Financial Times
RETAILERS IN BATTLE AT DAWN
According to the director of retail consulting at Experian,
igures for Boxing Day would reveal the number of people visiting
shops would be down on 2007. Jonathan de Mello said more
retailers were set to fall in the weeks ahead, with nearly 20
preparing themselves for \"pre-pack\" administrations, where a
buyer for the assets is lined up in advance of the
administration. His comments were echoed this week by Stephen
Robertson, director general of the British Retail Consortium,
who said that \"despite a last-minute surge, it is becoming clear
that overall this has been a poor Christmas for retailers, as
struggling customers cut back and traded down\".
BAILED-OUT BANKS\' LOANS COST MORE
According to research by the mortgage website mform.co.uk,
banks bailed out by the government will charge an average of 50
pounds a month more than other lenders on new mortgages for
first-time buyers. Banks which were nationalised and those in
which the government holds a stake charge an average rate of
interest of 5.02 percent on variable rate products for
first-time buyers. The average rate offered to first-time buyers
by lenders who have not been bailed out by the government is
4.87 percent.
NEW HOUSING TO FALL FAR BELOW TARGETS
According to a report released on Saturday from property
consultancy Savills, the number of new homes starting
construction in England in 2009 could fall to just 50,000
\"leaving the government\'s house-building targets in tatters\".
The consultancy predicts that starts of new homes could decline
to just a third of the level in 2007, and considerably below the
annual government target of 240,000 new homes. With very few
private sector builders prepared to risk starting on new homes
that may not be sold, Savills said many of these new starts will
be by government-funded registered social landlords.
BRITISH VITA IN STANDSTILL DEAL WITH LENDERS
British Vita, the chemicals company, has agreed a standstill
with lenders to evade a breach on the terms of its debt and
provide it with more time to study options to recapitalise in
2009. According to people close to the situation, talks with
leading lenders are continuing and are constructive. The TPG
owned company needs to reduce its debt load of 631 million
pounds, the covenants of which it risked breaching next month as
it struggled with a downturn in the sector and associated
industries. The standstill agreement will provide the firm with
a period of stability through to March 2009 to hold negotiations
with lenders.
WOOLWORTHS STORE CLOSURES START
After hopes of a sale of the business as a going concern
receded earlier this month, administrators to collapsed UK
retailer Woolworths will on Saturday close 207 stores in
the first phase of branch closures. By January 5, all 807 stores
are to close, with more than 300 shops to be sold to other
retailers. Despite talks continuing with interested parties on a
sale of the business as a going concern with 125 stores, no deal
is close to the 30 million pounds of funding needed, according
to a person close to discussions. The focus, therefore, is now
on selling the Woolworths brand name, along with Ladybird and
Chad Valley brands, for which interest has been expressed from
other retailers and manufacturers.
VIRGIN SHRUGS OFF FINANCIAL IMPACT OF ZAVVI COLLAPSE
Virgin said on Friday it expects to emerge undamaged from
the collapse of Zavvi, the music retailer it underpinned
financially and which has gone into administration. The
financial woes of the chain, which used to be Virgin Megastores
prior to a management buy-out of the division from Virgin Group
in September 2007, came to the fore after the collapse of
Woolworths\' wholesale arm EUK. With the collapse of Woolworths,
Zavvi was left without a batch of Christmas bestsellers just
weeks before December 25. Under the terms of the buy-out
agreement, Virgin stepped in and agreed to guarantee millions of
pounds of Zavvi\'s payments to Woolworths. Fears that the
collapse of Zavvi would leave Virgin with a large unpaid bill
were discounted when the latter said Woolworths\' administrators
had agreed to cap Zavvi\'s liabilities at 40 million pounds.
PENDRAGON GIVEN TIME TO RENEGOTIATE DEBT TERMS
According to people familiar with the situation, Pendragon , the UK\'s
largest car retailer, has secured a covenant
waiver from its banks and noteholders, deferring testing of
covenants on its net debt of 287.6 million pounds at the year
end. This would allow it time to hold talks with lenders in
2009. In November, Pendragon said it will report a 30 million
pound loss before exceptional items for the full year to
December due to a worse-than-expected drop in retail car sales.
WILLIAM HILL EXAMINES THE INCENTIVES FOR REFINANCING
William Hill, the bookmaker, is the latest in a run
of companies to consider the so-called forward-start facility
for refinancing its debt as the first 1.2 billion pound slice of
its 1.45 billion pounds total debt facilities expires in 2010,
people familiar with the situation have said. The process is
viable for healthy companies, not in breach of their existing
credit agreements, and works by inviting existing lenders to be
part of a group of banks providing an extension for the life of
their loan commitments. Back in July this year, the aerospace
defence engineering group, Meggitt, was one of the
first to use this form of financing in July.
CAMBRIAN AND WESTERN SET DEAL TERMS
In a proposed deal that underscores the collapse in company
valuations in the junior mining sector, Cambrian Mining
has agreed merger talks with Western Canadian Coal. The
all-share takeover by Western would value Cambrian at 24.75
pence a share, reflecting the steep fall in the share price of
the Aim-listed company which was trading at 345 pence in June.
The collapse of prices across the commodities sector, and the
absence of financing, have had a marked effect on the share
price of Cambrian and its mining peers on Aim. Western\'s
Toronto-listed shares have lost around 95 percent since June.
Cambrian gained 3.25 pence at 21.75 on Wednesday, while Western
rose one cent to 57 cents.
GAME ON FOR CODEMASTERS\' STOCK MARKET DEBUT
After being thwarted in 2008 by the general market turmoil,
Codemasters hopes to fulfil a long-held ambition and make its
stock market debut next year. \"The company is in a position (to
float), but the world closed its doors on us. But there is life
after death -- the public markets will rebound and whether in
the latter half of 2009 or in early 2010 we will be ready,\" said
chief executive Rod Cousens. The company is the largest games
developer and publisher in the UK, along with Eidos, the group
behind the Tomb Raider franchise.
Prepared for Reuters by Durrants
Keywords: PRESS DIGEST Financial Times Dec 27
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