Markets live chat transcript for the chat ending at 12:01 on 23 May 2008. Participants in this chat were: Paul Murphy (PM) Neil Hume (NH)
PM:
Hello and welcome to Markets Live
PM:
Daily stock chat here on FT Alphaville
PM:
Neil Hume is with me.
PM:
We are going to irritate everyone HUGELY this morning.
PM:
PM:
The news is that….
PM:
…. We can’t print out news yet.
PM:
The story we mentioned yesterday.
PM:
It is not ready.
PM:
Not quite in a position to pull the trigger.
PM:
So people are just going to have to come back to the site this afternoon.
PM:
Dont know timing yet
PM:
Maybe around 2pm
PM:
But we have to get this out before someone else gets the story.
PM:
Cannot wait much longer
PM:
Thanks for the gags below 
PM:
I promise — it will be worth the wait
NH:
morning
NH:
Throg, we talk quite a lot of cobblers. can you give more detail
PM:
PM:
Note Baz’s comment below on rates / swaps etc
PM:
Been watching short sterling?
NH:
I don’t know anything about short sterling.
PM:
Well, I tell you Neil, we’ve got to get up to speed on some of this stuff.
NH:
Ok, educate me.
PM:
Knew you were going to say that. 
PM:
Go to the short sterling future – click on the Dec 08 contract.
PM:
See how the price has been gapping over recent sessions.
NH:
Hmm.
PM:
Well, short sterling shouldn’t gap like that
PM:
If and when it does, someone has probably blown up.
NH:
Short sterling December futures have from 94.935 a fortnight ago to 94.075 now.
NH:
Simple change in interest rate expectations – inflation etc
PM:
Yes, you simply deduct short sterling from 100 to get perceived interest rates.
NH:
So they have moved by almost 100 bps.
PM:
Hmm – but the single day moves have been exceptionally extreme – I am told.
PM:
It’s things like this that blow hedge funds up.
PM:
PM:
(Throg — send us a mail and i will mail story when pubbed)
PM:
OMG look at this.
PM:
I’ve been invited to a press pool party where Piers Pottinger will be be the host.
NH:
Press pool? What, sharing copy?
PM:
No! A blinking pool – you know, a big hole in the ground with water in it.
NH:
With Piers Pottinger – didn’t know he was a bathing buddy of yours
PM:
PM:
I don’t know what to say.
NH:
Piers Pottinger is the boss of Bell Pottinger, PR company, part of Chime – Sir Tinkerbell’s operation.
PM:
But he’s also chairman of Sportech, which owns Littlewoods Pools – the old football lottery, which is being relaunched with a new name.
PM:
So they are having a “pool party” at the Hayward Hotel in July.
PM:
ADVANCE INVITATION
As you may already be aware, Littlewoods Pools is re-launching at the beginning of the 2008 Football Season with a new name and logo.
To celebrate the launch, Pools owner Sportech, is holding a “Pool Party” event in Central London, to be hosted by its Chairman Piers Pottinger. The date is the evening of 24 July and the venue is the Haymarket Hotel, SW1. It promises to be a special event!
A formal invitation will be sent to you in due course but I wanted to give you advance notice in the hope that your diary is clear on the evening of 24 July. I do hope that you can make it.
PM:
Sadly I will be on holiday.
PM:
Helen will be in NY by then.
PM:
So we are going to have to send Sam along.
PM:
Unless of course, you want to go Neil?
NH:
Er, no. I’ll let Sam have that treat. He can have a splash about with Piers.
NH:
That looks a Straight To YouTube event to me.
PM:
PM:
PM:
To the banks…
PM:
All change in the banking sector, I see.
NH:
Yes, it’s an UP day.
NH:
Smart bounce in RBS – ordinaries are up 7p at 252p. All the selling seems to have stopped for the mo
PM:
So the nil-paids have rocketed 16 per cent — well up 7p at 52p
NH:
Just think some longer term value oriented investors have decided it had just fallen too far.
NH:
but the main action has been in Lloyds TSB tho this morning.
NH:
stock is up 15p at 406p
PM:
What’s this on the back of?
NH:
Well its our friends at Exane BNP Paribas
PM:
I still cant get used to that name.
NH:
Well, ok, James Eden and Ian Gordon.
PM:
Very good – what are they saying?
PM:
Admiring Eric Daniels’ suntan or something?
NH:
No, they are quite restrained this morning.
NH:
Premium valuation for premium returns?
A key hurdle to overcome before owning Lloyds TSB shares is relative valuation.
Despite trading some 23% below the recent peak achieved in April, it is no secret that
Lloyds still commands a material premium to its UK domestic peers. However, this is
increasingly justified by a premium return on equity, and in a world of de-leverage and
liquidity-constrained growth, Lloyds is still able to sustain double-digit asset growth
and restrict dilution to return on equity. We upgrade from Underperform to Neutral.
