Tribal Grp. Share News (TRB)

LONDON (Alliance News) - London stocks were trading mixed midday Monday, with the continued fall in oil prices weighing on UK-listed resource stocks and wiping out most of the gains that had been recorded at the market open.

The FTSE 100 had managed to start the day positively after seven consecutive sessions of losses, but early gains were eroded as oil prices resumed their slide. Brent oil fell below USD37 a barrel for the first time since the end of December 2008, hitting a low of USD36.61 a barrel. West Texas Intermediate similarly fell to a seven-year low of USD34.65 a barrel.

Oil-related stocks tracked the declines, with BP down 1.6%, Royal Dutch Shell 'A' shares down 1.4% and Tullow Oil down 4.9%.

Shell said Monday it expects around 3.0% of the combined workforce of it and BG Group will be cut following the completion of the GBP47.0 million merger of the two.

The announcement came after Shell confirmed the Chinese Ministry of Commerce gave its unconditional clearance for the deal, adding to the approvals the pair already received in Brazil, the European Union and Australia. The Chinese clearance is the final pre-conditional approval required.

BG was performing marginally better than other oil companies, trading down 0.1%.

The FTSE 100 index was reading up 0.1% at 5,958.57 points at midday. The FTSE 250 was down 0.1% at 16,866.14 and the AIM All-Share down 0.5% at 721.78.

In Europe, the CAC 40 in Paris was up 0.1%, and the DAX 30 in Paris was down 0.4%.

Futures indicated a flat open for Wall Street, with the Dow Industrials pointed down 0.1%. The S&P 500 and Nasdaq 100 were both seen flat.

South Africa-exposed stocks were the stand-out gainers on the London market, rebounding from recent heavy falls as the South African rand rebounded against the dollar. Financial services groups Old Mutual and Investec were up 7.5% and 7.9% respectively, and paper and packaging company Mondi was up 1.6%.

The companies have been hit hard over the previous two trading sessions as the rand hit record lows against the dollar following the dismissal of South African Finance Minister Nhlanhla Nene last Wednesday. Nene was replaced by little-known parliamentarian David Van Rooyen.

Shares in Old Mutual and Investec were affected the most by the move, with Old Mutual falling 20% before Monday's gains and Investec losing 21%.

However, the rand rebound against the dollar Monday, trading at USD0.0661 after South African President Jacob Zuma on Monday appointed Pravin Gordhan, who had held the finance minister position prior to Nene, back to the role, replacing Van Rooyen, who only held the job for a week.

In the FTSE 250, Drax Group was up 5.0% at 222.70 pence after Goldman Sachs raised its recommendation on the power plant operator to Buy from Sell, while edging up its target price to 260p from 245p.

Hedge fund manager Man Group was up 3.8% after it confirmed the potential appointment of Lord Livingston as the successor to Chairman Jon Aisbitt, saying it is subject to regulatory review. Man Group said in May that Aisbitt planned to step down from his role following the company's annual general meeting of shareholders in May 2016.

Man Group's confirmation of the potential appointment of Lord Livingston, the former trade minister and BT Group chief executive, followed a Sky News report.

Education support-services company Tribal Group was down 47% after it said it plans to raise up to GBP30.0 million in a rights issue early next year in order to cut debt and provide working capital and said it will move to AIM to cut costs.

The group said it has suffered from "slow" sales momentum, while several "key customer contract milestones" have moved into 2016, meaning that adjusted operating profit for 2015 is likely to be "significantly lower" than expected.

Tribal has warned its lenders that it may breach the covenants of its revolving credit facility, under which the group is able to borrow up to GBP50.0 million. The group has also begun talks with its bankers to "negotiate amendments to the operation of covenants and the waiver of any event of default that may result from our current trading performance".

Circle Oil was the worst performer in the AIM All-Share index, down 35%. The oil and gas company said progress on its new financing deal had been slower-than-expected, leaving it scrambling to shore up its position.

The company reached a deal with International Finance Corp in November to extend its reserve-based lending facility, but progress on securing this financing has been slower than Circle had originally envisaged. Circle said despite the low cost of its operations, trading remains very challenging for the business due to the further weakening in global oil prices and varying production levels from its NW Gemsa project in Egypt.

Due to the continued problems the company has faced, the borrowing base for the reserve-based lending facility from the IFC is set to be reduced, leaving a shortfall in Circle's funding. It is actively considering options, including issuing equity or restructuring its debt in order to shore up its finances.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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