Markets live chat transcript for the chat ending at 12:15 on 13 Jan 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH)
PM:
Hello, is that Alpha – ville?
NH:
Yeah
PM:
Hello, I have Bone H. Beaumont the first, senior goof at Parasite Capital on the line. You’re now connected.
PM:
Hullo, Bone Beaumont here, senior goof at Parasite Capital here in New York. We just wanted to dialogue with you on the subject of Roche possibly bidding for Genentech.
NH:
…. off! We don’t do personal one-to-one briefings for American hedgies.
PM:
And we were watching, er CNBC and they were pointing out that you had not disclosed your sources on this story so can you just explain to me who your source actually was on this deal and why France Telecom might be publishing information on this matter.
NH:
We’re part of the FT – Financial Times
PM:
Uh? Financial time? We’re on EST here. When time is it in France? Sorry am I calling when it’s night time for you guys?
NH:
Look. We’re busy. We’ve printed everything we know on Roche and Genentech. – but we don’t have time to discuss the matter with every hedgie in NY.
PM:
On CNBC they said that you guys and printed this story in FranceVille without saying where you got your information from.
NH:
Sorry I’ve got to go.
PM:
And on a later report on CNBC, looking at the two dollar rise in Genentech stock that we have seen on the TV this afternoon and on Bloomberg, they reported that you had not said which people you had spoken to about this matter.
NH:
Look pal. Place the top bit of the phone to your ear. GO AWAY.
PM:
But we’d just wannya now to dialogue with our research people at this end at Parasite Capital because maybe you could explain to us where you got this information from, that was reported on CNBC quoting FV Telecom in England…
11:03AM
NH:
Look –we’re going to have to stop this Murph. It puts me in a bad mood just reading the stuff.
NH:
I’ve had to turn ringer on my phone off. If any other bonehead calls up and asks me who the source was – im just going to lose it.
NH:
Why do they do that? Since when does Charlie Gasparino go on the box and say “X company is going to bid for Y – and I know that because I range up the press office to check and Slim Felt, the head of communcations, said “Yeah Charlie, you’re right”??
PM:
It’s because we don’t say “three people familiar with the matter” told France Telecom.
NH:
Right, so people wont ring me up if I say people familiar with the art of reading now say that Roche has all but confirmed it is close to re-bidding for Genentech?
PM:
Well what they’ll do is ring you up and say Erich Hunziker, chief financial officer and deputy head of Roche’s executive committee, told investors at the J.P. Morgan Healthcare Conference that the bid is “on track” – but he didn’t make any statement on the dividend policy
PM:
Actually, that’s not quite right. Here’s par from a Bloomberg story.
PM:
In his speech, the Roche CFO showed a slide reaffirming objectives to increase the dividend over the next three years. Asked by an analyst about reports Roche might cut its dividend to help pay for the Genentech deal, Hunziker said: “No.”
NH:
So Roche stock must have rallied on that, no?
PM:
No – shares fell 3.4 per cent yesterday. – and they are off another 1 per cent today.
NH:
actually the comments by the CEO were interesting
NH:
he was the saying the deal was on track
NH:
and was financing
NH:
but given that Genentech’s independent directors knocked it back in August
NH:
I think we can safely assume that another offer is coming
PM:
Yes — we guess — early february
PM:
BUT THAT’S ONLY A GUESS DONT RING ME UP
NH:
PLEASE DON’T RING US UP OR EMAIL AND ASK DUMB QUESTIONS ABOUT SOURCES
NH:
ENOUGH
11:07AM
NH:
Did you see this Million Dollar Traders programme on BBC 2 last night
PM:
Nah, was at the IFR awards
PM:
What was it like? Toe-curling. Let me guess – they were each given one of Peston’s Picks?
NH:
No no – nothing like that. It was rather good actually.
NH:
got together a group of people who knew nothing about trading and plonked them in front of some Bloomie screens
NH:
really interesting to see the way they reacted to set backs
NH:
mind you some were hopeless and will surely be cut
NH:
like the old guy
NH:
who bought when he should have sold
NH:
and then there was some ex-officer type who put on a really ambitious pairs trade
PM:
haha
NH:
long HBOS, short Allianz
NH:
it blew up in his face
NH:
another woman cracked
NH:
she didn’t like trading
NH:
and then there was a classic bit on short selling
NH:
a woman said it was immoral to be selling shares you did not own in companies
NH:
which has taken years to build
NH:
by hard working men and woman
PM:
NH:
she seemed to think there was a right price for stocks
PM:
I will have to catch it next week
NH:
in fairness, they were plunged into biggest meltdown in the last 70 years
NH:
so it was something of a baptism of fire
NH:
but then the old guy putting everything on BG
NH:
that could have gone wrong at any time
11:12AM
NH:
What was the IFR awards like? Who were you there with?
PM:
Oh, I promised not to come on here this morning and take the proverbial out of Nomura.
NH:
At the Grosvenor I guess.
PM:
Yep.
PM:
There was a good turn out amongst ex-Lehman people.
PM:
Sadly, they were all busy waiting on tables – so I didn’t get a chance to talk to them for long.
NH:
PM:
boom boom
NH:
Who was bank of the year, JP Morgan?
PM:
Yeah.
NH:
How much did the charity thing raise.
PM:
Oh I can’t remember the total – about 750 or something. There was a hush around the room when the final tally was announced. People were embarrassed.
NH:
That is low – if think that is less than half last year’s – and last year’s was judged a washout.
PM:
Hmm. Actually the bids were rather depressing.
NH:
How about JPM?
PM:
Well they bid 125 initally – and then dug into their pocket for another 150 – matched the 275 bid by Goldman last year, when they won the top award.
PM:
I don’t think Goldman won anything last night.
NH:
So how about other bids – what did Nomura do?
PM:
Oh I can’t remember – it was respectable enough.
PM:
What I do remember is Deutsche – they had the lowest – ten bob.
NH:
10 bob?
PM:
Yeah, 50p.
PM:
I think there are problems round there.
NH:
er, let’s more on.
11:14AM
PM:
Whoa — better look the market
NH:
it is a while since we have seen a fall this size
NH:
FTSE 100 off 100 points
NH:
at 4,326
PM:
oh dear
NH:
and check this
NH:
it was 4,638 a week ago
NH:
so its had quite a serious reversal
PM:
the Xmas bounce over then
NH:
Looks that way
NH:
although the performance of the equity market does seem at odds with the signals from the credit market
NH:
anyway
NH:
miners and financials doing most of the damage
PM:
Oh dear yes — what is going on with Barclays???????
PM:
Stock is off 12 % now!!!
PM:
trading at 162 — down 22p
PM:
What is going on??