A key hurdle to overcome before owning Lloyds TSB shares is relative valuation.
Despite trading some 23% below the recent peak achieved in April, it is no secret that
Lloyds still commands a material premium to its UK domestic peers. However, this is
increasingly justified by a premium return on equity, and in a world of de-leverage and
liquidity-constrained growth, Lloyds is still able to sustain double-digit asset growth
and restrict dilution to return on equity. We upgrade from Underperform to Neutral.
NH:
► Receding headwinds and more sustainable returns?
In a slowing macro environment with rising unemployment, falling house prices,
volatile equity markets, and increasing corporate bad debts, it may appear bizarre to
talk of receding headwinds, especially for Lloyds TSB’s UK-centric businesses.
However, apparently vulnerable other income lines are proving increasingly resilient.
In a slowing macro environment with rising unemployment, falling house prices,
volatile equity markets, and increasing corporate bad debts, it may appear bizarre to
talk of receding headwinds, especially for Lloyds TSB’s UK-centric businesses.
However, apparently vulnerable other income lines are proving increasingly resilient.
NH:
► Strategic options too?
Tim Tookey was appointed as Acting Group Finance Director on 18 April. Tim has
made a strong start and we expect his appointment to be made permanent shortly. He
has a differentiated story to tell – with clear opportunities to take market share and
improve product margins across each of Lloyds’ three operating divisions. But Lloyds
also now has genuine strategic optionality – improving organic growth prospects
supplemented by increasingly financially compelling domestic M&A opportunities.
Tim Tookey was appointed as Acting Group Finance Director on 18 April. Tim has
made a strong start and we expect his appointment to be made permanent shortly. He
has a differentiated story to tell – with clear opportunities to take market share and
improve product margins across each of Lloyds’ three operating divisions. But Lloyds
also now has genuine strategic optionality – improving organic growth prospects
supplemented by increasingly financially compelling domestic M&A opportunities.
NH:
► But we remain underweight banks
As discussed in “Don’t bank on it” (16 May) we remain underweight the sector. The
potential rewards for owning the banks are substantial – 24% average upside in our
base case – but downside risks for banks exceed those of less macro-driven sectors
As discussed in “Don’t bank on it” (16 May) we remain underweight the sector. The
potential rewards for owning the banks are substantial – 24% average upside in our
base case – but downside risks for banks exceed those of less macro-driven sectors
NH:
Actually , leafing thru this – there’s a discussion of whether Lloyds could go for Alliance & Leicester or Bradford & Bungle.
NH:
This is rather long, but I think people will find it very useful. So I am going to put it all up.
PM:
remember bickie
Reminder to readers – if you arrived late and want to stop the dialogue ‘jumping’ as you catch up, hit the ‘pause auto-scrolling’ tab at the bottom right hand corner
NH:
Lloyds TSB was and remains, strategically constrained in terms of executing phase 3 of
its strategic plan to expand into new products and new markets. Given the scale of its
retrenchment into the UK, with c.97% of earnings now derived from UK businesses, it is
extremely difficult to identify how and where else Lloyds might demonstrate competitive
advantage. Frankly, we regard Phase 3 as an illusory concept. However, after
(reportedly) taking a very serious look at Northern Rock in 2007, shortly before it
sought emergency funding from the Bank of England, it seems reasonable to
contemplate the possible attractions to Lloyds of a bid for Alliance & Leicester or
Bradford & Bingley.
its strategic plan to expand into new products and new markets. Given the scale of its
retrenchment into the UK, with c.97% of earnings now derived from UK businesses, it is
extremely difficult to identify how and where else Lloyds might demonstrate competitive
advantage. Frankly, we regard Phase 3 as an illusory concept. However, after
(reportedly) taking a very serious look at Northern Rock in 2007, shortly before it
sought emergency funding from the Bank of England, it seems reasonable to
contemplate the possible attractions to Lloyds of a bid for Alliance & Leicester or
Bradford & Bingley.
NH:
To be clear, we see absolutely no strategic compunction for Lloyds to make a move for
either of these businesses. With minor exceptions (such as Alliance & Leicester’s cash
management business or Bradford & Bingley’s established self-certified mortgage
franchise); neither prospective target would extend Lloyds’ capabilities beyond what it
could readily achieve organically itself. Indeed, if we simplistically regard either
transaction as just a mortgage portfolio acquisition, (a simplification which Alliance &
Leicester would most certainly resent!) Lloyds would argue that it can, as an
alternative, simply accelerate its own participation in the mortgage market as it already
has done since the end of 2007, more than doubling its net share from just 6%
achieved in both 2006 and 2007.
either of these businesses. With minor exceptions (such as Alliance & Leicester’s cash
management business or Bradford & Bingley’s established self-certified mortgage
franchise); neither prospective target would extend Lloyds’ capabilities beyond what it
could readily achieve organically itself. Indeed, if we simplistically regard either
transaction as just a mortgage portfolio acquisition, (a simplification which Alliance &
Leicester would most certainly resent!) Lloyds would argue that it can, as an
alternative, simply accelerate its own participation in the mortgage market as it already
has done since the end of 2007, more than doubling its net share from just 6%
achieved in both 2006 and 2007.
