Editor: John Arnold. E-mail jarnold@creditman.co.uk
Pat Williams. E-mail pwilliams@creditman.co.uk
Site: Business Credit Management UK
URL: http://www.creditman.co.uk
Issue: Vol 6 Issue 4
Dated: 27 January 2001
Welcome to the Business Credit News UK.
In this weeks edition you will find the following topics.
We are very pleased to announce the inauguration of our debt collection service for the UK and Internationally. This is a service run by credit managers for businesses and credit professionals worldwide. Enquiries can be made on-line at http://www.creditman.co.uk/creditse/collection.html or e-mail jarnold@creditman.co.uk
If you need help with your debt collection we should be pleased if you would give our service your consideration.
We have many exciting new products about to come on stream in the next few weeks making Business Credit Management UK the Ultimate Resource for Businesses and Credit Professionals. Watch out for our announcements.
UKSPLIT ECONOMY NEEDS A LOWER EXCHANGE RATE, SAYS THE ITEM CLUB
The ITEM Club's ( sponsored by Ernst & Young) economic forecast for 2002 finds that, while global economic conditions continue to deteriorate, the UK economy's stellar performance continues. GDP is likely to grow by about 2 percent this year. The main concerns are the danger of the divided economy and the likelihood that inflation will undershoot the 1.5 per cent target lower band. To tackle these issues and to ensure continuing economic success, the case for the Bank of England to intervene and tackle the overvalued pound has never been stronger.
Professor Peter Spencer, the ITEM Club's economic advisor, says: "As we said in July, an official exchange rate intervention programme is vital to bring the economy and its external trade closer to balance. The time could not be better for the Monetary Policy Committee to start talking down the pound, supporting the move by selling sterling in the exchange markets. A lower pound would help retarget inflation and transfer spending power from consumers to producers."
Low risk
"Sterling could fall by as much as 10 per cent from its current value before inflation overshoots the 2.5 per cent upper band this year. It would put the UK economy in pole position as the world economy recovered and give the manufacturing sector a much-needed shot in the arm. The downside risks associated with this process that existed six months ago have all but disappeared. In the absence of intervention, the adjustment is likely to take eighteen months to complete."
Rebalancing the economy
The ITEM Club is concerned about the continuing effect of a split economy. Currently high consumer spending combined with increased public expenditure is the only real driver for GDP growth – this reliance is illustrated by the fact that public capital expenditure has doubled over the last 12 months to £10 billion. However, the rest of the economy is looking very sick. Manufacturing output fell by 2.9 per cent in the three months to November 2001.
The economy is relying heavily on continuing domestic demand. A realignment of the pound would allow the company sector to recover and tilt the economy back in the right direction for further economic growth.
The Euro
Professor Spencer adds: "A lower Sterling exchange rate would also have an impact on the UK's possible entry into the Euro. The Treasury model suggests that the pound needs to come down to the 1.40 to 1.50 Euro range before joining the new currency. At the moment the exchange rate is 1.62 Euros to the pound."
IOD SURVEY SHOWS FURTHER DECLINE IN BUSINESS OPTIMISM
The Institute of Directors released the results of its Business Opinion Survey for the fourth quarter of 2001 (December) last week which showed a further decline in business optimism, slipping company performance and weak order books. Inflationary pressures remained very benign.
The IoD said that business optimism slipped in the fourth quarter to its lowest level since the second half of 1998. The balance of companies who were more, rather than less, optimistic about their company's prospects (relative to the previous quarter) in December was 10% which compared with 23% in September and 28% in June and March. It should, however, be noted that the September survey straddled the 11 September terrorist attacks in the US and, therefore, did not fully account for the damage done to UK business optimism by those events.
