Investors await information on Lloyds fundraising scheme

Published on Sunday 22 November 2009 21:03

INVESTORS are waiting for Lloyds Banking Group to unveil more details of its record fundraising plans this week.

The bank will take its mammoth plan to shareholders on Thursday for approval as part of its efforts to sidestep the UK government's toxic asset protection scheme (APS).

The group, which is 43 per cent owned by the taxpayer, is raising a record-breaking 13.5 billion from shareholders to duck the APS, accompanied by a debt conversion offer expected to generate 7.5bn.

Investors need to approve the 13.5bn cash-call and will be asked to do so at Thursday's extraordinary general meeting in Birmingham, Sir Win Bischoff's first meeting as chairman.

Details on pricing for the rights issue and how much it will cost on average for Lloyds' 2.8 million-strong army of private shareholders are due to be released tomorrow.

It is expected to be heavily discounted, with some reports suggesting a hefty 93 per cent discount of 15p a share.

But the latest plan is unlikely to meet with resistance, given the unsavoury alternative of taking part in the APS and handing majority control to the UK government.

There'll be water, water everywhere this week as utility firms south of the Border await regulator Ofwat's decision on prices for the next five years.

Thursday's announcement will be the centrepiece of a busy week for the sector, with three major players reporting.

The regulator stunned the industry in July when it demanded a 4 per cent cut in average household bills – calling on water firms in England and Wales to reduce bills by an average 14 to 330 before inflation by 2015. The demand contrasted with final business plans submitted to Ofwat in April, which called for average price increases of 31 before inflation.

The uncertainty has blighted the share price performance of the sector, which has missed out on the stock market surge seen since March.

United Utilities is expected to report underlying operating profits of 367 million on Wednesday – virtually the same as last year.

Severn Trent, up tomorrow, is expected to report an underlying profit before tax of 180m, up from 154.5m last year.

Northumbrian Water should today show a first-half pre-tax surplus of 87.1m up from 77m a year earlier.

Carphone Warehouse's half-year results on Friday come after the group recently pleased the market by topping forecasts for broadband customer additions and confirming its planned de-merger was "progressing at pace".

The group, which is spinning off its TalkTalk broadband business into a separate company, said it gained a net 77,000 subscribers in the three months to 30 September, compared with City predictions for an increase of around 41,000.

The interim figures cover a momentous period for the group, which became the UK's biggest residential broadband provider after it bought the UK operations of troubled broadband firm Tiscali for 236m.

Investec Securities is looking for profits of 159.2m, up from 133m a year earlier.

Last year, Carphone sold a 50 per cent stake in its retail business to US giant Best Buy.

Analysts will look for any further update on the planned Best Buy chain and the sudden departure of Bob Willett, Best Buy's international chief executive. Willett will leave on New Year's Eve, just months before the firm makes its hotly-anticipated debut in the UK.

Pub group Mitchells & Butlers was able to provide some cheer after a tough year when a final quarter rebound in sale saw it up guidance for annual profits. But the late sales push is not expected to have prevented a steep slide in profits for the year to 26 September.

While analysts at Deutsche Bank are forecasting profits to be down more than 24 per cent to 127.9m, they said M&B – which owns the Horseshoe Bar in Glasgow and Deacon Brodie's Tavern in Edinburgh – had been performing on a par with the likes of robust rival Whitbread, owner of Brewers Fayre.