Business View: Extra, extra. HBOS goes out on a limb to back Green bid

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The Independent Online

The rather irritating Howard, who dominates the Halifax bank's advertising, is always promising you a little extra. However much it is, it is as nothing to the extra that Howard's colleague, Peter Cummings, is delivering for Philip Green.

The rather irritating Howard, who dominates the Halifax bank's advertising, is always promising you a little extra. However much it is, it is as nothing to the extra that Howard's colleague, Peter Cummings, is delivering for Philip Green.

Mr Cummings runs the corporate banking side of Halifax's parent, HBOS. In the past few years, he has gained a reputation for bold lending to aggressive entrepreneurs. He backed Mr Green in previous ventures - buying Sears shops and Arcadia - and has done nicely out of it. He lent to Mr Green's friend, Tom Hunter, and to other members of the Green fan club - notably the Barclay brothers, who borrowed from HBOS to buy Littlewoods and will be using the bank to fund their £665m purchase of the Telegraph Group.

But all this is overshadowed by the commitment Mr Cummings and his bank are making to Mr Green's assault on Marks & Spencer. If he succeeds with his 400p-a-share bid, HBOS will be providing as much as £3bn to the bid vehicle.

The figures work like this: Mr Green will have to pay £9.1bn for M&S shares, assuming no one accepts his offer of a stake in his highly leveraged new company. M&S has more than £2bn of debts, and with pension fund and other commitments the total package will be about £12bn.

Mr Green's family is coming up with £1.575bn of equity finance for this, with Goldman Sachs putting up £850m and HBOS and Barclays Capital sharing another £600m. But I've learnt that HBOS is underwriting £475m of the Green family money, so assuming it is going 50/50 with BarCap, it's total equity commitment is £775m.

It is also lending to Mr Green as one of four banks that have committed a total of £7.9bn. No exact figures have been given on who is lending what, so assuming an even distribution, HBOS's share will be £2bn.

Of course, HBOS will seek to syndicate these loans once the bid goes through, but it will have to put £3bn at risk, at least for a short time. That is over 10 per cent of its market value.

Mr Green has a track record for paying banks back quickly. But his M&S bid is much larger than anything else he has done. And HBOS's commitment is significantly larger than anything it has ever done. No wonder the HBOS chairman, Lord Stevenson, is going on the board of Mr Green's company.

Postman, do your day job

Hurrah for Allan Leighton. The former Asda boss has done a fantastic job for his old mate Philip Green. He joined him for the meetings with US investor Brandes, which agreed to back Mr Green with its near 12 per cent stake in Marks & Sparks if he divvied up 400p a share.

But advising Mr Green isn't Mr Leighton's only job - indeed it isn't even one of his official jobs. These include being a non-executive director of BSkyB, where he ran around pacifying shareholders after James Murdoch was made chief executive; chairman of Lastminute.com, where lobby group Pirc tried to get him ousted; and former deputy chairman of Leeds United, where his role is under scrutiny after the club went bust.

For the man in the street, Mr Leighton's most important job is chairman of the Royal Mail, which may be creeping back into profit but is missing every performance target it has been set. This week, it will be fined £70m because of this, wiping out much of the Mail's meagre profits. The taxpayer should ask why Mr Leighton appears not to be able to do as good a job for the post as he is doing for the likely future owner of M&S.

Let's call the sack the sack

Among the numerous indictments made against Kenneth Lay, Enron's former chairman, one has a strong resonance for British companies. The Feds are unhappy at the announcements made when other executives - notably chief executive Jeffrey Skilling - were kicked out of Enron. The Skilling statement referred to him leaving for "personal reasons" when actually it was because he admitted to Mr Lay that he could not stop the spiralling decline in Enron's share price.

On both sides of the Atlantic, executives never seem to be sacked. They resign for "personal reasons" or to "further their career". They are often paid off handsomely to keep their mouths shut. If the principle is established that these soft-soap statements are misleading and so actionable, we might see more candour.

j.nisse@independent.co.uk

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