Company performance also slipped even though the majority of respondents reported that their companies were still performing well. The balance of those companies performing well, minus those performing badly, was 72% compared with 76% in September and 80% in June. The balance of directors reporting higher output minus those reporting lower output fell back further in December to 33% compared with 38% in September. The key leading indicators of total order books and export order books were both down. The decline in export order books was especially sharp - from a balance of those companies reporting above normal order books minus those reporting below normal order books of -1% in September to a balance of -17% in December. Capacity utilisation and employment and profit balances also deteriorated.
Price pressures remained weak, with many more respondents reporting increased costs than increased prices - putting a squeeze on margins. Average settlements were around 4.6%, marginally higher than in September but well contained.
Manufacturing industry continued to under-perform the general economy with the gap between manufacturing and the rest of the economy widening significantly in December. Export order books and capacity utilisation were particularly weak indicators.
Ruth Lea, Head of the Policy Unit at the IoD, said:
"Our latest survey suggests that general business optimism weakened significantly between September and December - even after allowing for the fact that our September survey did not fully pick up the impact on UK business confidence of the 11 September terrorist attacks in the US. In addition, every activity indicator - company performance, output, employment, profits, total orders, export orders, capacity utilisation - significantly deteriorated. The manufacturing sector continues to underperform the rest of the economy, reflecting its exposure to difficult overseas trading conditions and the weak euro. Business is facing its biggest challenges since the early 1990s recession.
"We do, however, remain reasonably confident that the UK economy, as a whole, will avoid a full blown recession despite the pain experienced in several other parts of the private sector - and especially in the manufacturing sector. Public spending is rising and will continue to rise and this will underpin economic activity. Moreover, the consumer has proved to be resilient, helped by lower interest rates - though we believe the recent debt supported retail 'splurge' will prove to be temporary. We would be surprised to see further cuts in interest rates, but given the benign inflationary climate and manufacturing's difficulties we do not expect to see major tightening this year."
CBI CALLS FOR QUARTER-POINT RATE CUT AS MANUFACTURING RECESSION DEEPENS
The CBI today last Wednesday called for a quarter-point cut in interest rates as its latest manufacturing survey showed firms cutting prices in a bid to keep customers as export and domestic orders fall.
The CBI's Quarterly Industrial Trends Survey reveals that over the past four months domestic prices fell at the second fastest rate since the survey began in 1958. The only time prices fell more quickly was the end of the Asian crisis in January 1999. Price expectations are now the worst in the survey's history.
UK export orders fell over the past four months by more than expected. Only 12 per cent of manufacturers reported a rise while 48 per cent reported a fall. This gives a negative balance of minus 36 per cent which compares with minus 32 per cent in the October survey.
Domestic orders also weakened although to a lesser extent than expected. This suggests that the expected slump in domestic orders was probably due to uncertainty caused by the events of 11 September, rather than an acceleration in the underlying rate of decline.
Manufacturing output fell over the past four months at the fastest rate since July 1999. Lack of demand is expected to limit output over the coming four months.
Severe job-cutting has helped to hold down costs. Only nine per cent of firms reported a rise in employment while 46 per cent reported a fall. Over the coming months manufacturers expect job cuts to accelerate further with the expected change in numbers employed the most negative since October 1992.
Ian McCafferty, CBI Chief Economic Adviser said: "Manufacturers are really under the cosh, with many cutting prices sharply in an effort to keep customers. So far exporters have been worst hit, but the knock-on effect of job cuts will slow consumer spending and weaken the less down-beat domestic market.
"With inflation clearly under control, a quarter point rate cut would be relatively risk free. However, with interest rates already so low, it would be naive to pretend that a further cut is the only answer. The Government must find additional ways to help the manufacturing sector which remains absolutely vital to the long-term success of the UK economy."
The survey also shows that investment spending is expected to decrease over the next 12 months compared with the previous 12 months. Uncertainty about demand is given as the key reason for limiting capital expenditure.
Business optimism has weakened again and manufacturers are less optimistic about their general business situation than they were four months ago.
