BHS Nears Collapse Putting 11,000 Jobs At Risk

Retailer BHS is understood to be calling in adminstrators, threatening up to 11,000 jobs across the UK.

A statement is expected to be made later about the company's future.

Sky's City Editor Mark Kleinman said: "BHS has been struggling for many years. It was sold by the high street billionaire Sir Philip Green for £1 last year to a group of little-known financiers through a group called Retail Acquisitions.

"A few weeks back it looked like they had secured a urgent lifeline by getting approval from landlords and other creditors to reduce its rent bill at its more than 160 stores.   

"But a separate £60m loan that the company required has failed to materialise."

Sports Direct has been in talks to buy some of the stores, but there are reports it does not want to take on the company's pensions deficit.

David Gill, national officer of shopworkers' union USDAW, said he was "very concerned" about the situation at the retailer.

"We are seeking urgent clarification from the company and urging them to change their attitude to trade unions and begin a dialogue with us at this difficult and worrying time for staff.

"We also urge the company to comply with the law, consult staff and USDAW as the union for BHS workers on the future of the business. I am writing to members working in BHS to reassure them that we will provide the support, advice and representation they require."

BHS could be the biggest retailer to collapse since Woolworths disappeared in 2008 and that is likely to raise questions about the company's financial stewardship and the role of its directors.

Although one of the UK's most recognised high street brands, BHS has struggled against value fashion rivals and online shopping.

It performs on average 1,000,000 transactions a week across 164 stores and 74 franchise stores across 18 countries - but has struggled to be profitable.

source

Carlyle Backs Diamond's Barclays Africa Bid

One of the world's most powerful buyout firms is backing a daring attempt by Bob Diamond, the former Barclays chief executive, to swoop on the lender's African operations.

Sky News has learnt that The Carlyle Group, which owns household name companies in the UK such as Addison Lee, is working with one of Mr Diamond's investment vehicles on a bid for Barclays Africa Group Limited (BAGL).

The news will underline the former Barclays chief's efforts to win control of the operations he helped to build during his long career with the bank.

His plans remain, however, at a relatively early stage, and no firm proposal has yet been made to the board of Barclays, according to insiders.

Mr Diamond's proposal is being hatched through Atlas Merchant Capital, which was established in 2013 "to participate in compelling market opportunities in the financial services sector".

That move came a year after Mr Diamond left Barclays shortly after it had been fined nearly £300m by regulators in the UK and US for its role in the global Libor rate-rigging scandal.

Jes Staley, Barclays' new chief executive, said in March that the bank would seek to reduce its 62.3% stake in BAGL, which has majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa, Tanzania, Uganda and Zambia - making it one of the continent's largest banking groups.

It also has representative offices in Namibia and Nigeria, as well as insurance operations in Botswana, Mozambique, South Africa and Zambia.

Mr Staley's decision to offload most of its shareholding has angered some investors, who say privately that it should instead be focusing on getting out of investment banking, where it has struggled for years to generate acceptable returns.

Barclays will hold its annual meeting in London this week, where it will avoid the traditional protests from institutional investors over the size of its bonus pot but is nevertheless likely to be scrutinised over key strategic decisions including the proposed African sale.

The bank has already warned in recent weeks that - along with Wall Street rivals which have reported dire first-quarter results - a slowdown in trading and advisory income in its investment bank is hurting it.

It has also infuriated investors by slashing its dividend for the next two years despite indications from John McFarlane, Barclays' chairman, that it would seek to grow the payout.

Mr Staley has defended his decision to reduce its African stake to a minority position, saying that it would allow the bank "to deconsolidate (BAGL) from an accounting and regulatory perspective, subject to shareholder and regulatory approvals if and as required".

Mr Diamond's determination to gain control of BAGL, which has a market value in Johannesburg equivalent to nearly £6bn, has seen him turn to one of the world's most formidable investors for support.

