Editor: Pat Williams. E-mail pwilliams@creditman.co.uk
John Arnold. E-mail jarnold@creditman.co.uk
Site: Business Credit Management UK
URL: http://www.creditman.co.uk
Issue: Vol 4 Issue 3
Dated: 23 January 2000
Welcome to the Business Credit News UK.
In this weeks edition you will find the following topics.
"Optimising Credit Performance in the New Millennium - Make the first collection quarter of the New Millennium your best ever!
It's that time of year again - you know, when the auditors/ bank/ FD are all saying "something must be done about debtors". Kennard & Co are putting on a one day credit management training workshop in Stoke on Trent on Wednesday, 9th February to help maximise your cash collection and minimise bad debts.
The workshop is pitched at ICM Intermediate level and is designed to encourage networking. It has been deliberately organised at a convenient venue for the Potteries so that participants don't have far to travel in the winter weather.
The trainer is Russell Kennard, MBA AIMC who has worked for several of the big companies in the area and was responsible for establishing the local MICM (Grad) course at Stoke College. A lot of interest has been shown already so book early to avoid disappointment!
Further details: Mobile 07747 845 257 Email: arkmba@btinternet.com " Website: www.arkennard.co.uk
UKADVANCE ENERGY STATISTICS
Provisional statistics showing energy production and consumption and petroleum product prices in the three months to November 1999 were published on the 18 January 2000 by the Department of Trade and Industry. Some figures for typical retail prices of motor spirit and diesel fuel in December are also given.
Production of indigenous primary fuels, September to November 1999
Production of indigenous primary fuels in the three months to November 1999, at 73.5 million tonnes of oil equivalent, was 1.7 per cent higher than in the corresponding period a year ago. Production of coal fell by 9.0 per cent, whilst production of oil and gas rose by 3.6 per cent and 6.2 per cent respectively. Production of primary electricity fell by 13.0 per cent because of a higher level of outages for maintenance, repair and refuelling at nuclear stations.
Consumption of primary fuels, September to November 1999
Total inland consumption of primary fuels, which includes deliveries into consumption, during the three months to November 1999, at 54.2 million tonnes of oil equivalent, was 3.6 per cent lower than that recorded for the same period a year ago. Consumption of gas rose by 2.7 per cent, whilst consumption of coal, oil and primary electricity fell by 10.2 per cent, 4.0 per cent and 11.8 per cent respectively. Consumption of coal fell because of lower use at power stations.
Use of petroleum products, September to November 1999
Total use of petroleum, including non-energy use, in the period September to November 1999 was 19.8 million tonnes, 4.5 per cent lower than a year earlier. Energy use decreased by 3.8 per cent while non-energy use increased by 3.9 per cent. Total motor spirit deliveries were down 2.2 per cent, with deliveries of unleaded petrol 10.4 per cent higher. In the period, unleaded petrol deliveries (excluding Lead Replacement Petrol (LRP)) represented 90.6 per cent of total motor spirit deliveries, compared with 80.3 per cent a year earlier. Derv fuel deliveries increased by 1.4 per cent, while deliveries of other gas diesel oils, primarily used for heating purposes, decreased by 15.4 per cent. Fuel oil deliveries fell by 22.7 per cent, continuing its decline as a source of energy for industry and electricity generation. Deliveries of other products decreased by 2.2 per cent (increased deliveries of aviation turbine fuel (up 1.0 per cent) were offset by lower deliveries of liquefied petroleum gases (down 8.1 per cent) and burning oil (down 19.1 per cent)).
Petroleum product prices, September to December 1999 Prices of motor fuels have risen sharply in December following a slight fall in the month to mid November. These movements reflect the slight fall in crude oil prices in October followed by a sharp increase in November due to continued adherence by key oil producers to production targets.
In terms of prices at the pump, figures show that prices of motor fuels increased in the month to mid-December with increases of around .5 pence per litre for Lead Replacement Petrol (LRP), and increases of over 2 pence per litre for premium unleaded and 2.5 pence per litre for diesel. In the year to mid-December 1999, rises of 11.7, 10.6 and 13.1 pence per litre were seen for premium unleaded, LRP and diesel respectively - these represent increases of around 15 to 20 per cent in the price of these fuels.
In the month to mid-November, the price of super unleaded fell by 0.5 pence per litre and was around 5.5 per cent higher than a year ago; an actual increase of 4.3 pence per litre. The rate of duty payable on higher octane unleaded fuels was reduced from 52.33 pence per litre to 49.21 pence per litre as of 1 October 1999 and the consequent fall in the price is reflected in the comparison covering the last year.