NH:
a combination of things
NH:
partly, the fall is down to the poor performance of Citigroup and Bank of America overnight
NH:
concerns about a whacking Q4 loss, left Citigroup down around 19%
NH:
remember, the WSJ was reporting yesterday that the big C could report a loss of $10bn
NH:
and one has to think that things are a bit desperate at C
NH:
the very fact that they are probably going to see their brokerage arm, which is one of their crown jewels, shows that
NH:
as for Bank of America
NH:
they got hit by a downgrade
NH:
which somewhat ironically was penned by a Citi analyst
NH:
Keith Horowitz. He forecast BoA would post a $3.6bn fourth-quarter loss (or 75 cents a share), a mark to market loss of $3bn, and a dividend cut to 5 cents a share from 32 cents
NH:
that was good enough to knock 11% off the BoA share price
NH:
in fact Stacy did a nice post on the downgrade
NH:
along the lines of pot and kettle
NH:
and here’s the link for it
PM:
Ah yes — i see
NH:
on top of that, the UK banks have had a good run in recent days on hopes that the government was close to announcing the creation of a bad bank, where toxic assets could be dumped
NH:
as we wrote yesterday
NH:
that seems unlikely at the moment
NH:
the govt will probably revise the Credit Guarantee Scheme
NH:
and possibly some sort of insurance for loans
NH:
anyway, the reality that a bad bank is not going to happen anytime soon
NH:
has sparked a bit of profit taking
NH:
in fact, this report from the Beeb has not helped
NH:
The BBC reports that it expects the Government to announce tomorrow, Wednesday, a £20bn loan guarantee scheme.
PM:
So there disappointment the plan is not more radical
NH:
yes
NH:
have a look at this
NH:
from Simon Pilkington at Cazenove
NH:
it sums things up nicely
NH:
No details are available. Under the scheme the banks pay a fee to the Government which in turn effectively insures the loan. The cost and amount of first loss retained by the bank are yet to be revealed.
NH:
Though substantially larger than the £1bn original proposal we believe that, if the report is accurate, the initiative falls short of investors’ hopes for a more substantial bailout. In the last few days the share prices of the domestic banks have risen on hopes of a Government move that would ease the pressures on capital. If the BBC report is accurate, a £20bn loan scheme will have marginal benefit.
In contrast to the UK sector, the share prices of large US banks are trending back to their lows on fears of poor Q4 trading and we feel the UK domestic banks are vulnerable to disappointment, both from the government’s move and trading.
In contrast to the UK sector, the share prices of large US banks are trending back to their lows on fears of poor Q4 trading and we feel the UK domestic banks are vulnerable to disappointment, both from the government’s move and trading.
PM:
thanks for that
NH:
and there is one other concern
NH:
the short selling ban ends this week
NH:
and long only funds that have made some money in the banks
NH:
and the insurers for that matter over the past month or so
NH:
are locking in profits now
NH:
because they are worried the Monsters of Mayfair will launch a fresh offensive against the banks later this week
NH:
that I am told is really affecting the insurers
NH:
which have had a good run
NH:
PRU:LSE
Prudential (PRU:LSE): Last: 375.00, down 17 (-4.34%), High: 390.00, Low: 373.25, Volume: 2.35m
NH:
AV:LSE
Aviva (AV:LSE): Last: 399.00, down 36.5 (-8.38%), High: 425.00, Low: 396.50, Volume: 3.06m
Friends Provident (FP:LSE): Last: 77.40, down 7.1 (-8.40%), High: 83.50, Low: 77.40, Volume: 1.28m
Standard Life (SL:LSE): Last: 218.00, down 14.5 (-6.24%), High: 228.00, Low: 216.00, Volume: 994.22k
PM:
thanks for all that
PM:
although I still think there must be something else behind the fall in Barclays
PM:
Down 12.7% now!!!
PM:
This is more than a bit profit taking
NH:
fair point, but as readers note below it has had a good run
PM:
no other bank is being hit nearly as hard — even if barc has outperformed the sector recently
NH:
but there are some explanations for that
NH:
RBS is not down as much – pff 23p at 161.6p
NH:
and that’s because of these rumours
NH:
which we believe are true
NH:
ROYAL BANK OF SCOTLAND SEEN SELLING BANK OF CHINA SHARES AS EARLY AS TUESDAY – MARKET SOURCES
NH:
ROYAL BANK OF SCOTLAND EXPECTED TO SELL ALL 10.8 BLN BANK OF CHINA SHARES – MARKET SOURCE
NH:
actually getting back to Barclays a minute
NH:
here’s a good explanation for its weakness
NH:
alongside HSBC it is the only bank with domestic operations that you will be able to short when the ban ends on Friday
PM:
what do you mean?
NH:
well, the govt is or will soon own larges stakes in RBS, HBOS and Lloyds
NH:
and I can’t see them loaning out that stock to the Monsters of Mayfair
NH:
then again, who knows
NH:
perhaps John Kingman will fancy making a small return on his portfolio by stock lending
NH:
anyway lets assume they don’t lend
NH:
stock will be difficult to borrow in those three
NH:
and even if you can borrow it will be expensive
NH:
so what’s the next best bank to short?
PM:
Barclays
PM:
followed by HSBC
PM:
Good point
NH:
and from what I am hearing, long onlys are selling out of Barc today
PM:
ok
PM:
that all makes much more sense
PM:
could explain the drop
NH:
before we finish up with the banks
NH:
another interesting note out this morning
NH:
from JP Morgan
NH:
examines the possibility of a bad bank
NH:
Significant further action required – With supply of credit restricted,
the government is being pressed to avert an even more serious recession.
Whilst guarantee schemes could have some beneficial impact, they
would not be a game changing event for us. Without substantial balance
sheet restructuring, the market will likely continue to charge premium
rates for capital, factoring in the risk of full nationalisation.
the government is being pressed to avert an even more serious recession.
Whilst guarantee schemes could have some beneficial impact, they
would not be a game changing event for us. Without substantial balance
sheet restructuring, the market will likely continue to charge premium
rates for capital, factoring in the risk of full nationalisation.
NH:
System potentially close to negative equity without further fresh
capital – If banks were to fair value assets based on where we believe
asset quality could go to, system could effectively get close to negative
equity (potential impairments of £35bn, £37bn and £21bn for
Lloyds/HBOS, RBS & Barclays c.80-105% of NAV). Note this is before
taking into account potential treasury losses, pension liabilities etc.
capital – If banks were to fair value assets based on where we believe
asset quality could go to, system could effectively get close to negative
equity (potential impairments of £35bn, £37bn and £21bn for
Lloyds/HBOS, RBS & Barclays c.80-105% of NAV). Note this is before
taking into account potential treasury losses, pension liabilities etc.