NH:
If Lloyds TSB does make a move for either Alliance & Leicester or Bradford & Bingley,
the rationale would be purely financial rather than strategic. Bradford & Bingley finished
2007 with shareholders equity of GBP1.2bn, yet today it has a (pre-rights) market
capitalisation of just GBP0.6bn. It is well capitalised, well funded with strong net
inflows of (expensive) retail deposits, and it continues to grow its balance sheet
satisfactorily. However, despite this, even with its residual SIV exposure written down
to GBP10m and CDOs with US subprime exposure down to GBP40m, the market is
currently unwilling to value the business (on a standalone basis) at even book value.
Alliance & Leicester offers more interesting strategic optionality for other potential
predators given a more diversified business franchise, but if the motivation is pure
financial opportunism, then Bradford & Bingley becomes the more logical target. It’s
cheaper
the rationale would be purely financial rather than strategic. Bradford & Bingley finished
2007 with shareholders equity of GBP1.2bn, yet today it has a (pre-rights) market
capitalisation of just GBP0.6bn. It is well capitalised, well funded with strong net
inflows of (expensive) retail deposits, and it continues to grow its balance sheet
satisfactorily. However, despite this, even with its residual SIV exposure written down
to GBP10m and CDOs with US subprime exposure down to GBP40m, the market is
currently unwilling to value the business (on a standalone basis) at even book value.
Alliance & Leicester offers more interesting strategic optionality for other potential
predators given a more diversified business franchise, but if the motivation is pure
financial opportunism, then Bradford & Bingley becomes the more logical target. It’s
cheaper
NH:
Historically, simple deal economics would have been predicated largely on
cost synergies, and for an in-country deal, even with a creditable 42.8% efficiency ratio,
35-40% of the GBP280m cost base could reasonably be eliminated.
However, other than the unusual spectre of an opportunity like Bradford & Bingley
trading at a large discount to book value, funding and capital synergies now appear
increasingly relevant. With incremental new business now being funded entirely by
retail deposits raised at an incremental cost of 100bp+ over base rate, the opportunities
for Lloyds TSB, still able to fund short term at sub-LIBOR in the wholesale markets,
start to look very material.
cost synergies, and for an in-country deal, even with a creditable 42.8% efficiency ratio,
35-40% of the GBP280m cost base could reasonably be eliminated.
However, other than the unusual spectre of an opportunity like Bradford & Bingley
trading at a large discount to book value, funding and capital synergies now appear
increasingly relevant. With incremental new business now being funded entirely by
retail deposits raised at an incremental cost of 100bp+ over base rate, the opportunities
for Lloyds TSB, still able to fund short term at sub-LIBOR in the wholesale markets,
start to look very material.
NH:
Bradford & Bingley has GBP16bn of securitisations and covered bonds, where public
markets remain closed (save for HBOS’ GBP500m issue earlier this week). It is highly
uncertain what pricing differential Bradford & Bingley may suffer when markets reopen.
However, at 31 December 2007, it had GBP12bn of unsecured wholesale funding and
GBP21bn of retail deposits. We do not have full visibility of the maturity profile of either
the wholesale or retail funding, nor the average cost (which will be far below the cost of
incremental funding at more than 6%). However, we hypothesise that Lloyds would,
over time, be able to reduce the average cost of short-term funding by more than 50bp.
On GBP33bn, that is worth GBP165m pre-tax – more than the anticipated cost
synergies of an in-country transaction.
markets remain closed (save for HBOS’ GBP500m issue earlier this week). It is highly
uncertain what pricing differential Bradford & Bingley may suffer when markets reopen.
However, at 31 December 2007, it had GBP12bn of unsecured wholesale funding and
GBP21bn of retail deposits. We do not have full visibility of the maturity profile of either
the wholesale or retail funding, nor the average cost (which will be far below the cost of
incremental funding at more than 6%). However, we hypothesise that Lloyds would,
over time, be able to reduce the average cost of short-term funding by more than 50bp.
On GBP33bn, that is worth GBP165m pre-tax – more than the anticipated cost
synergies of an in-country transaction.