ISSUED BY:
Department of Trade and Industry
1 Victoria Street
London SW1H 0ET
INFORMATION TECHNOLOGY TAKES A SEAT ON THE BOARD
However, KPMG Consulting report shows some companies are still hanging back over e-business
A new KPMG Consulting report highlights the growing recognition of the importance of IT - and its role in e-business - in the Boardrooms of the UK's largest companies, but warns that many companies don't know what to do about it. Over three-quarters of the participants claimed IT is already significantly changing the way their organisations operate and is becoming a key part of business strategy. However, they lack confidence in their own organisation's ability to exploit IT and their personal ability to sponsor innovative projects, and don't know where to seek guidance to overcome these barriers. As a result confusion and hesitation reign as the majority stand back, watching their competitors and only investing once someone else has shown the way. KPMG Consulting warns that the accelerating pace of e-business demands that companies take positive action to innovate in IT, with the bystanders being condemned to a following role and even extinction.
The report,E-business and Beyond: Board Level Drivers and Doubts, canvassed 149 CEOs/Board Directors of FT350 companies about the prioritisation of technology within their organisation.
According to Alan Buckle, CEO at KPMG Consulting, the report shows that "Board Directors are accepting that IT is having a massive impact on their companies and are beginning to consider the impact of technology on corporate strategy. On the other hand, the rapid development of technology - particularly in e-business - means that business leaders are frequently bombarded by complex and often contradictory messages. This complicates decisions about the practical application of IT in business. Companies need to take a systematic approach to the innovative use of IT if they are to overcome the complexity of the issues involved."
A number of results from the report show how IT innovation and an organisation's IT function are prioritised at Board Level:
However, other findings reveal the problems Board Directors are encountering when it comes to harnessing technology for the benefit of the business:
despite believing that customer expectations are their key challenge, business leaders give investment priority to improving efficiency and reducing cost;
Graham Nixon, Partner at KPMG Consulting, added: "These findings show that many of the top companies in the UK now recognise the need to put technology and e-business at the heart of their strategy but have difficulty in turning that recognition into action. Board Directors need to ensure that their organisation develops a process for deliberate innovation, a culture which encourages success (and permits failure), and an IT infrastructure which provides the flexibility to react to this fast-evolving environment. Only those who evolve faster than the competition will survive and prosper."
UK MBO ACTIVITY IN 1999 REFLECTS FLIGHTS TO QUALITY
Key highlights of the latest research published by KPMG Corporate Finance, a leading private equity adviser, reveal that:
The overall value of the larger MBO/MBI deals* in the UK has increased in 1999 although fewer deals have been completed reflecting a flight to quality by the UK buy-out houses;
The slow-down in the number of UK deals completed in 1999 reflects the shift towards increasing investment opportunities in Europe;
1999 has been a record year in the number of public-to-private (PTP) transactions completed. Although there has been a slowdown in Q4 of 1999, PTP transactions are set to continue in 2000.
Larger MBO/MBI Deal Value Increases
Overall activity among larger MBO (management buy-out), MBI (management buy-in) and IBO (institutional buy-out) deals has fallen by 20% from 166 larger MBOs completed in 1998 to 138 in 1999 so far, according to the latest research published by KPMG Corporate Finance. However, the aggregate value of the larger MBOs completed in the last year has increased from £12,880m in 1998 to £13,510m in 1999 with the average value for each deal increasing by 26% from £78m in 1998 to £98m in 1999.
Less Activity in Sub-£100m Deals
The KPMG Corporate Finance research reveals that trends are emerging between the mid-market deals (within the £10m to £100m range) where the activity is slowing and the larger buy-out market (£100m plus) where buy-out activity has increased, especially in the £100-250m range.
The aggregate value of deals in the £10-25m range dropped by 39% from £1,070m in 1998 to £770m in 1999 and in the £25-50m range fell by 36% from £1,280m in 1998 to £940m in 1999. The value of deals in the £50-100m also fell by 43% from £2,420m in 1998 to £1,690m in 1999.
Deal Value in £100-250m Range Increases by 99% in 1999
The value of deals in the £100-250m increased significantly from £1,980m in 1998 to £3,950m in 1999, an increase of 99%. In the £250m plus range, aggregate deal value only increased marginally from £6,130m in 1998 to £6,160m in 1999.
Larger MBO Deal Value Increased by 555% since 1990
The levels of buy-out activity remain buoyant compared to the early 1990s (see table below). In 1990, only 60 larger MBOs were completed (compared to 138 in 1999) an increase of 130% with the aggregate deal value increasing from £2,060m in 1990 to £13,510m in 1999, an increase of 555%.
Record PTP Activity in 1999
1999 has been a record year for public-to-private (PTP) transactions with 33 deals totalling £4,712m compared to 24 PTPs in 1998 totalling £2,992. This highlights an increase of 38% in the number of deals completed and 57% increase in deal value between 1998 and 1999.
PTP transactions, however, have significantly slowed in the final quarter of 1999 with 6 PTPs completed in Q4 of 1999 (compared to 10 PTPs completed in Q3) with an aggregate value of £678m (compared to with an aggregate value of £1,690m in Q3 of 1999).
Regional Break-Down
The regional buy-out activity in the UK has significantly slowed in 1999 compared to 1999. Although in the majority of the active regions (London, the North West and the West Midlands), the trend largely reflects that of the overall buy-out activity with less deals but those being completed have a higher aggregate value.