CHAMBERS RESPOND TO GDP FIGURES
Reacting to the preliminary estimate of GDP growth released last Friday by the Office of National Statistics showing a growth of 0.2 per cent in the last quarter of 2001, Ian Fletcher, Chief Economist at the British Chambers of Commerce said:
"Today's data is par for the course. Our economy had everything bar the kitchen sink thrown at it during the last quarter of 2001 and the fact that it still grew is testament to some nimble footwork from the Bank of England and the spending power of consumers.
"Clearly manufacturing is facing some of its most testing conditions abroad, but the economy overall should avoid recession if the MPC keeps its hand steady on the tiller and sustains demand at home."
The preliminary estimate of GDP growth for the fourth quarter of 2001 released today (Friday) by the Office of National Statistics is 0.2% (compared to the previous quarter). This means the economy is estimated to have grown 1.9% since the final quarter of 2000, and the preliminary estimate of GDP growth in the year 2001 is 2.4%. Manufacturing output shrunk while services grew at a faster rate than in the previous quarter.
SCAM WARNING FROM FSB
Small businesses are facing an extra burden in the form of a data protection company that is presenting itself as a Government Agency and charging a registration fee of £111.
According to the Federation of Small Businesses (FSB), the company called Data Protection Agency Services Ltd, is sending official looking letters to unsuspecting businesses. These letters give the impression that the recipient must register through Data Protection Agency Services Ltd under the Data Protection Act and threaten dire consequences for failing to do so.
There is no connection between the commercial company and the Government's own Data Protection Registry, now known as the Information Commissioner.
John Walker, FSB Policy Chairman said, "as a result of new data protection legislation and the strong penalties for non compliance, small business people are aware of the need to follow the law and can be easy prey for such approaches. We advise members to ignore any approach made by Data Protection Agency Services Limited and refer the matter to their local office of the Trading Standards Service which is carrying out an investigation."
Details of whether or not a business needs to notify under the 1998 Data Protection Act are available at www.doineedtonotify.co.uk or on the notification helpline 0870 9027 522.
If you need to register the current charge is an annual fee of £35 payable to the Information Commissioner.
Data Protection Agency Services Limited is also trading as Data Collection Enforcement Agency.
PRICEWATERHOUSECOOPERS UK FIRM ANNOUNCES INTENTION TO ADOPT LLP STATUS
PricewaterhouseCoopers on the 21 January 2002 announced its intention to become a Limited Liability Partnership (LLP) in the UK with effect from 1 July 2002. The move, which is subject to a vote by the firm's UK partners, comes after the firm lobbied in favour of the introduction of LLPs in the UK.
Kieran Poynter, PricewaterhouseCoopers UK Senior Partner, said:
"Immediately after the Government announced its plans to legislate, we welcomed the move. After many years of pushing for the modernisation of UK partnership law, we were obviously delighted.
"This shows a real commitment by the Government to providing a modern business environment for professional firms whose services underpin the strength of the UK as a global business centre. LLP status will help us continue to attract, retain and develop the talent we need to meet our clients' needs."
The Limited Liability Partnerships Act 2000 came into force on 6 April 2001.
When faced with corporate multiple debt situations disgruntled creditors often want, to put it euphemistically, to “bring the directors to book”.
The Insolvency Act 1986 goes some way towards ensuring delinquent directors are subject to criminal sanction. The Appeal Court’s decision of Regina v Bevis illustrates the sanction the court will impose where it has been proven a director has concealed or salted away a company’s assets the effect of which prevents its liquidator from making an effective distribution to the creditors.
S208 of the Act provides when a company is being wound up a criminal offence will be committed if any of its officers fails to disclose company property to the liquidator. Company directors will be under a duty of disclosure all of the company’s property to the liquidator and any associated transactions relating to it. Directors will be able to rely on the defence there was an absence to defraud or conceal as well as there being no intent to defeat the law.