NH:
Potential capital synergies arise from the fact that Bradford & Bingley perceives a need
to retain a very material tier 1 “premium” over its more diversified peers. In 2007, it
achieved an underlying return on equity of 19.1%, but the decision to raise GBP300m
of equity to take its (preformed) equity tier 1 to 9.3% consigns that metric to history. In
essence, Lloyds TSB’s unofficially targeted 7% equity tier 1 would appear more than
ample for a combined group. Simplistically, we can conclude that around a quarter of
Bradford & Bingley’s GBP1.2bn (2007 year-end) shareholders’ equity is surplus to
requirements.
to retain a very material tier 1 “premium” over its more diversified peers. In 2007, it
achieved an underlying return on equity of 19.1%, but the decision to raise GBP300m
of equity to take its (preformed) equity tier 1 to 9.3% consigns that metric to history. In
essence, Lloyds TSB’s unofficially targeted 7% equity tier 1 would appear more than
ample for a combined group. Simplistically, we can conclude that around a quarter of
Bradford & Bingley’s GBP1.2bn (2007 year-end) shareholders’ equity is surplus to
requirements.
NH:
Our point is simple. Even without any detailed arithmetic that a visit to the Bradford &
Bingley data room might facilitate, theoretical deal synergies appear to eliminate the
entirety of any acquisition price loosely based on today’s market capitalisation. Cost
synergies alone of (say) GBP100m, taxed and on a P/E on 8.5 equate to today’s
GBP0.6bn market value of the business. In today’s uncertain world, potential funding
synergies actually appear to exceed cost synergies, with Bradford & Bingley’s business
capable of being supported by 25% less capital in a combined business.
Bingley data room might facilitate, theoretical deal synergies appear to eliminate the
entirety of any acquisition price loosely based on today’s market capitalisation. Cost
synergies alone of (say) GBP100m, taxed and on a P/E on 8.5 equate to today’s
GBP0.6bn market value of the business. In today’s uncertain world, potential funding
synergies actually appear to exceed cost synergies, with Bradford & Bingley’s business
capable of being supported by 25% less capital in a combined business.
Lloyds TSB has just raised more in non-equity tier 1 than it would cost to acquire
Bradford & Bingley with a 50% premium. It has no strategic need to acquire Bradford &
Bingley, and would have reservations about an GBP8.5bn self-certified book. It
wouldn’t ordinarily choose to take its equity tier 1 back to Basel 1 levels at a time of
severe deterioration in the UK macro, and it is perfectly capable of growing its own buyto-
let book organically rather than acquiring GBP23bn from B&B. However, financially,
such a transaction appears compelling.
PM:
SuperSWF!
NH:
shares in B&B up 4p at 105.5p
PM:
NH:
and A&L up 2.5p higher at 421p
PM:
Thanks for all that. Very interesting.
PM:
I personally can’t see any reason why Lloyds would want to take on Bungle Bank, but still…
PM:
NH:
our new recruit Bryce Elder has just sent over an interesting chart from UBS
NH:
since the start of the month short sterling has been tracking the oil price very closely
NH:
the inference must be that the market is worried about inflation and the BoE have to jack up interest rates to stop it
PM:
yes — interesting
PM:
Notice that same UBS note has some rather gloomy stuff on newspapers
NH:
it does. very gloomy indeed
PM:
News flow this month has added to the bleak outlook for advertising across most
categories of newspapers in the UK. Negatives have included businesses cutting
marketing budgets, property advertising slowing sharply, and the transfer of advertising to websites, which also highlights the structural issues that are likely to weigh on sentiment.
categories of newspapers in the UK. Negatives have included businesses cutting
marketing budgets, property advertising slowing sharply, and the transfer of advertising to websites, which also highlights the structural issues that are likely to weigh on sentiment.
PM:
This demonstrates how current cyclical economic pressures may lead to an
acceleration of the structural migration of print-based advertising to online, with the risk that advertising does not return even when economic conditions improve.
acceleration of the structural migration of print-based advertising to online, with the risk that advertising does not return even when economic conditions improve.
PM:
Sellers of Trinity Mirror
PM:
reminds me of the stuff about web traffic this morning
PM:
Something of a stink
PM:
Telegraph top and everyone else is complaining.
PM:
this explains it.
PM:
The delightfully named Jemima Kiss.
PM:
But what people probably don’t know is that the salaries of Telegraph hacks are being linked in some way with the amount of web traffic.
PM:
Not a welcome development.
PM:
Here’s a little note from The Telegraph that explains it:
NH:
The news below on the growth of the telegraph.co.uk is an important
milestone but I’m sure will prove to be a fairly early one on the road to success for our digital operations. As I said in an email a few weeks ago how we all perform on line will be an important element of how year end wages etc are assessed. Please don’t think that because the Telegraph is beginning to punch its weight on line that it’s time to sit back. I’ve just come out of a meeting with Toyoto about how they do things and one of their guiding principles is that they don’t do things “best” only “better” which means there is always room for improvement which, of course, is true for all of us.
milestone but I’m sure will prove to be a fairly early one on the road to success for our digital operations. As I said in an email a few weeks ago how we all perform on line will be an important element of how year end wages etc are assessed. Please don’t think that because the Telegraph is beginning to punch its weight on line that it’s time to sit back. I’ve just come out of a meeting with Toyoto about how they do things and one of their guiding principles is that they don’t do things “best” only “better” which means there is always room for improvement which, of course, is true for all of us.
