sports to report pre-tax profits of £349m, up 18%, on sales of £4.6bn.

BT bid to win hearts and minds in split from Openreach. BT Group (BT.A) FOLLOW hired a group of “culture experts” to quiz managers about their attitudes towards its legal split from Openreach. The former telecoms monopoly recruited consultants to carry out a “hearts and minds” review to look at staff’s feelings about the structural overhaul. BT said it had hired the consultants because it believed that attitudes were “key to the sustainable success of the commitments”. The FTSE 100 giant agreed to separate Openreach, its phone and broadband network arm, in March 2017 following a lengthy stand-off with Ofcom. The watchdog stopped short of calling for a full break-up, but demanded that Openreach set up its own independent board.

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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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