The North West has emerged as the region where there has been a dramatic increase in the value of larger MBO/MBIs completed. In 1999, 17 deals were completed in the North West (compared to 18 in 1998) with an aggregate value of £2,176m (compared to £768m in 1998). The average value per deal has therefore increased by 33% from £96m in 1998 to £128m in 1999 in the North West.
Buy-out activity in the North, the East Midlands, and the South West has slowed the most dramatically in 1999 with aggregate value of deals dropping in the North by 53% from £541m in 1998 to £254m in 1999; by 49% in the East Midlands from £468m in 1998 to £241m in 1999; and by 46% in the South West from £846m in 1998 to £451m in 1999.
Charles Milner, UK Head of Private Equity at KPMG Corporate Finance commented:
"There has been less activity in the final quarter of 1999 showing signs that the UK market is becoming more saturated with many of the UK private equity players now looking at investment opportunities in Europe.
There are clear indications that many of the traditional mid-market players are now completing larger deals (in the £100-£250m range) than previously done with a significant increase in the levels of buy-out activity in this range, creating opportunities for some of the smaller players in the sub-£50m market.
There has been a significant slow-down in the level of public-to-private transactions in the final quarter of 1999 as many of the worthwhile companies have now been taken private, although PTP transactions are still likely to continue given the recent announcements from RJB Mining and Perkins Foods."
* = Deals with an overall value in excess of £10m
GREECE
Greece, aiming to join the euro in 2001, revalued the drachma in agreement with the European Central Bank and euro-zone finance ministers. Greece's booming economy now meets most of the conditions for joining the euro; its stockmarket was one of the EU's best performers in 1999.
Source - The Economist
Stephen Byers, Secretary of State for Trade and Industry, on the 20 January 2000 announced that inspectors have been appointed under section 432(2) of the Companies Act 1985 to investigate and report on the affairs of TransTec plc.
The inspectors have been asked to concentrate their investigation on the accounting treatment of a claim against the company for $18m and the extent to which the claim and other matters were disclosed to shareholders and the public - and on the reasons for the downfall of the Group.
The Secretary of State said
"There are clearly a number of serious issues regarding the collapse of TransTec which the public interest requires to be investigated by independent inspectors. I have emphasised to the inspectors that their prime objective must be to provide me with a full report as quickly as possible consistent with the need to undertake a fair, thorough and professional investigation. I have also asked the inspectors to report in a form which will enable the report to be made public"
The inspectors are Hugh Aldous FCA of RSM Robson Rhodes, 186 City Road, London EC1V 2NU and Roger Kaye TD QC, 24 Old Buildings, Lincoln's Inn, London WC2A 3UP.
The registered office of TransTec plc is PO Box 55, 1 Surrey Street London WC2R 2NT.
The shares of TransTec were suspended by the London Stock Exchange on 24 December 1999 and administrative receivers were appointed on 29 December 1999.
An inspector appointed under section 432 of the Companies Act 1985 has wide powers to require documents and the attendance of witnesses, including directors, officers and agents of the company and anyone else he considers is or may be in possession of relevant information concerning the company, and examine that person on oath. He may extend his investigation to other member companies of the group if this seems appropriate.
Hugh Aldous FCA was one of the inspectors appointed under section 432(2) of the Companies Act 1985 to investigate the affairs of House of Fraser Holdings plc.
Roger Kaye QC has a wide experience of inspection and other commercial and corporate matters and has frequently represented the DTI in major cases.
The inspectors make their report under section 437 of the Companies Act 1985. On receiving the report the Secretary of State will give consideration to what further action should be taken such as referral to other bodies including regulators, prosecutors and professional bodies and for possible disqualification of directors.
Figures released on the 19 January by KPMG Corporate Recovery show that almost 40% of companies going into receivership in 1999 were in the manufacturing sector, with the failure rate in the sector increasing by 8% over the previous year.
However, despite fears earlier in the year that total receiverships were set to soar, the total number of companies going into receivership in 1999 rose by only 2 per cent compared to 1998 as fears of recession diminished and confidence returned during the year.
A total of 533 receiverships were recorded in the six months to December 1999, down 2% on the previous six months and 1% down on the last six months of 1998. This fall in half yearly figures follows two successive increases. The total figure for 1999 was 1077.
Commented Tony Thompson, KPMG Corporate Recovery partner, "1999 was a year of contrasts. At the start of the year there were indications that the economy, which had been deteriorating in 1998, was still slowing down. In response the Bank of England cut interest rates four times during the first half of the year.
"In the second half of 1999, the economy was seen to pick up and the Bank was prompted to raise interest rates by 0.25 percentage points. Despite an uneven regional and sector recovery, conditions are set for the number of receiverships to fall in the coming year."
The manufacturing sector suffered disproportionately despite a fall in the failure rate in 1998. Some 37% of receiverships in 1999 were in the manufacturing sector which accounts for only 15% of companies in the economy. For the third year running appointments in the construction industry fell, by almost 25%. The regional pattern of receiverships varied considerably. The South East accounted for the largest percentage (45%) of appointments. The biggest increase occurred in the Midlands which registered an increase of 21% compared to 1998.