PM:
You posted that with a straight face
PM:
PM:
Wider markets?
NH:
hang on, just bringing up the screen
PM:
FTSE 100 down 22 at 6159
NH:
and that’s because the miners are experiencing a bit of profit taking this morning
PM:
And the banks aren’t big enough anymore to counter balance
NH:
seems that there is a bearish story around on nickel this morning
NH:
in addition to the story in the WSJ about the Rio/BHP tie-up running into some regulatory hurdles
PM:
Got any more on Nickel??
NH:
The nickel price has broken down and fallen below its critical support level at US$25k/t.
The metal fell 6% today to US$23.6k/t, which is bad news. Inventory levels are high and need to
roll over to stop this decline. That said, inventories have still gone up (see Chart 1) in what should
normally be a seasonally strong period. At the same time there is hardly any pig iron in the
market (see Chart 2), which is also bad news for the metal. The next support level is at
US$20k/t, which would represent another 15% decline from here;
The metal fell 6% today to US$23.6k/t, which is bad news. Inventory levels are high and need to
roll over to stop this decline. That said, inventories have still gone up (see Chart 1) in what should
normally be a seasonally strong period. At the same time there is hardly any pig iron in the
market (see Chart 2), which is also bad news for the metal. The next support level is at
US$20k/t, which would represent another 15% decline from here;
NH:
oh, should have mentioned this is from MF Global
NH:
Both Xstrata and BHP Billiton (both Neutral rated) with some 27% and 16% profit exposure
respectively have significant exposure to this metal. Relative to the other miners, this
should therefore hold these stocks back. AngloAmerican (BUY, TP 4,500p) has some 9%
profit exposure, but can boast some very strong exposure to the booming platinum price (c29% of
Group profits) and other stronger base metals (c25% of profits), the very robust iron ore and other
ferrous metals (c21% of profits) as well as the strong coal business (c7% of profits)
respectively have significant exposure to this metal. Relative to the other miners, this
should therefore hold these stocks back. AngloAmerican (BUY, TP 4,500p) has some 9%
profit exposure, but can boast some very strong exposure to the booming platinum price (c29% of
Group profits) and other stronger base metals (c25% of profits), the very robust iron ore and other
ferrous metals (c21% of profits) as well as the strong coal business (c7% of profits)
NH:
With Rio Tinto (BUY, TP under review) having basically very little exposure to this metal, it
should also help to address the exchange ratio offered by BHP Billiton. We therefore
continue to prefer Rio Tinto relative to BHP Billiton;
should also help to address the exchange ratio offered by BHP Billiton. We therefore
continue to prefer Rio Tinto relative to BHP Billiton;
NH:
When looking purely to nickel exposure then Eramet and Norisk Nickel should be hardest
hit, albeit Vale should also be impacted with some 36% profit exposure to Nickel and other
products; and
hit, albeit Vale should also be impacted with some 36% profit exposure to Nickel and other
products; and
NH:
Is this a lead indicator of other metals/commodities? Not really, but caution is required.
The question must arise whether the break-down of nickel is bad news for the overall
commodities complex? We would say that so far it looks like a metal specific issue. The metal
was significantly undersupplied some time ago and has hence seen extremely high and erratic
prices. The adjustment to US$30k/t was still seen as normal, but the latest adjustment must been
seen as bringing the metal back in line with its marginal cost of production and the higher
inventory levels. This, however, does not necessarily mean that the whole metals complex will
break down. For example zinc was weak throughout that whole period of the commodities run.
Investors really need to look to copper as the lead cyclical indicator and that so far remains
supported by the low inventory level, high oil price and the not overstretched price relationship to
the marginal cost of production.
The question must arise whether the break-down of nickel is bad news for the overall
commodities complex? We would say that so far it looks like a metal specific issue. The metal
was significantly undersupplied some time ago and has hence seen extremely high and erratic
prices. The adjustment to US$30k/t was still seen as normal, but the latest adjustment must been
seen as bringing the metal back in line with its marginal cost of production and the higher
inventory levels. This, however, does not necessarily mean that the whole metals complex will
break down. For example zinc was weak throughout that whole period of the commodities run.
Investors really need to look to copper as the lead cyclical indicator and that so far remains
supported by the low inventory level, high oil price and the not overstretched price relationship to
the marginal cost of production.