NH:
Merits of a ‘pre-emptive’ ‘good bank’, ‘bad bank’ with banks
effectively taking the impairment losses aforementioned on assets up
front, allowing for a ‘less risky’ injection of capital and in the process
turning pro-cyclicality of Basel II from a problem to a benefit. Two
possible ways to structure the ‘bad’ bank; (i) Government debt funded
where the government buys the ‘bad’ assets with paper it issues to banks
(used in Sweden, Mexico); (ii) Deposit funded where the government
assumes a matching portion of customer deposit liabilities, complex, the
attraction being the creation of a new market player and no need to ‘print’
money. Among other effects both options could see substantial haircuts
on assets transferred, requirements to raise fresh capital and a likelihood
of strictly defined lending criteria. On our estimates, we see c.£260bn of
‘bad’ assets representing 15% total assets, but a much larger 58% of
RWAs. Impairments would represent an average 5.5% of total loan book.
effectively taking the impairment losses aforementioned on assets up
front, allowing for a ‘less risky’ injection of capital and in the process
turning pro-cyclicality of Basel II from a problem to a benefit. Two
possible ways to structure the ‘bad’ bank; (i) Government debt funded
where the government buys the ‘bad’ assets with paper it issues to banks
(used in Sweden, Mexico); (ii) Deposit funded where the government
assumes a matching portion of customer deposit liabilities, complex, the
attraction being the creation of a new market player and no need to ‘print’
money. Among other effects both options could see substantial haircuts
on assets transferred, requirements to raise fresh capital and a likelihood
of strictly defined lending criteria. On our estimates, we see c.£260bn of
‘bad’ assets representing 15% total assets, but a much larger 58% of
RWAs. Impairments would represent an average 5.5% of total loan book.
NH:
Remain UW until full details –is unclear which banks would be
potentially be involved, but we expect at least those with a government
participation. We would be more positive on those implementing these
potential measures and are curious to see what route Barclays takes.
Given the variability of outcomes, risk of inaction and risks associated
with implementing a ‘bad’ bank, we remain UW on the UK banks.
potentially be involved, but we expect at least those with a government
participation. We would be more positive on those implementing these
potential measures and are curious to see what route Barclays takes.
Given the variability of outcomes, risk of inaction and risks associated
with implementing a ‘bad’ bank, we remain UW on the UK banks.
PM:
hang on a minute
PM:
just pulled this note up
PM:
and there is quite a bit of stuff in here on Barc
PM:
JPM saying they need to raise a further £3bn
PM:
!!!
PM:
it is in the conclusion
PM:
With GDP contracting at an alarming rate there is clearly an increasing pressure on the UK government for further intervention. Actions such as extending loan
guarantee schemes and offering government guarantees on securitisation structures
will likely make some difference, but in themselves are insufficient to return
confidence to the system, in our view.
Whilst in previous reports we have referred to the need for a ‘good bank’, ‘bad bank’
structure this note shows that we under-estimated the potential charge to existing
shareholders
guarantee schemes and offering government guarantees on securitisation structures
will likely make some difference, but in themselves are insufficient to return
confidence to the system, in our view.
Whilst in previous reports we have referred to the need for a ‘good bank’, ‘bad bank’
structure this note shows that we under-estimated the potential charge to existing
shareholders
PM:
Whilst taking the losses ‘up front’ for the banks would likely lead to
significant new capital needing to be raised, we believe that this is the price that
needs to be paid for investors to truly become comfortable with the sector. This is, in
our view, very necessary, as otherwise funding costs will remain elevated, making it
difficult for the banks to pass through the benefits of other economic stimulus.
Although it is practically impossible to accurately quantify, based on a 6% core Tier
1 ratio and ceteris paribus i.e. no further adjustments for pension deficits, other hits
etc, we would expect capital issuance to be £13bn at HBOS/Lloyds TSB, £6bn at
RBS and £3bn at Barclays. Note we have used 0% Pillar 2 ‘top up’ charge and in the
table below compare this figure with our current 2010E JPM capital deficit. For more
details on the methodology of our capital deficit please see JPMorgan, UK Banks -
Where we go from here, 19 November 2008.
significant new capital needing to be raised, we believe that this is the price that
needs to be paid for investors to truly become comfortable with the sector. This is, in
our view, very necessary, as otherwise funding costs will remain elevated, making it
difficult for the banks to pass through the benefits of other economic stimulus.
Although it is practically impossible to accurately quantify, based on a 6% core Tier
1 ratio and ceteris paribus i.e. no further adjustments for pension deficits, other hits
etc, we would expect capital issuance to be £13bn at HBOS/Lloyds TSB, £6bn at
RBS and £3bn at Barclays. Note we have used 0% Pillar 2 ‘top up’ charge and in the
table below compare this figure with our current 2010E JPM capital deficit. For more
details on the methodology of our capital deficit please see JPMorgan, UK Banks -
Where we go from here, 19 November 2008.
NH:
good spot
11:28AM
11:28AM
NH:
Welcome back Monty
NH:
interesting view
NH:
and you are quite right on Pandit
NH:
he said before Xmas that brokerage was a jewel in the crown
NH:
and now…
NH:
Citi – a state controlled bank
11:29AM
PM:
Also note Monkey on currencies also below — research in the LR
NH:
must look at that
PM:
What is the krona up to today?
NH:
weak against the dollar
NH:
$1.4605
NH:
and Euro buys you 0.91p
NH:
so the recovery looks like it is over
NH:
which won’t please the Irish
PM:
NH:
they reckon sterling is being devalued on purpose by the UK govt and BoE
11:32AM
PM:
How’s property doing?
NH:
all seem to be weaker
Hammerson (HMSO:LSE): Last: 534.00, down 16.5 (-3.00%), High: 554.50, Low: 531.50, Volume: 438.23k
Land Securities Group (LAND:LSE): Last: 892.50, down 47 (-5.00%), High: 929.50, Low: 891.00, Volume: 1.41m
British Land Co (BLND:LSE): Last: 543.00, down 23 (-4.06%), High: 565.00, Low: 540.50, Volume: 895.48k
Great Portland Estates (GPOR:LSE): Last: 255.00, down 5 (-1.92%), High: 261.50, Low: 255.00, Volume: 143.58k
Liberty International (LII:LSE): Last: 506.00, down 7.5 (-1.46%), High: 521.00, Low: 503.00, Volume: 421.00k
NH:
Why do you ask?
PM:
Ah, was just reading this Merrill Lynch note.
PM:
The Real View uk 2009
Bhupen Master
PM:
Balance sheets under pressure in 2009
We remain cautious on the outlook for UK property in 2009. A combination of the ongoing de-leveraging of the financial system, deteriorating fundamentals for occupational markets, rising yields and stretched balance sheets will result in a continued rebuilding of the risk premium. This leads us to believe the risks are still skewed to the downside.
