Sports Direct launches legal challenge to Debenhams (DEB) rescue plan. Mike Ashley’s Sports Direct International (SPD) has reignited its battle with Debenhams by launching a legal challenge to the department store’s rescue plan. Sports Direct’s legal challenge is understood to be supported by one Canadian landlord, CPC. Meanwhile property investor M&G, which will also take part in Arcadia’s crunch vote on Wednesday, is understood to have launched separate legal action against the company voluntary arrangement (CVA). Debenhams last month secured landlord approval for a CVA that will shut 22 shops after Christmas and slash rents on a further 61 stores. Terry Duddy,who revealed in an interview this weekend that he would like to reduce some of the space in other Debenhams stores,said that he believed the “challenges to the CVAs to be without merit”.
Thomas Cook Group (TCG) flew into another patch of turbulence after City scribblers punctured bid buzz by warning the embattled airline’s share price could double or plunge to 0p. Barclays told investors to buckle in for “significant share price volatility” and warned that the travel company could breach its banking covenants in the first quarter of its next financial year. The company could still “struggle to meet financing requirements” even if the airline is sold, it warned. Barclays analyst James Rowland Clark cautioned that “as a distressed seller, there is no guarantee that these potential buyers would be willing to pay premium multiples”. “Thomas Cook is now in the ‘special situation’ bucket – we believe it could double or go to 0p,” the analyst said, slashing his target price to 17p from 46p.
Woodford Patient Capital Trust (WPCT) pulled out of a seven-day tailspin as analysts argued that the embattled investment manager could calm markets by selling “trophy assets”. Stifel analyst Iain Scouller told clients that Mr Woodford’s Equity Income fund needs to sell “all or a significant part” of its unquoted assets to resolve its liquidity mismatch. Given the “significant overlap” between the two funds, the sale of the assets would have a “knock-on effect” to WPCT, he explained. “We think it is possible that we will see some sales of ‘trophy assets’ to demonstrate some value in the unquoted portfolio in an attempt to give the market some comfort on WPCT’s valuations,” Mr Scouller argued. After dropping by almost a quarter in its seven-day slide, WPCT shares clawed back 4.4p to 63.4p.
Shaftesbury shareholder sues for £10m over share placing. The Hong Kong billionaire who is the biggest shareholder in West End landlord Shaftesbury (SHB) has launched a lawsuit against the company in the latest round of hostilities related to a £265m fundraising in 2017. Sammy Tak Lee alleges that the Carnaby Street owner deliberately set out to reduce his stake by not giving him enough time to participate in the cash call. He is demanding £10.4m in compensation for the fall in the value of his shares following the fundraise and also wants to see Shaftesbury’s bosses censured for allegedly breaching their duties as directors. Shaftesbury said it “considers the claims to have no merit” and intends to defend the allegations “robustly”, adding that it was “disappointed that Mr Lee is continuing with this course of action”.
Focus on build-to-rent knocks profits at Crest Nicholson. A new focus on selling to housing associations and build-to-rent investors boosted sales but weighed on profits at housebuilder Crest Nicholson Holdings (CRST). The FTSE 250 member has cut back on the number of homes it sells to individual consumers in a bid to protect its revenues and cut risk on its balance sheet. It now sells around 45% of its homes to institutions, up from 35% five years ago, and has also been making strides outside of its southern heartlands to markets that have been less affected by uncertainty over Brexit. Profits dipped 12% to £52m in the six months to April, reflecting a drop in margins as a result of the new strategy, but revenues were up 7% to £502m.