Carlyle, which reports its own quarterly results to Wall Street this week, manages more than $180bn (£125bn) in assets, although it has a relatively limited presence in Africa.

Through Atlas Mara, another vehicle created by Mr Diamond, the former Barclays chief has established a presence in seven African countries, including Botswana, Nigeria and Rwanda.

It is unclear how a proposal from Atlas Merchant Capital and Carlyle would be structured.

Other investors are also said to be in discussions with Mr Diamond's veh

icle.

A spokesman for Mr Diamond and Carlyle both declined to comment on Sunday.

source

Taxpayer May Take Port Talbot Steel Stake

The taxpayer could co-invest with a buyer to save the Port Talbot steelworks, the Business Secretary has told MPs.

Sajid Javid made his comments after the current owner, Tata Steel, confirmed it was contacting "many tens" of potential buyers for the South Wales site - adding that it would prefer one buyer.

Earlier on Monday, the company said it was selling its Long Products steel business to Greybull Capital, potentially saving over 4,000 jobs at a number of sites in the UK and France.

Commenting on the battle to save Port Talbot, Mr Javid told the Commons a part-renationalisation was possible: "The formal sales process begins today.

"I've been in contact with potential buyers making clear that the Government stands ready to help.

"This includes looking at the possibility of co-investing with a buyer on commercial terms."

He explained that Tata had told him several weeks ago, in confidence, that it was considering the immediate closure of Port Talbot but he was "not prepared to let that happen".

To jeers from opposition MPs, who expressed anger over his decision to visit Australia at the time of Tata's decision to sell, he added: "In the days that followed I worked relentlessly to convince Tata that it was in everyone's interest to keep the plant open and to find a new buyer.

"I also made it very clear that the Government is totally committed to supporting and facilitating that process. This work has paid off."

Responding to his comments, the head of the Community steel union said he was encouraged.

Roy Rickhuss said: "Mr Javid should bring forward further details of what ‘co-investment’ would look like and share his plans with the unions so we can ensure that the best interests of steelworkers are upheld.

"There are still many steps to be taken and yet again we call on the government to match the rhetoric of its ministers with action and to continue to work with the Community to save our steel."

The only company that has so far expressed a public interest in buying the rest of the Tata Steel assets remaining in the UK is Liberty, owned by Sanjeev Gupta, though others are known to be examining their positions.

Mr Gupta has spoken of a desire to save jobs with the potential to remodel Port Talbot as a producer of steel through the use of electric arc furnaces - to take advantage of recycling opportunities.

But top of his list of concerns are high energy costs, which he told Sky News last week would have to be "rectified" by the Government.

He also warned there would be no quick-fix, overnight solution.

source

Tata Sells Scunthorpe Steel Plant To Greybull

Tata has sold its steel plant in Scunthorpe and several other businesses to Greybull Capital, possibly saving up to 4,400 jobs in the UK and 400 in France.

Greybull will take on the entirety of Tata Steel UK's steelworks operations in Scunthorpe, as well as two mills in Teesside, an engineering workshop in Workington and a design consultancy in York along with a mill in Hayange, France.

The combined operations form Tata's Long Products Europe (LPE) business. Following completion of the deal, the steelworks business will trade under the brand name British Steel.

The sale also includes the associated sales and distribution network.

Tata also confirmed on Monday that it was to contact "many tens" of potential buyers for the rest of its UK steel business, including the sprawling Port Talbot works - adding that it preferred to find a single purchaser.

Commenting on the creation of British Steel arising from the Long Products sale Roy Rickhuss, general secretary of the steelworkers’ union Community, said: "We welcome this major step forward towards a deal which will continue steelmaking in Scunthorpe and secure the future of the Long Products business across the UK.

"Greybull's interest in the business ... demonstrates that with the right investors UK steel making can have a positive future. So far, Tata Steel has honoured its commitment to be a responsible seller of the business by allowing time for the deal to be done."

