The Mail 14/04/19 - Vox Markets | Vox Markets

The Mail 14/04/19

Struggling travel firm Thomas Cook Group (TCG) 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.

Plan to restructure department store chain Debenhams (DEB) could take up to two years as 50 stores face the axe. A massive reorganisation at department store chain Debenhams could take up to two years after it spiralled into administration last week. The £2.3 billion turnover company plans to close as many as 50 of its 165 stores in a sweeping change that will see it cast off debts and scrap leases. Last week, lenders used their power as chief creditors to take control despite irate protests from Sports Direct International (SPD) founder Mike Ashley who watched his 29.9% shareholding evaporate in the insolvency of the parent firm.The size of the stores and the complexity of the business compared with other retailers makes it likely the new owners will remain with the business until it is clear to potential new buyers that it has a sustainable future, sources told The Mail on Sunday.

Edward Bramson’s stalking of Barclays (BARC) bank reaps him £7m in fees since securing support from investors. The corporate raider stalking Barclays bank has made himself an estimated £7 million in fees since securing support from investors, according to an analysis seen by The Mail on Sunday. Edward Bramson is trying to win a place on Barclays’ board at its annual shareholder meeting on May 2 after building a 5.5% stake in the bank. He raised the funds for the investment from major institutions such as Aviva, Fidelity and Invesco. But it has now emerged that Bramson will earn a hefty fee for his work managing Sherborne Investors Guernsey C, the name of the vehicle he set up to buy his Barclays stake. Bramson earns fees even if he does not secure a board seat at Barclays or execute his turnaround plan.

Corporate raider Melrose has cut nearly 900 jobs at engineer GKN since its controversial takeover. Corporate raider Melrose Industries (MRO) 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) 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). 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.

Activist investor Oasis Management has thrown its support behind Superdry (SDRY) founder Julian Dunkerton who seized back control of the business just 12 days ago. Oasis Management, which recently forced the chief executive at Mr Kipling-to-Bisto owner Premier Foods to resign, has bought 3.3% of the fashion firm’s shares. It is understood to have met with Dunkerton since he won his bid to be reinstated as a director with the backing of 51.2% of shareholders.

Stagecoach mulls a takeover of the UK’s largest bus operator Arriva after it goes up for sale. Stagecoach Group (SGC) 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).

WPP’s post-Sorrell clear-out kicks off in earnest this week. The advertising giant has brought in bankers from Goldman Sachs to find a buyer for Kantar, its market research firm. The sale is a key plank of chief executive Mark Read’s turnaround plan to simplify the business that he inherited last year from founder Sir Martin Sorrell. First-round bids for Kantar are due in the coming days, with WPP (WPP) hoping to complete a deal by the end of June. Analysts at Deutsche Bank said in a research note they expect the deal to value Kantar at £3.1 billion and they assume WPP will retain a 33% stake in the business. Market sources say a sale to a large private equity firm is the most likely outcome.

MIDAS SHARE TIPS: Tablets and debit cards… how Morses is taking doorstep lending upmarket. Midas verdict: Morses Club (MCL) is a strong, well-run business with big ambitions and the means to achieve them. In time too, Smith is keen to move from Aim to the main market, which would allow more large institutions to invest in the business. At 173p, the shares should prove rewarding.

MIDAS SHARE TIPS UPDATE: Egg-free bakery chain Cake Box Holdings (CBOX) has a winning formula with turnover set to rise. Midas verdict: Chamdal and Dass have created a winning formula. Average weekly turnover is £6,900 per store and rising, as customers respond to affordable prices, attentive service and personalised cakes on demand. Investors have already seen decent returns but Cake Box should keep on delivering. The founders still own 50.1 per cent of the business too, so they are highly incentivised to make a success of it.


Mentioned in this post

Cake Box Holdings
Morses Club
Marks & Spencer Group
Melrose Industries
Ocado Group
Stagecoach Group
Sports Direct International
Thomas Cook Group