The Week Ahead: Leeds United on the edge of the abyss

Click to follow
The Independent Online

For fans, players, creditors, potential buyers and, arguably, the entire Premiership, tomorrow marks something of a water-shed as another crisis date dawns for Leeds United.

If the club survives that far, Monday will mark the end of the extended standstill agreement struck with bondholders, who control the bulk of the club's £81m debt pile.

As the week closed, hopes were failing that a bid would emerge strong enough to win over the creditors. Those rumoured to be trying to put together last-minute deals included a consortium of businessmen and Leeds fans, as well as Peter Wilkinson, the IT millionaire who made his considerable fortune by selling Planet Online to Energis. He has apparently let it be known that - while he would rather not - should the worst come to the worst, he would step in to save the club. Leeds' chief executive, Trevor Birch, spent much of last week frantically trying to find an interim deal that would stall creditors, including cancelling player loan arrangements and deferring players' wages.

Administration has not been seen in the Premiership before and if Leeds succumbs, the debate will really get going: who gets what, how the creditors are paid, what players will be sold and what, if any, sporting penalty the Premier League will inflict on the club.

Away from the emotion of the pitch, a handful of heavyweight stocks will dominate proceedings. By far the biggest is AstraZeneca, the FTSE 100 drugs stalwart, and analysts are hoping for good news. Third-quarter results were well above market forecasts, and the group upped guidance for full-year earnings, out on Thursday. Yet as Shell recently proved, stalwarts are not unknown on occasion to throw the odd blindside.

For a start, analysts have been unable to agree over how much money has been allotted to marketing Crestor, Astra-Zeneca's recently approved cholesterol treatment. Sales of the potential blockbuster have been scrutinised in the 22 weeks since it came on to the market, and an update will be eagerly awaited. Anti-coagulant Exanta will also be a focus point, with particular concern over whether the US Food and Drug Administration will grant the treatment priority review status. Overall sales are expected to be weaker because of a reduction in wholesale stocks of key drugs built up earlier in the financial year.

Northern Rock, as usual, kicks off the banks' earnings season with full-year figures on Wednesday. The pre-close statements from the sector have been detailed, so no one is expecting any great surprises. Northern Rock is forecast to announce increased income growth because of the strong mortgage market, with bad debts likely to be brought well under control in a cli- mate of high employment and low interest rates.

Another set of figures that are unlikely to contain many surprises comes from J Sainsbury. It produces third-quarter numbers on Thursday but has already thoroughly depressed the market with its latest bout of bad news; earlier this month it revealed weak festive sales and warned that factors such as the integration of a new distribution system would dampen trading going forward.

A number of companies will be issuing trading statements, including Vodafone, Cable & Wireless - where details of the UK restructuring after the planned US exit will be hoped for - Legal & General, Friends Provident and Allied Domecq, the owner of Malibu rum, Beefeater gin and Perrier-Jouet champagne. This time last year, the drinks giant warned that profits would be hit by non-operating items such as higher pension costs and the weak US dollar. Some analysts are pencilling in a reduction in this year's operating profits of £25m. Otherwise sales are expected to be solid.

The economic focus switches overseas this week. The US's Federal Reserve meets on Wednesday to make its decision on interest rates, and few expect any major changes. "The principal question is of course when the Fed will begin to tighten," says Investec economist Philip Shaw. "We had been of the view that an absence of inflation pressures would allow it to refrain from raising rates until after November's presidential elections." But he adds that with forecasts for US GDP already on the rise, the Fed could opt for a change as soon as June.

Back at home, announcements in a quiet week on the economic front include mortgage data from the Bank of England and the CBI quarterly industrial trends survey. No bad thing, as the Government is likely to have its hands full with the Hutton report and student top-up fees.

Comments