DTI PETITION TO WIND UP FIRST CREDIT UK LIMITED
The Secretary of State for Trade and Industry has presented a petition in the High Court to wind up in the public interest FIRST CREDIT UK LIMITED following investigations by Companies Investigations Branch of the DTI under section 447 of the Companies Act 1985 (as amended).
On the application of the Secretary of State the Court appointed the Official Receiver as provisional liquidator of the company pending the hearing of the petition on Wednesday 16 February 2000 at 10.30 am.
First Credit UK Limited offers a "credit repair" service and associated financial advice.
The role of the Official Receiver as provisional liquidator is to protect and preserve the assets and financial records and documents of the company until the hearing of the winding-up petition.
The registered office of First Credit UK Limited is at 51 Housefield Road, Stoke on Trent, Staffordshire, ST2 0DA and the company trades from Unit 4 Fellgate Court, Newcastle Under Lyme, Staffordshire
The petition was presented under Section 124A of the Insolvency Act 1986.
All public enquiries concerning the company should be made to:
THE OFFICIAL RECEIVER
Public Interest Unit
21 Bloomsbury Street
London
WC1B 3SS
DTI PETITION TO WIND UP LAS PARALEGAL TRAINING LIMITED LEGAL ASSISTANCE AND SUPPORT GROUP LIMITED COLLEGE OF PROFESSIONAL PARALEGALS LIMITED
On the petition of the Secretary of State for Trade and Industry presented on 6 December 1999, the High Court has wound up in the public interest LAS PARALEGAL TRAINING LIMITED - "PARALEGAL" and COLLEGE OF PROFESSIONAL PARALEGALS LIMITED - "CPP" following investigations by Companies Investigations Branch of the DTI under section 447 of the Companies Act 1985 (as amended). The hearing of a further petition which has been presented against LEGAL ASSISTANCE AND SUPPORT GROUP LIMITED "LASG"on the same day has been adjourned to a date to be fixed.
Paralegal, which ceased trading in late 1998, and its successor, LASG, have been engaged in the provision of vocational training in the "paralegal" field. It appears that CPP has yet to commence trading.
The registered office of Paralegal is at 68 Charter House, Lord Montgomery Way, Portsmouth, Hants, and the company traded from Anchor House, 127-129 Mile End Road, London. The registered office of LASG is at Leonard House, St George Street, Hanover Square, London and the company provided training courses at Birkbeck and Lewisham colleges. The registered office of CPP is C/o Lloyd & Co, Suite 315, 91 Western Road, Brighton, East Sussex.
The petitions were presented under Section 124A of the Insolvency Act 1986.
All public enquiries concerning the companies which have been wound up should be made to:
THE OFFICIAL RECEIVER
Public Interest Unit
21 Bloomsbury Street
London
WC1B 3SS
*** Forthcoming Creditors Meetings ***
Contributed byhttp://www.insolvency.co.uk
For more detailed information and ALL the British Isles insolvency's (liquidation's, receiverships, administrations, dividends, creditors) please visit http://www.insolvency.co.uk
From 24/01/2000 to 01/02/2000 Number of Creditor meetings : 91 Section Company Time Venue 138 Scotland - Interim Liquidator calling Creditors Meeting 26/01/2000 Farren (Scotland) Ltd 12.00 pm Glasgow WM Gardner Specialist Build Serv Ltd 10.00 am Glasgow 27/01/2000 Free Talk Media Ltd 12.00 pm Glasgow 23 Administrator Calling a meeting of Creditors 27/01/2000 Whitehead Poultry Ltd 10.00 am Sheffield 48 Receiver calling unsecured Creditors Meeting 25/01/2000 Solomons Ltd 10.30 am Southampton 27/01/2000 Brown & Wakling Ltd 03.00 pm Slough 28/01/2000 Cargo Masters Ltd 12.00 pm London Nottingham Electrical Laboratories Ltd 10.30 am Leicester 98 Creditors Voluntary Liquidations 24/01/2000 AMP (Southern) Ltd 12.00 pm London ANC Direct Deliveries Ltd 12.00 pm Manchester Aquabase Ltd 10.30 am Gloucester Art Bureau Ltd - The 11.00 am London Carpet Matters (Motherwell) Ltd 11.00 am Glasgow Citygrange Ltd 03.30 pm London Crawford