RIO TINTO (RIO:LSE): Last: 6,470, down 199 (-2.98%), High: 6,671, Low: 6,415, Volume: 1.83m
Eurasian Natural Resources Corp (ENRC:LSE): Last: 1,351, down 58 (-4.12%), High: 1,415, Low: 1,350, Volume: 660.21k
Kazakhmys (KAZ:LSE): Last: 1,716, down 61 (-3.43%), High: 1,780, Low: 1,713, Volume: 638.89k
Xstrata (XTA:LSE): Last: 4,107, down 117 (-2.77%), High: 4,230, Low: 4,087, Volume: 2.75m
Vedanta Resources (VED:LSE): Last: 2,577, down 71 (-2.68%), High: 2,648, Low: 2,564, Volume: 603.85k
PM:
Think that gives the picture
NH:
it does
NH:
PM:
(Worzel — I rather liked that graph! )
)NH:
right, lets move on to a point from Rahodeb below- Findel.
NH:
been doing a bit of digging this morning
NH:
as far I as I can figure out the company has been in the Square Mile seeing institutions
NH:
and they are not liking what they are hearing
NH:
apparently a few largish blocks of stock are being touted round the market
PM:
And the directors have just been buying stock!
NH:
stock has been very weak for three days
NH:
and is off a further 26.5p at 221.5p
PM:
Goodness, yes
NH:
for those of you who have not followed this company
NH:
it is basically a home shopping outfit
NH:
I think it also come into offices and tries to sell gifts
NH:
Kleeneze Distribution Network – that’s the irratating catalogue that’s gets left on your doorstep
PM:
Oh that thing!
NH:
also owns Letterbox, Kitbag, Confetti, I Want One of Those and The Cotswold Company
PM:
Well it has been smacked this morning
PM:
I Don’t Want One of Those
NH:
anyway the company has been in the doghouse with investors since April
NH:
when it stunned the market bad debt provision only 15 days after an upbeat trading statement
NH:
at that point it finally acknowledged it was affected by the credit squeeze
NH:
stock closed down 164 1/2p, or 37 per cent, at 279 3/4p on the day of the warning
NH:
anyway, the way the stock is performing at the moment suggests that the market reckons another profits warning is on the way
NH:
if that happens it could all get very nasty
NH:
however, I suspect a profits warning is not imminent because directors recently bought stock
NH:
but whatever they have been saying in these presentations obviously has given any comfort to shareholders
PM:
Interesting
NH:
actually just been looking at some of the wares on the findel website
NH:
this is on Iwantoneofthose.com
PM:
NH:
Say goodbye to pathetically small bunches of limp herbs bought for a small fortune from your local supermarket, and say hello to the simplest and most advanced indoor herb and plant grower on the market. It doesn’t matter a jot if you’re rubbish at growing stuff, this remarkable AeroGrow Kitchen Garden (complete with Herb Kit) contraption will do everything for you. All you do is pop the growing pods into the machine and plug it in, it tells you when and how much water to add, when to add nutrients (all included), and the internal micro-processor controls everything – even how much light the plants need. Your plants will grow at three times the speed they would in a traditional earth pot, and supply you with the freshest herbs possible. The machine comes with a seven pot herb kit that includes Cilantro, Chives, Italian Basil, Purple Basil, Dill, Mint, and Parsley. You can also buy extra kits and be growing Chillies, Baby Tomatoes and more Gourmet Herbs with consummate ease in no time at all. Have your very own kitchen garden actually in your kitchen, and all with zero maintenance and sub-zero talent
NH:
price???
NH:
yours for only £119
PM:
NH:
and what about
NH:
EzVision Eyewear
NH:
The EzVision original and the newly introduced EzVision X4 are all very Blade Runner meets Minority Report. These space age shades are your very own take anywhere movie screens. Both versions are super light-weight and plug into your iPod Video or any portable video/movie/DVD player, and show your movies as though you’re looking at a huge screen. The Original shows you movies at the equivalent of a 50 inch TV screen, and the X4 a 60 inch. They allow you to zone out from the world around you and get right into the movie, slide show, or whatever. There are retractable headphones that are built into the arms of the specs, so you can truly plug-in and zone-out. Watch movies in bed without disturbing your better half, chill out on the train in front of a top film, or plug in in-flight and free yourself from those horrible little seat-back screens. They have a 6-8 hour re-chargeable battery, an integral volume control, and come with adaptors to connect to iPods (and we tried it successfully with the new Zune player too) and DVD players. When you can’t get to the cinema, bring the cinema to you.
PM:
Post the link — people must see the photos
NH:
that’s only £150
PM:
NH:
Bladez 3D Helicopter
PM:
NH:
If you’ve had a wild time flying our indoor helicopters (and you really should have) then it’s time to step-up to the big time with Bladez 3D, our annoyingly spelt, but immensely enjoyable, indoor and outdoor monster RC Helicopter. It’s tough, it’s cool, it’s 3 channel and even has an intelligent RC system that avoids interference with other RC users – but won’t stop them pestering you to have a go. A twelve minute charge will give you about eight minutes of flying time, and it’s best suited for intermediate to advanced heli flyers. Unlike our lighter and simpler indoor models it has more precision and control, which of course requires more flying skill, but ensures a whole heap more fun. We got it up and running straight from the box, and despite not being ace heli flyers ourselves, managed to zip it around the office without sending anyone to casualty. However, it’s a pretty powerful beast, so if you’re flying it indoors make sure you have a fair amount of space, and as few household pets as possible. This is the best value for money indoor/outdoor chopper we’ve ever flown to date.
