Market Report: Euro Disney on the slide again amid winter gloom

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The Independent Online
SHARES in Euro Disney continued to behave like the theme park's runaway train on Thunder Mountain, plunging by 62p to an all-time low of 318p yesterday.

Dealers were concerned by speculation that bankers were intending to form a steering committee to oversee the company's financial restructuring.

Banque Indosuez was being tipped as the favourite to take the helm of the steering committee.

Secondary market prices for the theme park's debt were yesterday quoted at 50 per cent of value, down from 80 per cent earlier this month.

Rumours of a big rights issue also resurfaced. The consensus was that Euro Disney would have to extend to a one-for-one cash call.

The rights-issue fears appear to be prompting small investors, who bought shares after the slide that followed the company's annual results two weeks ago, to sell out.

Euro Disney's shares, which were originally floated four years ago at 707p, have tumbled from pounds 11.73 since March, and have halved in value since the end of last month.

Dealings in Paris yesterday were halted three times as the price tumbled from an overnight 33.4 francs to 27.2 francs. Investor sentiment has also been dented by the implications for attendance levels at the park against the backdrop of the severe cold weather sweeping Europe.

Euro Disney's performance - the fourth-worst by any stock - stood out like a sore thumb, with investors big and small content to mark time ahead of next week's Budget.

The FT-SE 100 share index bounced around between plus seven and minus eight, eventually settling at 3,067.2, down 2.1 points on the day. A fall of 8.5 to 3,430.7 was recorded by the FT-SE Mid. A total 567 million shares were traded.

Tuesday's half-point cut in interest rates caused more uncertainty about the contents of the Budget. NatWest Markets said tax increases could be as much as pounds 3bn, against previous estimates of pounds 2bn.

Gilts, though, benefited from the rate reduction. Longer-dated issues advanced by pounds 5 16 .

Overall, the equity market was bereft of any pulling influence, one way or the other, by Wall Street which held steady in early dealings ahead of today's Thanksgiving holiday.

Television shares commanded most attention yesterday as the Government announced a relaxation in ownership rules.

HTV, viewed as a prime takeover candidate, quickly raced to 97p before closing at 92p, up 4p. Shares languished at 19p earlier this year.

Yorkshire Tyne-Tees, however, dropped 17p to 194p with the company in effect excluded from any takeover fight because the rules will limit any owner to two franchises.

Despite the London stations also being barred from merging with each other, LWT is still seen as a possible bid target and rose 4p to 507p - just 3p short of this year's closing high.

Granada, a possible predator for LWT, lost 11p to 445p.

The 5.3 million rump of Comac Group's rights issue was safely placed in the market by James Capel at 7p. The fully-paid shares closed 1p higher at 96p.

Some 30 million shares in Burton were turned over. Traders said blocks of shares amounting to 15 million were placed in the market as part of a bought deal by Lehman Brothers.

The trades were struck at 63p and 63.75p. Burton eased 2p to 64p.

Retailers were generally softer on fears of the Chancellor widening the VAT net. Boots slipped 2p to 520p, Asprey gave up 4p to 311p, Dixons lost 5p to 265p, GUS shed 6p to 555p, and Kingfisher finished 13p lower at 654p.

Some publishing and printing stocks also suffered from VAT worries. Reed International eased 5p to 722p, United Newspapers retreated 4p to 524p, and De La Rue lost 5p to 794p.

Goodhead Group, though, bucked the sectoral trend and spurted 6p to 23p on its pounds 5.8m fund-raising deal underwritten by John Madejski, chairman of Reading Football Club.

Another year's high was hit by Bluebird Toys, ahead 23p to 563p. There was talk that the recent upgrade in the profit forecast from pounds 5m to pounds 8m by Smith New Court, the company's broker, may have underestimated its Christmas sales performance. One observer said Bluebird could make more than pounds 9m. On Smith's numbers, Bluebird is trading on a p/e of less than 10 on projected earnings per share of 55p.

British Gas firmed 2p to 324p amid talk that James Capel was poised to issue a buy circular.

Talk of a rights issue unsettled Pilkington in early dealings. Shares closed 1p better at 152p.

Yesterday's four debuts saw DFS chalk up at a 11p premium at 271p, as did Azlan, which closed at 241p. Hozelock managed a 1p gain over its issue price to 251p, but Wigmore went to a 6p discount at 94p.

Scotia closed at 287p, up 8p. St Bartholomew's Hospital in London has tested the possibility that EF13 (Lithium Gammalino- lenate), which is being developed by Scotia to treat pancreatic cancers, might also be effective on HIV-infected cells. Scotia said the study showed EF13 killed HIV-infected lymphocytes at concentrations that left normal lymphocytes unharmed.

Powerscreen International continued to be affected by the stock overhang caused by the sale of a large stake by a single investor last week. The price slipped 6.5p to 302.5p. Two directors took advantage of the situation, however. John Craig, chairman, yesterday bought 23,500 at 290p and Shay McKeown, chief executive, bought 10,000 at 294p. Total volume was 1.7 million.

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