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LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Babcock International Group PLC said it has agreed to buy helicopter form Avincis Group for GBP920 million from Investindustrial and Kohlberg Kravis Roberts & Co, funding it with a fully-underwritten GBP1.10 billion rights issue. Avincis is owned by World Helicopters Sàrl, a portfolio company of investment funds affiliated with Investindustrial and Kohlberg Kravis Roberts & Co. Under the terms of the deal, Babcock will assume Avincis's GBP705 million net debt. Babcock said it has entered into a GBP383 million multi-currency debt facility and a EUR620 million debt facility to enable it to refinance Avincis' debt after the acquisition is completed, if needed.
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UK energy industry regulator Ofgem proposed an independent investigation into the UK's energy market by the Competition and Markets Authority, asking the CMA to investigate "once and for all" whether there are barriers to effective competition with the "Big Six" suppliers. Ofgem said growing profits, coupled with price hikes, have intensified public distrust of suppliers and highlight the need for a market investigation "to clear the air", with the investigation expected to reassure consumers and complement Ofgem's reforms for a simpler, clearer and fairer energy market. The Big Six energy firms are Centrica PLC owned British Gas, E.ON, EDF, Npower, ScottishPower and SSE PLC.
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The US Federal Reserve on Wednesday rejected Citigroup Inc's capital plan and those put forth by four other banks as part of its annual stress test. The Fed said in a statement it based its decision to veto the capital plans of Citigroup, the US units of Royal Bank of Scotland Group PLC, HSBC Holdings PLC and Banco Santander SA on qualitative concerns. Its decision to fail the fifth bank, Zions Bancorporation, was based on the bank's inability to meet a minimum post-stress capital requirement. The Fed said both HSBC North America and RBS Citizens had significant deficiencies in their capital planning processes, including "inadequate governance and weak internal controls around the processes." Two other major US banks, Goldman Sachs Group and Bank of America, passed the stress test only after reducing their requests for buybacks and dividends. The Fed approved the plans of 25 other banks.
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London Stock Exchange Group PLC said the total equity capital raised on its markets in the 11 months to date almost doubled compared with the corresponding period in the previous year, adding that good signs of activity are continuing. In a preclose update, the London Stock Exchange said GBP28.3 billion of equity capital was raised, up 91% from GBP14.8 billion for the corresponding period in the previous year, driven by the number of new issues rising to 162 from 107. Growing investor confidence has seen a number of new issues and initial public offerings as corporates look to raise capital on the public markets.
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Shares in Rolls-Royce Holdings PLC jumped after the firm said it has been selected by All Nippon Airways to provide its Trent 100 engines to power Boeing 787 Dreamliner aircraft. Under the terms of the deal, worth GBP1.1 billion to Rolls-Royce, will see its engines used to power 25 Boeing 787 Dreamliner aircraft. Boeing already has 55 of the aircraft in service or on order, all powered by the Trent 1000.
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Low-cost airline easyJet PLC said it has agreed a new seven-year deal with London Gatwick Airport to support growth at the airport and improve customer service for its passengers. The new agreement, which will take affect from April 2014, will "incentivise the airline to grow at the airport and provide the framework for easyJet and GAL to further improve customer experience for easyJet’s passengers," said the airline.
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Tullow Oil PLC said it failed to find commercial levels of oil at the Emong-1 exploration well and the Etuko-2 well in Kenya. The FTSE 100 oil and gas company said the Emong-1 exploration well in Block 13T was drilled to a final depth of 1,394 metres to test a structure directly across the main basin bounding fault at the block but encountered poorly developed oil bearing reservoir sands. The company said that as such it believes the main basin bounding fault controls the distribution of oil reservoirs in this area but should not affect the potential of its Ngamia oil accumulation four kilometres from the site.
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Afren PLC said revenue grew 5% for the full-year, boosted by strong production figures and exploration success but saw pretax profit tumble due to impairment charges and joint-venture losses. Afren said full-year revenue came in at USD1.64 billion, up 5% on the USD1.57 billion recorded in 2012. Pretax profit for the year to December 31, 2013 declined by 144% to USD318 million from USD569 million. Net working interest production in the year increased to 47,112 boepd representing a like-for-like year-on-year increase of 8%, said the firm.
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Old Mutual PLC said it has agreed to sell Skandia Germany and Skandia Austria to a Cinven and Hannover Re acquisition vehicle for EUR220 million in cash, as its wealth division continues to simplify its operations in Europe and focus on core growth markets. At the end of 2013 Skandia Germany and Skandia Austria had a combined EUR4.9 billion in funds under management. The transaction is subject to regulatory approvals and other customary conditions and is expected to complete by the end of the third-quarter of 2014. Proceeds will be retained for general corporate purposes.