Union members at Scunthorpe are currently being balloted on whether to accept a 3% cut in pay and reductions in pension contributions for a year to smooth the path for the deal.

Greybull, which is a British-based investment group, will pay a nominal £1 for the business and has arranged a £400m investment and financing package. 

The existing management team will stay on to run the new business, and try to return the company to profitability.

Marc Meyohas, a partner at Greybull, said the aim was to avoid any redundancies, grow the business and become profitable within a year.

"We are delighted to have reached agreement for the acquisition of LPE, which we believe can become a strong business, with a highly skilled workforce and great potential."

The deal is expected to complete within eight weeks, assuming the completion of the financing arrangements for LPE and contract agreements with key suppliers are agreed.

Hans Fischer, chief executive of Tata Steel’s European operations, said: “Under these current challenging market conditions in Europe with the soaring levels of imports from China, we are happy that Tata Steel UK and Greybull Capital have entered the final stage of completion of the sale."

Greybull said it is already searching for a permanent chief executive.

The company helped turn-around the airline operator Monarch, which it bought it in 2014 and last year returned to profit, and recently acquired convenience store chain, My Local, from Morrisons.

Mr Meyohas would not confirm whether Greybull was interested in buying other parts of Tata's UK assets, such as the Port Talbot plant.

"We are always interested in growth. We would review any opportunities as and when they are presented to us," he said.

The Business Secretary Sajid Javid said: "The UK and Welsh Governments are working tirelessly to support Tata Steel to reach a deal for Port Talbot and their other sites across the UK."

source

New M&S Boss: Clothing Sales 'Unsatisfactory'

The new boss of Marks and Spencer has ordered a turnaround of its clothing business, describing sales as "unsatisfactory".

Steve Rowe said he would update investors on his plans next month after the retailer reported a 2.7% dip in like-for-like sales in its clothing and home sales during its fourth quarter.

He is retaining direct control over the troubled division - given its problems in recent years - despite taking over as group chief executive from Marc Bolland just days ago.

M&S blamed the performance on price deflation creating a "challenging backdrop" for trade but it admitted "some investment in price" in a bid to bolster its offering.

The figures also benefited from an earlier Easter, handing a 0.4% boost to clothing and home sales and a 1% rise in food.

Mr Rowe said that while he was happy with growing market share in its food division, he would be focusing on growing sales in clothing.

"I am very proud and privileged to be leading M&S.  We are focused on getting even closer to our customers and putting them at the heart of everything we do.

"We had a mixed performance in the final quarter of the year. Our food business once again outperformed the market ...Although the sales decline in clothing and home was lower than last quarter, our performance remains unsatisfactory and there is still more we need to do.

"Turning around our clothing and home business by improving our customer offer is our number one priority.

"I will update you on my thoughts on the business in May," he concluded.

According to a memo sent by Mr Rowe on Monday, he told staff M&S's "number one priority" would be to improve the perennially under-performing clothing and homewares division, which has seen same-store sales decline in all but one of the last 18 quarters.

The new boss vowed that M&S would spend time listening to customers and "keeping things simple", saying that the company was guilty of "over-complicating" things - a remark which one City analyst interpreted as a veiled dig at his predecessor.

Mr Bolland announced that he was leaving in January after five turbulent years in charge, with margin improvements in its clothing business undermined by persistent problems in technology and logistics combined with a disappointing customer response to many of its fashion ranges.

source

Fed Still Cautious Of Further US Rate Rises

The Federal Reserve committee is maintaining a slow and steady approach to raising interest rates, according to the minutes of a meeting held in March which were published on Wednesday.

Some had anticipated that strong employment and spending figures may encourage policymakers to boost rates earlier than expected due to the risk of a surge in prices.

But this appears not to be the case, despite two officials calling for an increase to have taken place last month.

The documents suggested that the Fed will stick with its plan to increase rates just twice this year, rather than the four hikes they had initially intended.

The downward revision came last month in response to concerns over the instability of the global markets, particularly due to the weakening of the Chinese economy.