Balance sheets under pressure in 2009
We remain cautious on the outlook for UK property in 2009. A combination of the ongoing de-leveraging of the financial system, deteriorating fundamentals for occupational markets, rising yields and stretched balance sheets will result in a continued rebuilding of the risk premium. This leads us to believe the risks are still skewed to the downside.
Assuming a 15% decline in underlying asset values in 2009 (our central forecast), the sector is only trading on a 5% discount to our one year forward NAV forecast. We do not see this as compelling.
Also in our opinion, the leverage of a number of companies is not sustainable and looking at discounts/premium to NAV does not !!!!!!!STOLEN FROM ALPHAVILLE !!!!!!!!reflect capital structure issues – if we assume a 50% peak to trough decline in values we estimate that the sector could require c.£14bn of new equity to reduce LTV’s to 40%. The risk of equity issuance is not necessarily reflected in current pricing in our view. We are looking for a c.-15% total return in 2009. An attractive entry point into the UK might be
when companies address balance sheet issues, asset values show signs of stabilising and sterling finds support.
We do not have a bias for any sector. Instead we believe investors should continue to focus on companies that have the better quality assets, strong balance sheets, secure cash flows, attractive relative valuations and management teams that have a proven ability to add value.
PM:
The call between the UK Majors for 2009 is difficult – we see more relative than absolute value. Our preference across the UK Majors is Hammerson. For the dedicated real estate investors we recommend switching out of Liberty International into Hammerson and out of Brixton into SEGRO.
In the mid/small caps,STOLEN FROM ALPHAVILLE we continue to focus on value-add companies and management teams with an ability to capitalise on uncertain market conditions, strong balance sheets and/or those operating in niche markets with barriers to entry. In this camp our preference would be Helical Bar (upgrading to Buy), Derwent London and Mucklow (upgrade to Neutral).
In the mid/small caps,STOLEN FROM ALPHAVILLE we continue to focus on value-add companies and management teams with an ability to capitalise on uncertain market conditions, strong balance sheets and/or those operating in niche markets with barriers to entry. In this camp our preference would be Helical Bar (upgrading to Buy), Derwent London and Mucklow (upgrade to Neutral).
We have made the following rating changes. We are upgrading Helical to Buy from Underperform, Mucklow to Neutral from Underperform. We are downgrading Land Secs to Underperform from Neutral, Big Yellow to Neutral from Buy, Safestore to Neutral from Buy and Capital & Regional to
Underperform from Neutral.
NH:
Hang on – what’s that you’ve put in there?
PM:
Ah, I hoped no one would notice.
NH:
Well I have.
NH:
You concerned that people are just ripping off our content – and not attributing it to use.
PM:
God forbid.
NH:
Anyway, you’ve stolen it from Merrill Lynch.
PM:
Well, not exactly. We’ve printed an extract from a research note that was circulating widely – and we have even named the individual author.
NH:
So why did you embed STOLEN FROM ALPHAVILLE.
PM:
Well, did you see this? From dealbreaker
PM:
Housekeeping
Posted by Bess Levin, Jan 12, 2009, 1:00pm
We don’t like to get too self-referential here on Dealbreaker but we make exceptions when it becomes necessary to call people out on their bull shit. Today’s example is that of a well-known financial publication ripping off Dealbreaker. As you know, earlier today, we posted an internal memo from Citi, regarding the Morgan Stanley and Smith Barney talks. Because it’s become something of a problem of other news outlets ripping off this here site, lately, when it comes to memos, we’ve been instituting our own theft-prevention measures. Which is why we can say with authority that a certain financial blog of the same initials as our own lifted the memo from us, without attribution. Because: 1. Mike Corbat never signed his title (CEO Citi Global Wealth Management) on the email, he only wrote “Mike.” We added the title to give our readers context. But maybe the other news source simply had the same idea, which would explain why the title also appears on their version? Oh, except 2. The original timestamp on Mike’s email was 9:39, and we changed it to 9:35. Just in case. Funny, SOMEONE’s memo recreates these exact edits, as well. I wonder how that happened.
Posted by Bess Levin, Jan 12, 2009, 1:00pm
We don’t like to get too self-referential here on Dealbreaker but we make exceptions when it becomes necessary to call people out on their bull shit. Today’s example is that of a well-known financial publication ripping off Dealbreaker. As you know, earlier today, we posted an internal memo from Citi, regarding the Morgan Stanley and Smith Barney talks. Because it’s become something of a problem of other news outlets ripping off this here site, lately, when it comes to memos, we’ve been instituting our own theft-prevention measures. Which is why we can say with authority that a certain financial blog of the same initials as our own lifted the memo from us, without attribution. Because: 1. Mike Corbat never signed his title (CEO Citi Global Wealth Management) on the email, he only wrote “Mike.” We added the title to give our readers context. But maybe the other news source simply had the same idea, which would explain why the title also appears on their version? Oh, except 2. The original timestamp on Mike’s email was 9:39, and we changed it to 9:35. Just in case. Funny, SOMEONE’s memo recreates these exact edits, as well. I wonder how that happened.
NH:
That is very funny indeed.
NH:
PM:
That of course links through to the New York Times’ Dealbook.
PM:
Citi’s Internal Memo on the Smith Barney Talks
PM:
Updated: The pending joint venture between Citigroup’s Smith Barney unit and Morgan Stanley’s brokerage arm appears to be causing some consternation among Citi’s wealth managers.
Mike Corbat, Citi’s head of global wealth management, sent a note out to his troops Monday morning asking them to sit tight and apologizing for the rumors about the deal in the press. The text of the memo is after the jump. (Editor’s Note: DealBreaker first broke the news of the memo on its Web site. A DealBook reporter confirmed the memo’s authenticity with Citigroup’s press office and posted a copy of the memo from Dealbreaker’s Web site. A link to the original DealBreaker post should have been included.)
Mike Corbat, Citi’s head of global wealth management, sent a note out to his troops Monday morning asking them to sit tight and apologizing for the rumors about the deal in the press. The text of the memo is after the jump. (Editor’s Note: DealBreaker first broke the news of the memo on its Web site. A DealBook reporter confirmed the memo’s authenticity with Citigroup’s press office and posted a copy of the memo from Dealbreaker’s Web site. A link to the original DealBreaker post should have been included.)
NH:
How embarrassing.
PM:
And entertaining. Especially delicious with it being the new york times.
NH:
Yes, we should add that dealbook is a very good service
NH:
But the NYT has high standards on sourcing etc.
PM:
Certainly higher than the various British operations that routinely rip off our content.
