Rumours that Corus is close to reaching an agreement with its lenders over a new banking facility sent traders rushing to get their hands on shares of the troubled steel maker yesterday, lifting the stock 1p to 16p. The hope among those buying into it is that Corus will unveil an agreement with its banks in the very near future, thereby guaranteeing the company's survival.
As it stands, the steel maker finds itself in limbo as its management team struggles to hammer out an agreement with lenders. Earlier this year, the company promised the market that a deal would be announced some time this summer. However, sector specialists were yesterday eager to warn investors not to rush into Corus shares until the details of the group's new banking covenants are made public. "Corus at the moment has its back against the wall, which means that its bankers are in a good position to dictate the terms of any new loan agreement to their advantage and at the expense of the company and its shareholders," one analyst warned.
The wider market was very much in retreat as weaker than expected US manufacturing figures sent stocks on both sides of the Atlantic into negative territory. The FTSE 100 index closed below the psychologically important 4,000 level as it gave up 67.3 points to 3,963.9. Heavy falls on America's tech-laden Nasdaq Composite meant London's New Economy companies lost ground. Spirent fell 2p to 24.25p, Psion gave up 3.75p to 61.5p and Thus lost 0.75p to 17.75p.
Given this background, dealers were puzzled by a 5p rise to 67.5p at Colt Telecom. Bulls of the stock suggested that Colt is a bid target, maybe for a resurgent Cable & Wireless, off 3.25p to 109.75p, which has seen its shares rally from December's nadir of 41p.
PHS gave up 2p to 74p as the group's finance director, John Skidmore, netted pounds 100,000 through the sale of 132,500 shares at 75p. Earlier last month, the washrooms-to-tropical plants specialist posted maiden full- year figures, which saw PHS achieve a pre-tax profit of pounds 36m.
Wood Group fell 15p to 165p as the company warned of declining margins at its US gas turbine services unit. Wood Group complained that the downturn in the North American power market was having a negative impact on its margins. Credit Suisse First Boston responded by trimming its 2003 and 2004 earnings forecasts but retained an "outperform" rating on the stock.
Punch Taverns lost 4p to 268p as Altium Capital advised investors to take profits after a 50 per cent jump by the stock over the past three months. Although Punch made a positive presentation of its strategy at Altium's offices recently, the broker believes the group's shares are now up with events. Elsewhere in the pubs sector, Enterprise Inns rose 5.5p to 814p thanks to upbeat comments from Scottish & Newcastle's retail unit.
Cazenove - the joint house broker to Mitchells & Butlers, which was down 3.25p to 230.5p - was heard telling investors that the group would benefit greatly if it won the auction for S&N's 1,500-outlet strong retail division. It also assured clients that M&B is unlikely to overpay for these assets but warned that if the group missed out on the purchase, the eventual acquirer is likely to turn its attention on M&B soon afterwards.
Datamonitor, the information compiler and provider, added 7p to 68.5p as Bernard Cragg, the chairman, picked up 108,000 shares at 60p. However, it also emerged yesterday that Reuters, a major shareholder, has been selling down its stake. Reuters disclosed the disposal of 3.5 million Datamonitor shares, a 5 per cent stake, which leaves it in control of just over 15 per cent of the company. Ambient gained 5p to 61.5p as the group boasted of a further improvement in the performance of its various operations. Ambient was particularly upbeat about the prospects at Moneybox, its cash machines unit, which achieved an overall profit for the first time in May of this year.
Keller, the construction group which saw its shares take a pasting last week after it issued a profit warning, gained 6p to 235.5p as investors responded to a raft of director share purchases. Six directors in total bought 347,000 shares at 230p. Leading the way was Pedro Lopez, a non- executive, who picked up 300,000 and now controls more than 5 per cent of Keller.
Project Telecom ticked 1p higher to 44p amid rumours of a 70p-a-share bid. According to yesterday's gossip, the mobile phone giant Vodafone is among those interested in the telecom services group. Bid speculation also pushed the biotech firm Vernalis 0.5p higher to 45.5p. Global Natural Energy, one of the best stock market performers so far this year, gained 50p to 260p as the petrol retailer announced that it has acquired a 20 per cent stake in a new UK gas distribution company.Reuse content