Reprographics Ltd 12.00 pm London D P Realisations Ltd 10.30 am Birmingham Delta Consultancy Ltd 11.00 am South Milford EWP Group Plc 11.30 am Norwich English Woodland Products Ltd 12.30 pm Norwich Geoff Lee Ltd 03.00 pm Welling Hopton Timber Products Ltd 12.00 pm Norwich Impact Print Ltd 11.30 am Manchester Lighthouse Collection Co Ltd - The 12.00 pm Reading Portercall Ltd 11.00 am Newcastle-u-Tyn Shire Oak Hotel Ltd 11.00 am Birmingham Showcase Entertainment Ltd 11.00 am London Talk2 International Ltd 12.00 pm Aylesbury 25/01/2000 Albion Barr Ltd 10.15 am Bately Beta Steels Ltd 10.00 am Cannock Dressworld Ltd 12.00 pm London Ferrygold Styles Ltd 10.00 am London House Hunters Ltd 03.30 pm Leicester Marshfile Ltd 11.00 am London Redwood Products Ltd 10.30 am Bromsgrove Roberts Stores Ltd 12.00 pm Glasgow Sea Plate Ventures Ltd 11.00 am Leicester Semmiters Ltd 11.00 am Brighton Starion Security Ltd 10.30 am Derby Timehouse Ltd 11.00 am Barnsley Tufton and Farmer Ltd 11.30 am Maidstone Woodstone Engineering Services Ltd 12.30 pm London 26/01/2000 B M (Bolton) Ltd 10.30 am Warrington Barr & Blair Decorations Ltd 12.00 pm Glasgow Broadmayne Ltd 11.00 am London Corrosion Control International Ltd 03.00 pm Manchester D2 Promo (Manchester) Ltd 12.00 pm Manchester John Bury Leisure Ltd 11.00 am Darwen John R Comer Ltd 11.00 am Liverpool Leen Valley Engineering Ltd 11.30 am Nottingham MBR Hands Ltd 11.00 am Northampton MTM Consulting Ltd 11.00 am Brighton Nextstep Systems Ltd 11.00 am Hull No 6 Restaurant Ltd 11.00 am Birmingham Oasis Watford Restaurant Ltd 03.00 pm Northwood P K Martin Ltd 10.00 am Leeds Prime Sports Direct Ltd 03.30 pm London Stretton & Foster & Co Ltd 11.30 am Manchester Ultralite Windows Ltd 12.00 pm London Whitemarble Builders Ltd 12.00 pm Sheffield 27/01/2000 ADS Machinery Ltd 02.00 pm Luton Autones Ltd 11.30 am Sheffield Betterpark Ltd 12.00 pm Glasgow CMS Services Ltd 12.00 pm Exeter Dinsdale Environmental Ltd 11.15 am Bately Freeman & Partners Ltd 11.30 am London Gayle Glass Ltd 12.00 pm Manchester Graphic Signs Blinds & Engraving Ltd 10.30 am Droitwich Spa Heatshield (Midlands) Ltd 01.00 pm Leicester Labyrinth Design Ltd 02.00 pm Cheltenham Leicester Clothing Ltd 11.30 am Leicester Scorpio Builders Ltd 11.30 am London Shaws Transport Ltd 11.00 am Sheffield Spec Weld Ltd 11.30 am Thornaby Streamline Building Co Ltd 12.00 pm London Sue O'Rourke Partnership Ltd 10.30 am Fulwood Tom Waling Designs Ltd 11.30 am Lutterworth 28/01/2000 Chester Court Hotel Ltd 03.00 pm Manchester Cradley Fire & Sound (Partitions) Ltd 11.00 am Birmingham Dialmode (151) Ltd 11.30 am Altrincham Engine UK Ltd 10.00 am London Gingham Co Ltd - The 11.00 am London Medway Graphics Ltd 11.00 am Chatham Mid Engineering Ltd 11.00 am Newcastle-u-Tyn Technotronics Ltd 10.30 am Sheffield 29/01/2000 Levent Express Pressing Ltd 04.00 pm London 31/01/2000 Bowman Contract Carriers Ltd 11.00 am Sandbach Leppin Health Performance Products Ltd 12.00 pm London Nelhans Agencies Ltd 12.00 pm Manchester Route 19 Ltd 11.15 am London 01/02/2000 Bryngelli Engineering Services Ltd 11.30 am Cardiff Swish Timber Products Ltd 02.00 pm Newport
TW LW TW LW
USA 1.64 1.65 Canada 2.38 2.40
Austria 22.37 22.06 Portugal 325.91 321.46
France 10.66 10.51 Belgium 65.58 64.68
Finland 9.66 9.53 Italy 3147.78 3104.78
Germany 3.18 3.13 Sweden 13.94 13.90
Holland 3.58 3.53 Switzerland 2.62 2.58
Spain 270.49 266.80 Ireland 1.28 1.26
Australia 2.47 2.50 Denmark 12.10 11.93
Hong Kong 12.77 12.84 Euro 1.62 1.60
Africa Com 10.02 10.07 Saudi Arabia 6.16 6.19
India 71.52 71.86 Malaysia 6.24 6.27
Singapore 2.75 2.75 Norway 13.14 13.17
Japan 173.82 175.13
TW This week LW Last week.
Glaxo Wellcome and Smithkline Beecham formed the world's biggest drug company, with a market capitalisation of around 105 billion pounds ($172 billion) and 7.3% of the world market after resuscitating an abandoned 1998 deal. Glaxo Smithkline, as the new company will be called, will be run mainly from America.