PM:
And fail to attribute.
PM:
You know I used to send out invoices to the hack concerned. Cant be bothered now.
PM:
Always caused constination – an invoice in to the relevant paper’s accounts department.
PM:
You wouldn’t say STOLEN CONTENT etc – or anything like that.
PM:
Just – invoice – 500 words, ABC deal with “named hack, department” and date.
NH:
You know we should hire that Bess Levin.
PM:
From dealbreaker? Yes, she’s very good.
NH:
To work with Stacy in New York.
PM:
Yeah, well nice idea.
PM:
Maybe during our next expansion stage.
NH:
while we are chatting about Stacy
NH:
we are planning the first transatlantic ML for next week
PM:
Ah!!!!
PM:
Excellent
NH:
we are going to go for Tuesday – which is Obama day
PM:
Of course
PM:
Look forward to that
PM:
ML America
NH:
not sure what time ML US will kick off
PM:
After lunch London time
NH:
possibily around 3.30pm
NH:
and the plan is that we will run them regularly
NH:
not every day
NH:
but when there is big corporate or economic data out
NH:
it should give me a chance to round-up what’s happening in London
NH:
and to get a flavour of the action on the street
PM:
Great new AV service
PM:
Free of course
PM:
SMI from new york City
PM:
Neil in boring old london
11:41AM
PM:
you mentioned earlier that the miners were being hit — as well as the financials
NH:
yeah, Rio Tinto in particular
NH:
got smashed first thing
NH:
traded as low as £14.57
NH:
now down 94p at £15.13
PM:
read across from the Alcoa figures overnight?
NH:
precisely
NH:
grim figures overnight
NH:
and remember, Rio bought Alcan last year
PM:
yes, right at the top of the market
NH:
and Alcan is rival to Alcoa
NH:
so what Alcoa has to say is important for Rio
NH:
and what it had to say was really, really depressing
NH:
and far from the perfect way to kick off the US reporting season
NH:
here are some of the lowlights
NH:
The Q4 was larger than expected US$1.49 vs Bloomberg consensus loss of US$1.23 and DB est of US$0.93.
NH:
company’s first quarterly loss in six years
NH:
and here are some comments from the CEO
NH:
Chief Executive Officer Klaus Kleinfeld, who already is reducing production, firing workers and selling units, said he may make deeper cuts if demand continues to wane. Aluminum prices are near five-year lows as orders drop from automakers, builders and appliance manufacturers.
NH:
Alcoa has set production cuts since June representing about 750,000 metric tons, or 18 percent of its global capacity. The company said on Jan. 6 it plans to fire 13,500 employees this year, eliminate 1,700 contractors and cut 2009 capital spending by 50 percent. The company said yesterday it would post $920 million in losses, including discontinued operations, related to the restructuring plan.
Global aluminum demand may fall 2 percent in 2009 after dropping 3 percent to about 36 million metric tons in 2008, Kleinfeld said on the analyst call.
PM:
Pretty depresssing stuff
NH:
yep
NH:
actually here’s a note from JP Morgan
NH:
which says that things will get worse in 2009
NH:
As difficult as 4Q08 was for Alcoa, we believe things will only get worse in 1Q09 and remain challenging for the remainder of the year. In 4Q AA lost $0.28 (from continuing operations and excluding one-time items) and in its Primary Metals
(aluminum) business had after-tax operating losses of $101 million while realizing an
average aluminum selling price of $0.96/lb in the quarter.
(aluminum) business had after-tax operating losses of $101 million while realizing an
average aluminum selling price of $0.96/lb in the quarter.
NH:
We note that due to 30-day aluminum price lags 4Q results exclude December’s average aluminum price of $0.68/lb, which should be realized in 1Q09. With aluminum at $0.67/lb today and averaging about $0.70/lb year to date, this implies that Alcoa is off to 09 with an aluminum price realization about 28% lower than what it experienced in 4Q08. As such, unless the aluminum price stages a dramatic rebound soon, we believe the company will have to take decisive action to preserve cash through much more meaningful cost reductions and if not a complete elimination of the dividend, at least a significant reduction in the dividend. We remain Neutral on shares of AA.
NH:
We could see quarterly losses for all of 09. We are maintaining our 1Q09 EPS
forecast for a loss of $0.47 and slightly lowering our 2009 forecast to a loss of $1.00
(vs. consensus of a gain of $0.29) assuming $0.80/lb aluminum. Our 09 quarterly
EPS progression is as follows: 1Q ($0.47); 2Q ($0.29); 3Q ($0.23); 4Q ($0.02). Our
2009 EPS forecast translates into a free cash flow deficit (before dividends of $544
million) of $1.5 billion on capital expenditures of $1.8 billion. Our analysis implies
that the company will be forced to draw down $1.4 billion on its $5.2 billion in lines
of credit in order to meet its cash requirements and pay the dividend.
forecast for a loss of $0.47 and slightly lowering our 2009 forecast to a loss of $1.00
(vs. consensus of a gain of $0.29) assuming $0.80/lb aluminum. Our 09 quarterly
EPS progression is as follows: 1Q ($0.47); 2Q ($0.29); 3Q ($0.23); 4Q ($0.02). Our
2009 EPS forecast translates into a free cash flow deficit (before dividends of $544
million) of $1.5 billion on capital expenditures of $1.8 billion. Our analysis implies
that the company will be forced to draw down $1.4 billion on its $5.2 billion in lines
of credit in order to meet its cash requirements and pay the dividend.
NH:
4Q of ($0.28) vs. our ($0.05) and Street of ($0.08). AA reported EPS of ($1.49)
before losses from discontinued operations of ($0.33) and one-time items of ($0.88)
or a “clean” loss ($0.28). Segment ATOI was: Alumina $162m, Primary Metals
($101m), Flat-Rolled Products ($98m), and Engineered Products & Solutions $65m.
before losses from discontinued operations of ($0.33) and one-time items of ($0.88)
or a “clean” loss ($0.28). Segment ATOI was: Alumina $162m, Primary Metals
($101m), Flat-Rolled Products ($98m), and Engineered Products & Solutions $65m.
Remain cautious. We maintain our Neutral rating on AA and our December 2009
target price to $8.00/share. Our target price is based on a 10.5x multiple on projected
EBITDA in 09 assuming our metal strategist’s long-term real aluminum price of
$0.91/lb. The 10.5x is at a slight premium to the stock’s 10-year historical
EV/EBITDA multiple of 9.3x, which we believe is justified given that 2009 is likely
to be a year of below-average earnings. The stock currently trades at 21.2x our 09
EBITDA forecast. We also warn investors that while the company has not cut the
dividend and management communicated the company’s 60-year track record for
paying a dividend, this does not mean that the dividend may not be reduced.