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Serco Group PLC said it has won a 22-month interim franchise agreement to continue operating the Northern Rail franchise with its 50:50 joint venture partner AbelIio on behalf of the UK Department for Transport until February 2016. The international service company said the deal has been co-signed by all five North of England Passenger Transport Executives, which ensures that the government can continue to work with Serco to deliver services tailored to needs of passengers in the region, and will see Northern Rail Ltd continue to operate local and regional rail services across the north of England.
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Compass Group PLC said it expects organic revenue growth for the first half of the year to be just over 4%, with an operating profit margin of around 10 basis points, boosted by new business wins and strong growth. The Food and support services company warned, however, of a hit to the sterling results of its overseas operations from the strength of the pound. In a trading statement ahead of its half-year results on May 14, the group said it has had a good start to the year, and its expectations for the full year remain positive and unchanged, although it warned that trading results from its overseas operations has been hit by the strength of the sterling against major currencies.
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WPP PLC said it will acquire a majority stake in Indian social media agency Social Wavelength via its wholly-owned operating company JWT. Social Wavelength is head-quartered in Mumbai, and posted revenues of INR91.5 million for the year ended March 31, 2013, with gross assets at the same date of INR59.2 million.WPP said this was its fifth acquisition in India in the last four years.
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UK travel operator Thomas Cook Group PLC said that winter trading was satisfactory, despite the number of bookings hit by the continued political unrest in Egypt, and said that customer booking for its Summer 2014 programme have shown an improving trend, with around 50% of holidays already sold. The travel company said that trading has been satisfactory for the winter season, which is 93% sold and in line with the booking pattern at the same time last year, due to lower customer demand for winter holidays to Egypt. Thomas Cook said that excluding Egypt, it achieved higher average selling prices and bookings, and gross margin were supported by improved yield management and cost efficiencies in the business.
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MARKETS
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UK stock indices are lower as investors keep an eye on the situation in Ukraine after the US warned Wednesday of further potential sanctions against Russia.
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FTSE 100: down 0.4% at 6576.87
FTSE 250: down 0.2% at 16214.04
AIM ALL-SHARE: down 0.3% at 848.04
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The pound has jumped to a six day high against the dollar following stronger-than-expected UK retail sales.
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GBP-USD: up at USD1.6616
EUR-USD: down at USD1.3756
GOLD: down at USD1293.74 per ounce
OIL (Brent): up at USD107.16 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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UK retail sales recovered at a stronger than expected pace in February, official data revealed. Retail sales volume including automotive fuel rose 1.7% in February from January, the Office for National Statistics said. Sales were expected to grow 0.5% after falling 2% in January.
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The US and the EU jointly pledged Wednesday to impose stronger sanctions if Russia further destabilizes Ukraine, hours after Moscow announced its intention to boost its military presence in Crimea. "If there is further escalation, we Europeans and Americans are ready to intensify sanctions," said EU President Herman Van Rompuy. "The goal is a negotiated solution, in respect of Ukraine's sovereignty and of international law." "We are united in our commitment to Europe's security," added US President Barack Obama during a visit to EU institutions in Brussels. "We are united in our determination to isolate Russia and impose costs for Russia's actions."
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Egyptian Army chief Abdel-Fattah al-Sissi has resigned to run for the presidency, he said Wednesday in a recorded address on state television. "Today I speak to you for the last time in military uniform. ... Today I leave behind this uniform, again to protect the nation," said al-Sissi, 59. The former military intelligence chief, who overthrew Egypt's first freely elected president, Islamist Mohammed Morsi, in July, is widely favoured to win the upcoming presidential race.
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Egypt's prosecutor general on Wednesday referred 715 alleged supporters of Morsi to trial on capital charges, local media reported. The defendants - of whom only 160 are in custody - have been charged with rioting and murder during the violence that gripped the southern province of Minya in the wake of a deadly police raid on pro-Morsi protest camps in August in Cairo.
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A Malaysia Airlines official said the firm was ready for a possible lawsuit against it in connection with missing flight MH370, as the search for the plane was called off temporarily due to bad weather in the southern Indian Ocean. "We will face this lawsuit when it comes," the official said, requesting not to be named. "I have not heard of relatives of Malaysian passengers and crew talking about a lawsuit, but that is their right if they want to sue us," she added. On Wednesday, a US firm said it expected to represent relatives of passengers in a lawsuit against Malaysia Airlines and Boeing over the disappearance of the Boeing 777-200 on March 8, according to media reports.
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South Korea and the US began a large-scale amphibious landing drill, the Yonhap News agency reported, amid heightened tensions on the peninsula. The Ssang Yong (double dragon) exercise involves more than 10,000 naval and marine troops from both countries. It is the largest joint marine drill between the two nations since 1993, and is taking place on the south-eastern coast of the peninsular until April 7. North Korea's state-run Rodong Sinmun newspaper on Monday denounced the drill and a joint aerial training exercise, accusing Washington of raising tensions, Yonhap said. Pyongyang test-fired two missiles into the sea early Wednesday, reports said, prompting international condemnation.
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