Source -The Economist
Meanwhile America's Warner-Lambert began negotiating with Pfizer, another drug firm, about its takeover offer of $78 billion, after initially rebuffing the bid. Warner-Lambert had earlier agreed a merger with American Home Products, a deal which seemed to have fallen by the wayside. There were reports that Warner-Lambert was also talking to Procter & Gamble, the world's biggest consumer-products firm and a possible white knight. To complicate matters still further, Switzerland's Novartis showed an interest in acquiring AHP.
Source -The Economist
PWC, the world's largest auditor, formed by the merger of Price Waterhouse and Coopers & Lybrand 18 months ago, admitted that the cost of the deal had been greater than expected. It also emerged that PWC demanded $160m of capital at short notice from American partners last October.
Source -The Economist
Sainsbury, Britain's second-largest supermarket chain, sacked its chief executive, Dino Adriano, and appointed in his place Sir Peter Davis from Prudential, Britain's biggest life insurer. Sainsbury has performed badly in recent years, losing top spot to Tesco and suffering from price-cutting by Asda, recently acquired by Wal-Mart.
Source -The Economist
Citigroup, the world's biggest financial-services group, paid 1.36 billion pounds ($2.23 billion) to acquire the investment-banking business of SCHRODERS, one of the last survivors of the genteel world of British merchant banking. Unable to establish an international investment-banking presence, Schroders will now concentrate on asset management.
Source -The Economist
KIM HOWELLS REQUIRES ALANOD TO GIVE UNDERTAKINGS FOLLOWING ITS ACQUISITION OF ANO-COIL
Kim Howells, Competition and Consumer Affairs Minister, announced last week that he has decided that Alanod Aluminium-Veredlung GmbH & Co (Alanod) should provide undertakings in respect of its acquisition of Metalloxyd Ano-Coil Ltd (Ano-Coil). Dr Howells accepted the findings and recommendations of the Competition Commission (CC) and the advice of the Director General of Fair Trading (DGFT) that the merger may be expected to operate against the public interest, and that to remedy the adverse effect of the merger Alanod should give behavioral undertakings in relation to the supply of aluminium coil in the UK.
Publishing the CC's report today, Dr Howells said :
"The CC found that the merger increases Alanod's market share to 75%,resulting in a clear loss of competition and producing a dominant supplier with the incentive and means to exploit its market power by charging higher prices. I accept the CC's unanimous conclusion that the merger may be expected to operate against the public interest, with the specific adverse effect that prices for aluminium coil would be higher than would otherwise be the case.
"I agree with the CC's recommendation that the adverse effect of the merger would in this case best be remedied through behavioral undertakings covering :
"The DGFT agreed with the CC's conclusions and recommendation that behavioural undertakings be sought. Both the CC and the OFT were concerned that a remedy relating specifically to Alanod's prices be put in place. I agree with this recommendation.
"There are two options for detailed implementation which have been put to me by the CC and the DGFT : a cap on Alanod's prices to its customers and publication of a list of Alanod's prices to improve transparency in the market place. I wish to ensure that the detailed remedy is effective for customers. I believe, therefore, that before deciding on the precise form of this remedy it would be useful to hear the views of interested parties on how it can best be made to work effectively.
"I have decided to ask the DGFT to consult interested parties on the detailed implementation of this remedy and to report the results of this consultation to me. I will then announce my decision on the remedy.
"I have asked the DGFT to seek suitable undertakings from Alanod (and Ano-Coil where appropriate) by 19 April 1999."
The CC found that, before the merger, Ano-Coil and Alanod were the two largest suppliers of anodised aluminium coil for use in the lighting industry in the UK, with market shares of around 40% and 35% respectively. The effect of the merger was to increase Alanod's share of the market in the UK to about 75%.
The CC also found that Ano-Coil had been an effective competitor in the UK and that, had the merger not occurred, it would have survived as a viable competitor, at least for a reasonable period. The merger has, therefore, resulted, in a clear loss of competition.
The CC considered carefully Alanod's arguments that competition from other producers of anodised aluminium coil, customers' ability to switch to other materials and the scope for new entry into the market would constrain its ability to achieve prices above those that would otherwise have prevailed and ensure continuing choice for customers. While accepting that the ability of end users to change supplier will continue to have some constraining effect on the merged entity, the CC concluded that Ano-Coil would have provided competition that would have been more effective than can be expected from any other suppliers in the post-merger market. It considered that there is only limited scope for substitution of alternative materials, particularly in the short to medium term. While recognising that there are no substantial technical barriers to entry, it considered that the commercial barriers are such as to stop any newcomer from entering the market.
The CC concluded that the merger had diminished competition and produced a dominant supplier in the merged entity, having both the incentive and means to exploit its market power by charging higher prices. The possibilities for price discrimination in a market traditionally lacking price transparency would be enhanced. In addition, with the dominant supplier being the sole source of the "MIRO" range of vacuum deposition products, greater potential exists for tying-in "MIRO" products with sales of pre-anodised aluminium than would otherwise have arisen.