NH:
so, quarterly losses for all of 09
NH:
and the fact that the Alcoa figs do not include the Dec aluminium price is clearly not good news
NH:
and all of this is not what Rio wants to hear
NH:
with its huge debt pile
NH:
in fact, if Rio does not make some disposals soon
NH:
then, its recent gains will evaporate pretty quickly IMO
NH:
while we are on the commodities tack
NH:
oil price weak this morning
NH:
few rumours doing the rounds
NH:
such as this
NH:
Crude started the week under increasing pressure after news that Russia
- Ukraine gas standoff was about to be solved. Rumours also circulating
that this weeks invenotories data will show large builds amid talk of
deepening global recession. The combination of a strengthening US
currency and continuous weakness in the stock markets were also behind
yesterday’s sell off in the oil market which gathered momentum as the
session progressed.
- Ukraine gas standoff was about to be solved. Rumours also circulating
that this weeks invenotories data will show large builds amid talk of
deepening global recession. The combination of a strengthening US
currency and continuous weakness in the stock markets were also behind
yesterday’s sell off in the oil market which gathered momentum as the
session progressed.
NH:
This selling spread across the commodity/energy
complex with Copper -5% and Nickel -12%. At this moment in time it’s
hard to see any bullish news that will spark a rally in the face of the
falling demand which is the main focus – again!
complex with Copper -5% and Nickel -12%. At this moment in time it’s
hard to see any bullish news that will spark a rally in the face of the
falling demand which is the main focus – again!
NH:
Yesterday crude broke below the 14 day moving average again but this
time has done it convincingly closing below this indicator. We have seen
4 days in a row of the market closing lower than it opened which is a
bearish pattern and there is certainly room for prices to fall further
before meeting significant support ($39.35 the next major level). The
oil market moved lower in the early trading this morning so testing the
low of 2008 is now on the cards and if that fails to hold then crude is
set to continue its downward trend.
time has done it convincingly closing below this indicator. We have seen
4 days in a row of the market closing lower than it opened which is a
bearish pattern and there is certainly room for prices to fall further
before meeting significant support ($39.35 the next major level). The
oil market moved lower in the early trading this morning so testing the
low of 2008 is now on the cards and if that fails to hold then crude is
set to continue its downward trend.
The short term trend is sideways while the medium and the long term
trends are bearish.
PM:
ta for that
11:46AM
11:47AM
PM:
tesco mentioned below — bucking the market trend??
NH:
do we have to?
NH:
really dull
PM:
please — we must
NH:
OK then
PM:
Shares up 3.4p at 353
PM:
the readers demand…
PM:
good trading statement?
NH:
well, the figs were bang in line with the guidance given to STRNS
PM:
Weekend press
PM:
suprise surprise
NH:
UK retail achieved 2.5% lfl growth
NH:
although that figure would be 3.5% if it were not for the VAT cut
NH:
and non food sales improved, which was a surprise
NH:
so there you have it
NH:
we are done
NH:
and you could have read it all at the weekend
PM:
PM:
in spite of that
PM:
here is a bit of analysis
PM:
from Cazenove
PM:
Tesco – TSCO.L TSCO LN 349p Outperform; Sector Underweight
Tesco has released its Christmas Trading Statement covering the 7 weeks to 10 January. Key points:
Tesco has released its Christmas Trading Statement covering the 7 weeks to 10 January. Key points:
UK ex fuel LFL was 2.5%. This compares with our expectation of 2.0% and a consensus range of 2-2.5%. As with Sainsbury last week there is the added complication of the change in VAT implemented at the beginning of December. On an ex-VAT basis Tesco’s LFL was +3.5% which is a creditable performance given the background economic conditions and actually indicates the group had a better Christmas trading period this year than it did a year ago (+3.1%).
New space contributed, we understand, slightly under 2.5%. Petrol is now a deflationary category, reducing the top line by c.1.5%.
PM:
There is no specific comment on inflation although the fact that the “stronger growth in volumes and customer numbers…has continued” can be taken as indication that the Discount Brands (and other price-related measures) continue to put downwards pressure on the sales mix. Overall we believe that the 3.5% ex VAT LFL is substantially accounted for by volume growth.
Perhaps surprisingly non-food sales returned to LFL growth (after a small decline in Q3) and the company is satisfied with its stock position hence there is not an adverse margin implication to be read into the improved top line performance.
PM:
Summary:
This statement represents a step in the right direction for Tesco as it aims to reverse its recent market share trend in the UK. While the headline LFL figure continues to lag its major competitors (and this will probably be the focus of the media coverage) like for like volume growth in the core grocery business is now, we believe, on a par with Sainsbury while, if recent market share data is to be believed, Asda’s growth appears to be slowing and Morrison’s heavily promotional trading stance may yet flatter to deceive in profitability terms. In this context we continue to view the valuation gap in the sector (Tesco on 11.4x Dec-09E vs Morrison on 14.0x and Sainsbury on 14.6x) as anomalous although in terms of immediate reaction the 2.5% headline LFL number has been widely flagged in the press (although the ex-VAT number may exceed expectations) and of itself is unlikely to prompt a very material mood shift towards the shares.
This statement represents a step in the right direction for Tesco as it aims to reverse its recent market share trend in the UK. While the headline LFL figure continues to lag its major competitors (and this will probably be the focus of the media coverage) like for like volume growth in the core grocery business is now, we believe, on a par with Sainsbury while, if recent market share data is to be believed, Asda’s growth appears to be slowing and Morrison’s heavily promotional trading stance may yet flatter to deceive in profitability terms. In this context we continue to view the valuation gap in the sector (Tesco on 11.4x Dec-09E vs Morrison on 14.0x and Sainsbury on 14.6x) as anomalous although in terms of immediate reaction the 2.5% headline LFL number has been widely flagged in the press (although the ex-VAT number may exceed expectations) and of itself is unlikely to prompt a very material mood shift towards the shares.
11:51AM
PM:
We must met the readers demands
PM:
Someone below just wants pure gossip
PM:
Dont know how they ended up here
PM:
You havent got any of that, have you Neil?
NH:
I have has it happens
NH:
but the usual warnings apply
NH:
here goes
NH:
from our penny dreadful expert
NH:
GW Pharma
PM:
PM:
Dope stock — medicines from canabis
NH:
yep, that’s the one. stock is risinig today
NH:
up 5.5p to 37.75p
NH:
AGM tomorrow
NH:
there is rumoured to be some good news coming on their lead drug
NH:
but this is very RAW
RAW is market chatter – information that has not been formally tested through traditional journalistic channels (PRs etc). The story might be complete rubbish, but if we believe there is some substance to it we will say so. Either way, Reader Beware.