According to the published minutes a number of central figures on the committee disagreed with an immediate rate hike, citing the continuing elevated risks to the US economy.

They indicated that they felt an increase in interest rates even this month, in April, would ‘signal a sense of urgency that they did not think appropriate’.

The Federal Reserve first hiked rates in December 2015, increasing them by a quarter of a percentage point.

They had been holding a rate of almost zero for seven years, since the beginning of the global financial crisis.

The US markets responded to the news by failing slightly after having risen fairly steadily throughout the day, highlighting their continued nervousness about the impact that rising rates too quickly might have on growth.

The S&P 500 Index shed over six points from its peak to 2053.86 in the immediate aftermath of the announcement and the Dow Jones dropped by 60 points to 17621.75, while the Nasdaq Index was down 10 points to 4511.51.

However all three recovered within the hour and quickly made further gains.

While employment and wages have been making gains in recent months not all indicators have been enjoying the same success.

Manufacturing figures for the first quarter of this year – published on Monday – showed that business spending on capital goods was much weaker than originally thought, indicating a further decline in the growth of the economy.

source

Everything You Need To Know About Flood Re

A new scheme to help home-owners in flood-stricken areas reduce their insurance premiums launches today, but what exactly is Flood Re? Here's a handy guide.

:: What is Flood Re?

A scheme run jointly by the Government and the insurance industry. The aim is to make insurance more affordable for those living in areas with a high risk of flooding, where insurance premiums are likely to be higher.

The higher cost associated with flood-risk areas is passed on to Flood Re, meaning insurance companies don't have to foot the bill, and should offer cheaper policies to those affected.

Essentially it is a reinsurance company, which allows insurers to insure themselves against losses because of flooding.

It’s not-for-profit, owned and managed by the insurance industry, and is the first of its kind in the world.

:: How does it work?

It is up to the insurer to decide if they wish to take part in Flood Re and pass on the flood-risk element of cover to Flood Re.

If they do want to pass on the flood-risk, insurers will pay a fixed charge per policy.

Issuance companies will also contribute to an annual £180m fund; the levy is raised from all UK home insurers according to their market share.

:: How is it calculated?

The cost for insurers to pass on the flood-risk to Flood Re is calculated according to the council tax band of the house. It starts at £210 for a Band A house, going up to £1,200 for Band H homes.

Flood Re doesn't set prices for home insurance, that is still set by the insurance company.

:: Who is eligible?

Only residential properties in council tax band A to H are covered. Businesses and buy-to-let properties are ineligible.

The holder of the insurance policy, or their immediate family, must be living in the property.

Flats in leasehold blocks of more than four are also excluded.

The property must have been built before 1 January 2009 to prevent incentivising building on flood-risk areas.

The Association of British Insurers (ABI) estimates some 350,000 properties in the UK will be eligible.

:: What do you have to do?

Buy your insurance cover as normal. You will need to check with your insurer if you're eligible and if they offer Flood Re products.

You will make claims through your insurer as before, and won't deal directly with Flood Re.

:: Who's taking part?

The following insurance brands offer insurance products that include the benefits of Flood Re: Admiral, Avantia (HomeProtect), Aviva Home Insurance, Bank of Scotland, Cherish insurance Brokers, Churchill, Direct Line, First Direct Home Insurance, Halifax, Hiscox Broker, Legal & General, HSBC Home Insurance, Liverpool Victoria, Lloyds bank, More Than, Nationwide and Privilege.

:: Is it fair?

Insurance companies are expected to pass on the cost of the Flood Re levy to their customers, which could raise average bills by around £10.50.

The scheme means those in lower-risk areas are helping to subside those in higher-risk places, where the premiums have been capped at an artificially low rate.

The Committee on Climate Change has said the scheme is not good value for money, specifically that it is subsidising more households than needed, meaning “costs are higher than necessary at the expense of other households’ insurance bills.”

