Outlook: Put this plan back in its Box
Wednesday 26 November 1997
The scheme works like this. The Grid hands out pounds 770m to shareholders by way of a special dividend. So far, so uncontroversial. Like lots of other stodgy old utilities, the management has run out of ideas and reckons shareholders can find better uses for the money themselves. Since the dividend payment is accompanied by a share consolidation, the exempt funds miss out on their tax credit, but you can't have everything. Now comes the tricky bit. Shareholders are then asked to reinvest pounds 300m to pounds 500m of the proceeds in a convertible bond issue just in case an electrifying overseas opportunity comes along.
The idea is to provide "financial flexibility" but since the Grid doubts whether any major acquisitions are in prospect for the next two years this seems a largely redundant flexing of muscle. Even if an opportunity were to present itself, the omens are not good. The Grid got burnt in Pakistan and missed out in Australia, which only leaves it with a slice of the action in Argentina while the regulator takes a hatchet to its margins back home.
Shareholders will have to wait until January before they see the terms of the bond issue. In the meantime they might wonder why the company is presenting the market with an opportunity to deal against it until the issue is safely away.
The only shareholder to benefit very obviously is HSBC Investment Banking, which holds 11 per cent of the Grid and is pocketing pounds 10m for helping Mr Box devise this little wheeze. The last time HSBC's relationship with the Grid came under the spotlight was when its broking arm, James Capel, acquired the Grid stake on behalf of the Olyan group in Saudi Arabia. The point of that little deal was never satisfactorily explained. Unless shareholders get some good answers from the Grid as to why they should support this latest humdinger, the Box plan should be put firmly back where it belongs.
- 1 Liam Gallagher brands Kanye West 'utter s**t' during BRIT Awards performance
- 2 Isis burns thousands of books and rare manuscripts from Mosul's libraries
- 3 People who sleep more than eight hours are more likely to have a stroke, research shows
- 4 Kanye West climbs on table at Nando's to crowd chants of 'Yeezus' before Brit Awards 2015 performance of 'All Day'
- 5 New theory could prove how life began and disprove God
Ukraine crisis: Putin will cut gas to Europe unless Russia is paid by the end of the week
Liam Gallagher brands Kanye West 'utter s**t' during BRIT Awards performance
Isis burns thousands of books and rare manuscripts from Mosul's libraries
Mohammed Emwazi: Nine things we now know about man named as Isis militant 'Jihadi John'
Kanye West climbs on table at Nando's to crowd chants of 'Yeezus' before Brit Awards 2015 performance of 'All Day'
Oscars 2015: Birdman beats Boyhood as Eddie Redmayne and Patricia Arquette win big - as it happened
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£17000 - £25000 per annum: Recruitment Genius: An opportunity to join this new...
£18000 - £21000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£36000 - £44000 per annum: Recruitment Genius: Encouraging more businesses to ...