NH:
this story is much less RAW
NH:
although not much in it
NH:
and we will have to go to Italy for it
NH:
insurer called
PM:
yes……
PM:
waiting…..
NH:
just trying to get the quote
NH:
Allenza
PM:
hello?
NH:
50% owned by Generali
NH:
I hear they are going to make an offer to buyout the rest of the company
NH:
being lined up for early Feb
NH:
they will offer around a 12% premium to the current price
NH:
offer will be in stock and cash
NH:
weighted more towards to stock
NH:
and I fairly confident something is being plotted here
PM:
Goodness — can you append a bandit rating to this?
NH:
I’d rather not, but I am happy with the quality of this piece of RAW
NH:
it is not live
NH:
but dead and in the kitchen
NH:
being prepared
NH:
and this is not really RAW
NH:
as its been around the market this morning
NH:
but anyway
NH:
rumours of capital increase coming at BNP
NH:
here’s some comment from KBW sales team on the rumour
NH:
Press (La Tribune) says BNP might NOT buy Fortis Insurance Belgium – ie BNP
& Belgian Govenment working on compromise deal. Only speculation so far but
MIGHT be:
& Belgian Govenment working on compromise deal. Only speculation so far but
MIGHT be:
* Fortis keeps 100% Belgian insurance (originally to be sold to BNP for €5.7bn
CASH) but BNP still takes 75% Fortis Banque Belgium & 67% Fortis Banque
Luxembourg -in exchange for a FIXED AMOUNT of ~133mn BNP shares issued direct
to Belgian & Luxembourg governments; as per original plan.
NH:
So Belgian government gets 11.6% BNP stake & Luxembourg govt gets 1.1%:
again, as per the original plan
again, as per the original plan
* That would be a VERY GOOD RESULT for BNP, assuming:
a) BNP also gets multi year insurance distribution with Fortis Belgium
b) they still only issue ~133mn shares even though BNP price now €32 vs €68
when deal announced
* IN THEORY, this revised deal means BNP LESS LIKELY to raise new capital IF
they’re not buying insurance, because that was the only CASH component…
…so we do not understand where today’s fresh rumours of a cash-call is
coming from…there MIGHT simply be confusion re need to call EGM to approve
issuance of 44mn shrs (NB first 88mn shrs considered contribution in kind &
does not need EGM)
NH:
es there is a RISK that the Belgian Government demands more shares (to
compensate for the lower share value of BNP in a stock-deal) BUT even so,
would probably still be decent result for BNP…
compensate for the lower share value of BNP in a stock-deal) BUT even so,
would probably still be decent result for BNP…
* Unknowns obviously include how the voting will be presented for the setting
up of a structured credit portfolio entity (currently, the ownership is
expected to be Fortis 66%, Belgian state 24%, BNP Paribas 10%), and also
whether the Belgian government will attempt to revise the bank deal terms…
* We think the BNP reaction is overdone, and stay Outperform…
NH:
OK, some people asking about the trading update from Taylor Wipeout
NH:
stock is down after the trading statement
NH:
off 3.5p, or 14%, at 21.5p
NH:
disappointment that there is not much detail on the debt restructuring talks in the update
NH:
The rest of the statement is just grim
NH:
although not especially worse than expected
NH:
that said, things aren’t getting any better in the US
NH:
although there is one surprise
NH:
net debt has come down by around £300m or so
NH:
however, that’s balanced by the fact that there will be more land write downs on the way
NH:
and also
NH:
Wipeout has moved up sharply in the past 6 weeks
NH:
the stock was trading around 10p at the start of December
NH:
its run higher has been partly on the back of hopes of a debt deal
NH:
given that we will probably have to wait until March to hear anything
NH:
a chunk of those gains are going to be given up
PM:
any analyst comment?
NH:
yep this is from KBC Peel Hunt
NH:
they have downgraded to hold from buy
NH:
Disappointing news on the debt
Debt discussions are the only issue here, and the update was
very limited and demoted to the back of the statement. Trading
looks better in the UK and worse in the US. Debt and a new
deal are the only drivers and a lack of firm news is likely to
cause a step back in the price. We move to Hold.
Debt discussions are the only issue here, and the update was
very limited and demoted to the back of the statement. Trading
looks better in the UK and worse in the US. Debt and a new
deal are the only drivers and a lack of firm news is likely to
cause a step back in the price. We move to Hold.
Mood swings – A key driver is the weight of opinion on whether Taylor Wimpey
is able to put together a financial deal that leaves any value on the table for
existing shareholders. The mood is certainly swinging away from that of
October/November, when many expected a zero remnant value. The various
updates on the debt front suggest that progress is being made and there has
clearly been a change in the mood with more observers now accepting that there
will be ongoing value.
NH:
Trading mixed – UK unit sales were higher than we forecast but the big
difference was social housing where profits are poorer but cash flow a little
better. North American sales were somewhat lower than we expected and this
division may now report a loss. Overall, there is likely to a very low PBT for 2008,
probably a modest loss and losses greater than £100m pre-tax are near certain
for 2009. Further land provisions are expected, still running to several hundreds
of millions in the 2008 accounts.
difference was social housing where profits are poorer but cash flow a little
better. North American sales were somewhat lower than we expected and this
division may now report a loss. Overall, there is likely to a very low PBT for 2008,
probably a modest loss and losses greater than £100m pre-tax are near certain
for 2009. Further land provisions are expected, still running to several hundreds
of millions in the 2008 accounts.
Valuation – Our valuation basis to date has been to assess what value might be
left for existing shareholders in the event of a large debt-for-equity swap. In
December we used a £700m swap at 10p and this drove a remnant value for
existing holders of 24p. If we revisit this model but use the now higher share
price, naturally we would see a higher value, now above 40p. However, the lack
of an announcement on firm proposals on debt today is likely to disappoint and
there is likely to be some surrender of the recent gains. However, when there is
more visibility (hopefully by the end of March) there is still scope for the shares to
push up to 40p and beyond. However, the shares have run from 10p to our
target of 24p and we now move back from Buy to Hold.
NH:
and this is from Cazenove
NH:
Taylor Wimpey – [TW.L, TW LN], 25p, Stock IN-LINE, Sector Neutral – Comment on FY2008 trading update
If housing market conditions do not improve, we believe the group is facing a period of loss making as it struggles to generate sufficient volumes and profits to service its interest costs. There remains uncertainty as to how high those interest costs will be cut, but greater clarity should be provided by the end of Q1 2009 when we believe the Eurobond holders will be aligned with the Group’s bankers and private placement holders. In the meantime, we are maintaining our In-line recommendation but suspect some of the recent outperformance may be lost in the short-term.