The CCC has called for the exclusion of band H houses, which, it says, are not likely to struggle to cover the cost of insurance. Band H homes were initially excluded from the scheme, but Flood Re argue "the impact of a flood can be no less devastating for Band H homes".

source

BT Fury At Ministers' 'Radical' Ofcom Call

The chief executive of BT Group has accused ministers of failing to acknowledge its efforts to overhaul Britain's broadband infrastructure as regulators mull tougher oversight of the former state monopoly.

Sky News has learnt that Gavin Patterson wrote to John Whittingdale, the Culture Secretary, last week in the wake of the Government's response to Ofcom's digital communications review.

Published on Wednesday, the Government said it "believes Ofcom should be firmly focused on taking whatever action is needed to correct the competition problems identified, and to promote the growth of the digital economy, however radical a change that might be".

It added that Ofcom should "confirm a clear and speedy timetable for decision-taking on the necessary changes to resolve the issues identified".

Mr Patterson is said to have been irritated by the Government's response, prompting him to write to Mr Whittingdale to argue that ministers had not taken account of a promised investment in improvements to its broadband network, which is also used by BT's competitors.

His letter added that the Government had not recognised in its response BT's planned introduction later this year of G.Fast, an upgrade to its existing copper network.

BT has said it will invest at least £1bn in delivering ultrafast broadband if it gains regulatory certainty over its ownership of Openreach, its infrastructure arm which rivals have demanded should be spun off.

Sky plc, the owner of Sky News, TalkTalk and Vodafone have argued that Openreach's continued ownership by BT represents a conflict of interest because it reduces its incentive to invest in upgrading its infrastructure.

Vodafone has accused BT of engaging in a game of "intellectual hide-and-seek", saying in a regulatory submission that it loads Openreach with "inappropriate costs from other parts of its business, which it expects to be paid for by the rest of the industry and passed on to customers".

BT has denied those suggestions.

The Government's response to Ofcom's review said it agreed that "the current relationship between BT and Openreach will not deliver the country’s needs for more competition, better innovation and better service".

Mr Patterson's letter to the Culture Secretary comes at an important time for BT, which is implementing a new organisational structure in the wake of its £11bn takeover of EE, the mobile phone group.

It has also appointed a new finance director, Simon Lowth, to replace veteran finance chief Tony Chanmugam.

BT, which competes for telecoms, broadband and pay-television customers with Sky, has a market value of nearly £44bn.

The company declined to comment on Monday.

source

Tesla Unveils Mass Market Electric Car Model

Electric car maker Tesla has unveiled its new, cheaper mass market model and revealed it had already taken 130,000 orders even though it is more than a year away from production.

Enthusiasts had queued overnight outside Tesla stores in California to put down deposits on the car, which will sell for $35,000 (£24,000), half the price of its current models, the Model S and the Model X, which start at $70,000 (£49,000).

Chief executive Elon Musk said it was the final step In the company’s plan to develop a "mass market, affordable car".

It is expected to have a range of more than 200 miles on an electric charge - around double what drivers currently get from competitors it is price range. Features will include automatic lane-changing.

Tesla is aiming to lift its car production to 500,000 by 2020, up from 50,000 last year.

It also plans to double the number of stores it has worldwide to 441 by the end of 2017.

Mr Musk unveiled a prototype of the Model 3 Sedan in Hawthorne, California, outside Los Angeles at an event attended by hundreds of Tesla owners and media.

Three of the cars were driven on stage. The four-door vehicles have no grille and also feature a roof that is a panoramic pane of glass from front to back.

The Model 3 is seen as critical to Tesla's growth plans and sustaining its share price which has jumped in recent days ahead of the launch, amid concerns by some sceptics about when the business will start to turn a profit.

A rival electric car from General Motors, the Chevrolet Bolt, is to launch later this year at a starting price of around $35,000 while a new generation of Nissan’s Leaf electric car is also in the offing.

source