The CC considered structural remedies, but concluded that, in current market conditions, the prospect of a sale of Ano-Coil leading to a strengthening of effective competition in the UK market for anodised aluminium coil was too uncertain and more radical structural changes were not practicable. It considered that a package of behavioural remedies would be the most appropriate means to alleviate the detriment to the public interest it had identified.
Alanod Aluminium-Veredlung GmbH & Co (Alanod) is a German limited partnership producing anodised aluminium coil (ie. electrically coated with a protective oxide film), for use in lighting. In 1998 it was the largest supplier of specular (mirror-like) anodised aluminium coil in the world. It is also the only company in the world producing, on a commercial scale, reflective aluminium coil using vacuum deposition (its "MIRO" range). Prior to its acquisition of Ano-Coil, its production was based entirely in Germany, with sales to UK customers being primarily through a distribution agreement with Thyssen Garfield Ltd (since terminated). Alanod has ownership links with Jordan Reflectors Limited, a manufacturer of lighting louvres in the UK.
Prior to its acquisition by Alanod, Metalloxyd Ano-Coil Ltd (Ano-Coil) was a subsidiary of another German company, Metalloxyd GmbH. In 1998 it was the largest supplier of anodised aluminium coil for lighting in the UK. On 17 March 1999 Alanod acquired Ano-Coil. Since the merger rationalisation has taken place in Ano-Coil's technical, marketing and sales operations.
The DGFT proposes to write to parties identified in the CC report as having given evidence to the inquiry, inviting comments on possible remedies on prices. Any other interested party wishing to offer comments on this aspect of the proposed undertakings should contact Carole Bowley, at the Office of Fair Trading by 9 February. OFT contact details until the 27 January are :
15-25 Bream's Buildings,
LONDON EC4A 1PR
From 1 February contact details are :
Fleetbank House,
2-6 Salisbury Square,
LONDON EC4Y 8JX
The Office will be closed between 27 January and 1 February.
MERGER CLEARANCE
The Secretary of State for Trade and Industry has decided, on the information at present before him, and in accordance with the recommendation of the Director General of Fair Trading, not to refer the following merger to the Monopolies and Mergers Commission under the provisions of the Fair Trading Act 1973:Proposed acquisition by British Energy plc of certain assets of National Power plc, namely Eggborough Power Station
Proposed acquisition by Bonham Industries Limited and Regent Corporation, through its wholly owned subsidiary London Vista Hotel Limited of Regal Hotel Group plc
Proposed acquisition by Lehman Brothers on behalf of CA-MC Acquisition Company of Money Controls Plc
COMPETITION COMMISSION'S INQUIRY CLEARS CHC HELICOPTER CORPORATION / HELICOPTER SERVICES GROUP ASA MERGER
The Competition Commission has found that the acquisition by CHC Helicopter Corporation (CHC) of Helicopter Services Group ASA (HSG) does not operate against the public interest and may not be expected to do so. The acquisition had raised possible concerns about the market for helicopter support services from the United Kingdom to oiland gas installations in the UK Continental Shelf (UKCS), where CHC's subsidiary, Brintel, was in competition with HSG's subsidiary, Bond, and a third major helicopter operator, Bristow.
Publishing the Commission's report last week, Kim Howells, Competition and Consumer Affairs Minister, said:
"The Commission has concluded that although there had been a reduction in demand for helicopter services since 1990 and it was likely that there would be some further reduction in future, it was not likely that Brintel (the smallest of the three main UKCS helicopter operators) would have left the market in the absence of the merger. Although the Commission saw no reason to believe that Brintel / Bond and Bristow would not engage in independent pricing, it nevertheless thought it was likely that there would be a loss of competition arising from the reduction in the current number of competitors as a result of the merger.
"However, since the Monopolies and Mergers Commission recommended against a previous acquisition in 1992, barriers to entry by other operators had reduced significantly. Regulatory barriers were lower as a result of the liberalisation of air transport markets in the European Economic Area since 1992: in consequence, various North American companies, for example, had entered the EEA market, mainly through joint ventures.
"In addition, the Commission found that the availability of facilities at Aberdeen Airport for potential new entrants to the UKCS Northern Zone was no longer the major entry barrier that it had been seen to be in 1992. The integration of Brintel and Bond as a result of the merger would release facilities at Aberdeen Airport. Even if these were not made available to another helicopter operator, Aberdeen Airport confirmed that other facilities elsewhere at the airport could be found. There would be no problem for a new operator in obtaining base facilities in England for the UKCS Southern Zone.
"The Commission also considered whether the buyer power of the oil companies was sufficient to prevent any reduction in competition leading to higher prices of other adverse effects. Oil companies are much larger and commercially stronger organisations than the helicopter operators. There was also evidence that in recent years the oil companies had become more determined to force down their supply costs. They controlled the procurement process and if they judged that competition was weak they could use this process to attract new entrants to bid for their helicopter contracts.