PM:
Wouldnt want to get in a 2D helicopter
NH:
that’s £50 to you sir
NH:
NH:
OJ@Home
NH:
we got a lot of calls about Panmure yesterday
NH:
mainly from their rivals
NH:
trying to stir up a bit of trouble
NH:
that said, there does appear to have been a protest vote yesterday and resoltuions 6 and 7 were removed
PM:
What were they ??
NH:
6. To re-elect Charles Stonehill, who retires by rotation, as a director.
7. To re-elect Richard Wyatt, who retires by rotation, as a director.
7. To re-elect Richard Wyatt, who retires by rotation, as a director.
PM:
So who are those two?
NH:
Wyatt chairman
NH:
this was from the statement yesterday
NH:
Richard Wyatt, who as previous Chairman of the firm was instrumental in re-
establishing Panmure Gordon as a leading independent firm, has decided to step
down from the Board to concentrate on other commitments and so will not now be
standing for re-election at today’s meetin
establishing Panmure Gordon as a leading independent firm, has decided to step
down from the Board to concentrate on other commitments and so will not now be
standing for re-election at today’s meetin
NH:
Richard’s efforts while Chairman,
and his advice as a non-executive, particularly in relation to the number of
growth initiatives the business has undertaken, has been very valuable. We look
forward to Richard remaining a close friend and supporter of the firm and thank
him greatly for all that he has done.
and his advice as a non-executive, particularly in relation to the number of
growth initiatives the business has undertaken, has been very valuable. We look
forward to Richard remaining a close friend and supporter of the firm and thank
him greatly for all that he has done.
NH:
he was also chairman
PM:
Ok — thanks for that bust up stuff. apparently
NH:
all very odd and OJ it does bear further digging
NH:
even if rivals are trying to make mileage out of it
PM:
PM:
PP below — sorry we dont know anythign about that
NH:
NH:
Well, its seems the end is nigh for Silverjet
NH:
shares suspended this morning
NH:
because the company has not got the working capital inject it needed
NH:
and is now talking to other parties
NH:
which is very odd because a few weeks ago this looked like a done deal
PM:
Now an undone deal
NH:
this is what went out from the company on May 5
NH:
#8.4 million loan facility and proposed #4.3 million subscription
Silverjet plc, the British exclusively business class airline, today announces
that on 2 May 2008 it entered into both a Subscription Agreement and a Loan
Facility Agreement with Viceroy Holdings LLC which is affiliated with Viceroy
Fund, an international luxury development fund based in the USA and UAE, details
of which are set out below.
Lawrence Hunt, Chief Executive of Silverjet said:
“I am delighted to confirm that following the announcement on 30 April
concerning the Memorandum of Understanding, Silverjet has now entered into a
binding conditional agreement and secured the commitment of a high quality,
long-term strategic investor. Viceroy is committed to the development and
expansion of Silverjet, and proposes to inject further capital to develop the
Silverjet proposition.
“This investment means that Silverjet is now well placed, both financially and
strategically, to exploit the opportunities which exist in the airline and all
business class market – a market which we now dominate.”
PM:
So what is the likely outcome here?
NH:
well, I will leave this to Mike Stoddard
NH:
he is the analys at Daniel Stwart who has had a 0p target price on the stock for months now
NH:
On 6 May 2008, Silverjet announced that on 2 May 2008 it had entered into a £8.4m loan facility agreement and that Silverjet had entered into a proposed £4.3m subscription agreement with Viceroy Holdings LLC. On 2 May 2008, Silverjet Aviation served a notice under the Loan Facility to drawdown approximately US$5.0 million. Silverjet has yet to receive the full drawdown.
PM:
NH:
As announced on 30 April 2008, Silverjet’s working capital reserves are limited and advances under the Loan Facility are required as a matter of urgency.
PM:
target price of zero!
NH:
Silverjet continues discussions with other parties, which have confirmed an interest in investing in the Company. In the meantime, Silverjet’s services continue as scheduled.
We consider it very unlikely that Silverjet’s shares will regain a listing
We consider it very unlikely that Silverjet’s shares will regain a listing
NH:
In addition to the problems with the business model which we highlighted in our initiation note in January, the meteoric rise in the oil price has added further misery.
NH:
We now estimate that it costs over £44,000 in fuel alone for a round trip to New York on a Silverjet B767, up from £28,600 at the time of the November 2007 fund raising. Against this background, we do not think anyone will bid and that, for Silverjet to survive, current shareholders will need to inject large amounts of fresh equity.