12:00PM
NH:
Has anyone out there heard of these two fund managers?
NH:
Jeremy Lang and William Pattisson?
NH:
they both work for Liontrust
NH:
or did
NH:
resigned this morning
NH:
and news of their departure has scuppered the Liontrust share price
NH:
off 40%
PM:
Just looking at the statement — they have resigned but are staying on for a full year
NH:
hang on
NH:
got some comment on this from our former colleague Sarah Spikes
NH:
who now works at Arden
NH:
Liontrust’s two most important fund managers have resigned, the company said this morning. These two managers run more than 80% of the money at Liontrust.
NH:
pproximately half the £3.5bn FUM is retail, making the company vulnerable to redemptions in the short-term.
NH:
The resignations are clearly a surprise, especially as they come without any update on bid talks, which began in May. We think it is reasonable for shareholders to expect a bid update on such important news.
NH:
148p a share would be the takeout price if Liontrust fetched 0.85% of funds under management – the price reported in the press for the ongoing auction of New Star, which has funds that are lower quality than Liontrust’s, and where redemptions are already well underway. We expect that bidders disappointed in the New Star process will have a closer look at Liontrust
¨ Liontrust is now trading on EV/FUM of 0.3%, a significant and unwarranted discount to other asset managers.
¨ Liontrust is now trading on EV/FUM of 0.3%, a significant and unwarranted discount to other asset managers.
PM:
Intriguing
12:04PM
PM:
Any more?
NH:
got a bit of feedback from the Taylor Wipeout conference call
NH:
Sell recommendation maintained following analysts call
We maintain our Sell recommendation following this morning’s analysts call.
Although there was no new negative news, the group’s ability to refinance
remains the key market focus. Although negotiations appear to be making
progress, we await the detail of these discussions and any potential dilutive
element they may contain.
We maintain our Sell recommendation following this morning’s analysts call.
Although there was no new negative news, the group’s ability to refinance
remains the key market focus. Although negotiations appear to be making
progress, we await the detail of these discussions and any potential dilutive
element they may contain.
NH:
Land write-downs. Taylor Wimpey has made land write-downs of £690m to date,
including £585m in the UK. The group has commented that it believes further
provisions will follow at the year end, particularly with regard to its UK landbank
(provisions in the US and Spain are referred to as immaterial). We forecast a further
£200m of land write-downs in 2008E and an additional £500m in both 2009E and
2010E. This equates to a 45% write-down of GAV (based upon 2007 gross assets).
including £585m in the UK. The group has commented that it believes further
provisions will follow at the year end, particularly with regard to its UK landbank
(provisions in the US and Spain are referred to as immaterial). We forecast a further
£200m of land write-downs in 2008E and an additional £500m in both 2009E and
2010E. This equates to a 45% write-down of GAV (based upon 2007 gross assets).
NH:
Debt and refinancing. The key area of focus for the market continues to be the group’s
financing situation. Debt at the year end stood at £1.55bn, a £350m reduction from peak
debt reported at the interim stage. We understand that it has received a £110m inflow
from UK tax repayments (with no further material repayments expected from the UK in
2009E), although it has been constrained by an adverse £200m forex movement,
suggesting that the underlying cash performance was better than market expectations.
financing situation. Debt at the year end stood at £1.55bn, a £350m reduction from peak
debt reported at the interim stage. We understand that it has received a £110m inflow
from UK tax repayments (with no further material repayments expected from the UK in
2009E), although it has been constrained by an adverse £200m forex movement,
suggesting that the underlying cash performance was better than market expectations.
NH:
Refinancing discussions are ongoing and the group has commented that it believes they
are constructive. No particular key stages have been reached although management
indicated that some key terms had been agreed in outline with some of its lenders
(although not all). During the analysts call this morning, it further commented that a debt
for equity swap, in the traditional sense, had not been discussed.
We still believe that any refinancing package will come at a high cost to the business, not
only in terms of arrangement fees and the margin payment over LIBOR but also in
terms of dilution to existing equity shareholders. In our view, a dilutive equity
fundraising or some kind of debt for equity swap will be required to secure refinancing
terms.
are constructive. No particular key stages have been reached although management
indicated that some key terms had been agreed in outline with some of its lenders
(although not all). During the analysts call this morning, it further commented that a debt
for equity swap, in the traditional sense, had not been discussed.
We still believe that any refinancing package will come at a high cost to the business, not
only in terms of arrangement fees and the margin payment over LIBOR but also in
terms of dilution to existing equity shareholders. In our view, a dilutive equity
fundraising or some kind of debt for equity swap will be required to secure refinancing
terms.
12:06PM
NH:
right just had a look at Paul’s hand
NH:
and his 2d is bigger than his 4d
PM:
NH:
he should be on Millionaire Traders
PM:
er, no
NH:
actually I know your tipping record
PM:
What is the price of Futuragene???
NH:
jeepers 32p
PM:
And how has the performed over recent months
PM:
get the chart up!
NH:
well, this could well be one of the best performers of last year
NH:
it has come from 7p back in Oct/Nov
NH:
defied the crunch
NH:
but let’s not carried away here – what did you first tip these things at?
PM:
140 p or something
140 p or somethingNH:
OK
NH:
still a bit offside then
PM:
And i didnt say “buy” at 7p
NH:
proof that the 2d/4d things is bogus
NH:
Right, I think that is all for this morning folks
NH:
quick FTSE 100 update
NH:
small rally
NH:
FTSE 100 down 75 point at 4,352
12:11PM
PM:
Right — ive got to go
NH:
STRNS = Sunday Times RNS
NH:
a rival to Pestowire in corporate news
Top News from Top Sources. The BBC’s Business Editor, Robert Peston, has played in important role keeping the British public fully informed during these difficult times.
PM:
Or Sund Telegrpah
PM:
I am not lunching today
PM:
But have got some family stuff to do
NH:
following yesterday’s news, not a bad idea methinks
PM:
Right — thanks for joining us today
PM:
And for all the comments
PM:
We will be back tomorrow at 11am
PM:
And next Tuesday, you get NH and SMI doing Obama Live
PM:
But for now….
PM:
seeya
NH:
bye
NH:
FKA – check Media Guardian
NH:
I can say no more
NH:
oh and I just got sent this
NH:
from the Standard’s City Spy
NH:
Its merger with Commerzbank may have saved Dresdner from banking oblivion, but staff in mergers and acquisitions won’t be celebrating. Talk in the City is that the 101 bankers in Dresdner’s London M&A department and 25 at Commerzbank will be cut down to just 25 in all. An employee at a rival bank tries to soften the anticipated blow: “Working at Dresdner is worse than unemployment
NH:
apparently, the black bin liners are being dispatched today
NH:
that really is it
NH:
bye