"The Commission concluded, therefore, that the reduction in barriers to entry by other helicopter operators and the buyer power of the oil companies would together be sufficient to prevent any reduction in competition from the acquisition leading to higher prices or other adverse effects."
CHC is a Canadian registered company engaged in the provision of helicopter services in many parts of the world. Its UK business is carried on by Brintel Helicopters Ltd (previously British International Helicopters Ltd) which it wholly acquired in 1994. Brintel's principal activity is the supply of helicopter services to oil and gas installations in the UK Continental Shelf (UKCS).
HSG is a Norwegian registered company which, like CHC, provides helicopter services around the world. It acquired 100% of the shares of Bond Helicopters Ltd, a UK company principally engaged in supplying helicopter services to offshore installations in the UKCS, in 1994.
CHC acquired a controlling interest in HSG in August 1999, after a series of share transactions beginning in March.
The other current provider of helicopter services to oil and gas installations in the UKCS is Bristow Helicopters Ltd, in which the US company Offshore Logistics Inc. (OLOG) has a 49% shareholding.
The UKCS includes the North Sea Northern and Southern Zones, i.e. above and below, respectively, latitude 56oN. For the purposes of the report the Southern Zone included the installations in Morecombe Bay. The Northern Zone accounts for about 80% of the total market.
The Competition Commission's predecessor, the Monopolies and Mergers Commission, reported in August 1992 on the proposed acquisition by Bond Helicopters of British International Helicopters. As a result, that acquisition was not allowed to proceed.
The UKCS market for helicopter services was about £150 million in 1998. Market shares were: Brintel 18% for 1998 (10% in January-August 1999); Bond 29% (#34%); and Bristow 51% (56%).
Struggling to get the best from your workforce but not sure how? Confused by the maze of initiatives and advice available? Help is now at hand via a website for enlightened management launched last week by Competitiveness Minister Alan Johnson.
Mr Johnson said:
"Click on www.greatplacetowork.gov.uk for management strategies and information on the hardest part of running a business - getting employees to work to shared goals with full commitment.
"Business has told us the great deal of useful information, initiatives and advice available has created an information maze.
"So we set ourselves the challenge of developing a website to help businesses make their way through the maze and identify - particularly for small businesses without in-house experience - where they might go for help and advice.
"A team from business, people management advisors and unions, working with the DTI and DfEE, have drawn up the website and a leaflet to provide pointers to achieving results and creating a great place to work.
"Without employee commitment, the chances of becoming an agile customer-oriented organisation are negligible. Achieving outstanding results means achieving outstanding people management."
Mr Johnson was speaking at toy and games manufacturer, Hasbro UK Ltd, Uxbridge, Middlesex, where he launched Art @ Hasbro, a creative art exhibition promoting fun at work and involving local communities and children.
He said;
"This exhibition's main aim is to stimulate creativity and new ideas within the company by looking at the world from a different perspective. By opening this exhibition to other businesses and local schools, Hasbro is also giving these children the opportunity to have a glimpse of a fun working environment. And that is important - today's children are tomorrow's workforce."
The website (www.greatplacetowork.gov.uk) contains over 50 case studies illustrating how different organisations have tackled business challenges. It includes the opportunity to give feedback and to suggest possible further case studies.
The exhibition will bring together roughly 30 paintings and sculptures, which meet Hasbro's mission of "Making the World Smile". It will run through to the end of February. For further information contact Sarah Mooney, Corporate Communications Manager, tel: 020 8744 5736.
10th February 2000 Companies House Seminar Shaw Hill Hotel Whittle - le - Woods Chorley Nr Preston Lancashire PR6 7PPW Registration 5.30pm - 6.00pm Seminars include a question and answer session and buffet 6.00pm - 9.00pm Cost 37.60 pounds Contact Tamara Bent tbent@companieshouse.gov.uk +44 (0)29 20380911 17 February 2000 The ICM Construction Industry Conference "The Changing Face" Kingsway Hall, London WC2 A must for all those involved in the UK Building and Construction Industry 21 February 2000 Wessex branch meeting of the ICM Mock Meeting of Creditors The Southampton Yacht Club 1 Channel Way, Southampton 7.00pm for 7.30pm 8 March 2000 ICM Conference on Commercial Credit Fraud CBI Conference Centre, London WC1 Exhibitors should telephone Sheila Simmons at the ICM on 01780-722907 14 to the 16 March 2000 Credit 2000 THE UK event for the Commercial and Consumer Credit Industry Olympia, London 20 March 2000 Wessex branch meeting of the ICM - AGM The Southampton Yacht Club 1 Channel Way, Southampton 7.00pm for 7.30pm Sponsored by Croner Publications 26th April 2000 Companies House Seminar Pine Lodge Hotel Kidderminster Road Bromsgrove B61 9AB Registration 5.30pm - 6.00pm Seminars include a question and answer session and buffet 6.00pm - 9.00pm Cost 37.60 pounds Contact Tamara Bent tbent@companieshouse.gov.uk +44 (0)29 20380911
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