NH:
actually I have a copy of Mr Stoddart’s note from January
NH:
Sell – 100% downside
NH:
of course this will not please one of our columnists
PM:
Who’s that?
NH:
our style guru
NH:
TYLER BRULE
PM:
NH:
he is a big fan of business only jets
NH:
There’s nothing like a short, sharp jab to the lower chest and a crotch-numbing dip in frigid waters to start the week. The jab came in the form of an early Sunday morning text from my friend Bruce in Moscow who sent word that the all-premium carrier Eos Airlines has just gone into Chapter 11.
NH:
The dip has become an annual ritual with Mats to celebrate the opening of the summer house in Sweden and this year involved a very rapid, ungraceful jump rather than dive into the Baltic (temperature about 9Degrees C) and a speedy ascent up the ladder to bundle up. While we were drying off, I texted Bruce back to verify it was true. Seconds later he confirmed that it was no rumour and that Eos would be operating its final flights over the next 24 hours.
NH:
News of collapsing carriers isn’t such big news at the moment, particularly the premium sort. Runways around the world are littered with carcases of all-premium concepts that never quite made it (anyone recall the days of MGM Grand?) for the long haul but I was a little stunned by the sudden disappearance of Eos because I had breakfast with the senior management only days before and they couldn’t have been chirpier about their prospects.
NH:
They were relieved that they had their letter of intent for an additional Dollars 50m of financing and were gearing up for the launch of their Newark service.
I have sampled Eos a number of times and it’s a shame that they didn’t make a go of it. While I wasn’t exactly a fan of flying across the Atlantic in a tarted-up 757, the price was right, there was as much space as on BA First and with enough business to do in the back of the car it wasn’t so bad having to travel to Stansted with its speedy security set-up and the airline’s fast boarding procedure.
I have sampled Eos a number of times and it’s a shame that they didn’t make a go of it. While I wasn’t exactly a fan of flying across the Atlantic in a tarted-up 757, the price was right, there was as much space as on BA First and with enough business to do in the back of the car it wasn’t so bad having to travel to Stansted with its speedy security set-up and the airline’s fast boarding procedure.
NH:
All eyes are now on the last man standing and, if we’re to believe the press reports, Silverjet is on shaky ground. A few weeks ago the rumour was that Lufthansa was potentially interested but the German flag-carrier’s confirmation that it’s keen on picking up the rest of the shares it doesn’t already own in BMI suggested it was more interested in playing number two at Heathrow rather than building a base outside London
NH:
I might be proved wrong but given that Lufthansa uses Geneva-based PrivatAir for all its premium services it’s doubtful it sees much value in Silverjet. So is there a future for this type of independent, all-business airline?
I think there is. Big network carriers have already proven that there’s a market for it (KLM, Swiss and Lufthansa all have single-class products and BA’s warming up to launch its own transatlantic service out of London’s City airport) but independent operators have trouble because they’re not part of a bigger network and high-paying passengers tend to be shackled to their frequent-flier programmes.
I think there is. Big network carriers have already proven that there’s a market for it (KLM, Swiss and Lufthansa all have single-class products and BA’s warming up to launch its own transatlantic service out of London’s City airport) but independent operators have trouble because they’re not part of a bigger network and high-paying passengers tend to be shackled to their frequent-flier programmes.
PM:
ok — ta
PM:
PM:
Any RAW to finish off with this morning?
NH:
OK, here goes
NH:
hearing Rabobank are set to make an offer for Friends Prov’s Lombard division
NH:
hearing the price is pretty good
PM:
NH:
very bearish story going round on Taylor Wimpey
PM:
Whats that
NH:
well, the stock went ex the other day
PM:
And?????
NH:
actually we had better check this before printing
PM:
Hmmmmm
NH:
exrtremely RAW and extremely bearish
PM:
There is raw and their is financial food poisoning
NH:
on a brighter note there does seem to be something going on between Persimmon and Bovis but I don’t think that it is the straight forward bid many people are looking for
PM:
ok
PM:
PM:
Right — on this story we keep threatening….
PM:
Come back at 1.30 to check
PM:
We will do everything in our power to print it then
PM:
Good luck to everyone doing CFAs
PM:
Obviously we failed ours 
PM:
Not really — one reason i went into journalism is so i didnt have to do any more exams
PM:
Please behave yourselves below
PM:
And one more point — please be careful not to libel people and companies here.
PM:
PM:
We are off. thanks for joining. Back next TUESDAY at 11am for the next ML session
NH:
not me – off for the week. first hols of the year. need to recharge.
PM:
In the meantime, comeback to Alphaville at 1.30 BST for a nice little M&A tale…
PM:
Oh, Neil swanning off.
PM:
Need a replacement…