S208 should be contrasted with S213, headed “Fraudulent Trading”. To prove fraudulent trading the court will have to be satisfied the company’s business was being conducted with the intention of defrauding its creditorsWhere.actual dishonesty involving real moral blame has been proven the court has power to order the directors (and others) to make such contribution to the company’s assets as it thinks proper. Such contribution can be punitive as well as compensatory.
Roger Birch was a director of a company and on its winding up he failed to detail all of its property to the Official Receiver. He was found guilty of an offence under S208.Presumably the action was not taken under S213 because there was only an implication of dishonesty rather than an intention to defraud. Nevertheless he was sentenced to 18 months imprisonment. Appealing against perceived harshness of the decision because no cash had been actually taken for his personal benefit the court still sustained the opinion of the lower court that Birch’s omission did amount to fraud.
However the court did accept the sentence was too harsh where Birch had made no personal gain even although there had been a deliberate failure to disclose the company’s assets to the liquidator. Noting the more serious charge of fraudulent trading had not been brought and previous good character Birch’s custodial sentence was reduced from 18 to 9 months.
Whilst creditors may be delighted to see the imposition of criminal sanctions in these circumstances a word of caution should prevail. Firstly the company has first to be put into insolvency for the legislation even to be contemplated. Many companies simply cease trading and whilst there may be statutory obligations to wind the company up these are often ignored. Secondly creditors should know if a director is obliged to make a financial contribution to the company’s assets it is the general body of creditors who will gain, often by a slightly increased dividend payment once a distribution is made - not the particular petitioning creditor.
Stephen Cowan
Yuill & Kyle,
Debt Recovery Lawyers, Scotland.
0141 572 4251
www.debtscotland.com
scowan@yuill-kyle.co.uk
WORLD'S SECOND LARGEST CREDIT INSURER SET UP
The combination of the Gerling Credit Insurance Group and credit insurer NCM, announced in August 2001, has now been successfully completed. In the UK, NCM annually insures trade worth £40 billion - including £20 billion of UK exports - against the risk of non payment.
On 28 December 2001, 'Gerling NCM Credit and Finance AG', was incorporated by way of a consolidation of the Gerling Credit Insurance Group and NCM. The new company is based in Cologne. Bernd Hinrich Meyer is chairman of its management board. Dr Heinrich Focke, who is also chairman of the executive board of the Gerling holding company, Gerling Versicherungs-Beteiligungs-AG, chairs the company's supervisory board.
The new company, currently number two in the world credit insurance, has a premium income of about Euro 1.1 billion - giving it a 25% market share worldwide. It benefits from an excellent market position in all major European countries, as well as in North and Central America. In the growth markets of South America, Asia and Australia, it has already secured a good foothold. Gerling NCM sees itself as the leading credit insurer worldwide, providing a comprehensive range of risk transfer, financing and other trade receivable services. It recently launched a service for financing trade receivables of small and medium-sized companies via asset-backed securities.
"Since 11 September 2001, we have faced substantially increased credit risks. But combining Gerling Credit and NCM into a strong force in the marketplace will greatly benefit our customers, who are companies of all sizes operating in all major economies worldwide", says Bernd Meyer.
OVERVIEW ON POLITICAL & ECONOMIC SITUATION IN ARGENTINA
The British Argentine Chamber of Commerce are organising a seminar that will provide an overview on the political and economic situation in Argentina together with a talk on the infrastructure sector in the market and its future prospects.
The event is to be held at the:
Argentine Embassy
65 Brook Street
London W1K 4AH
On February 8th, 2002 starting at 0930 hours.
CONTACT DETAILS
Dra Claudia Morales
Executive Director
British Argentine Chamber of Commerce
65 Brook Street
W1K 4AH
020 7495 8730 (Telephone) 020 7495 8732 (Fax) enquiries@bacc.newnet.co.uk
EXPERIAN APPOINTS STUART KEEPING TO HEAD UP TELECOMS
Nottingham, UK, 22 January 2002 - Experian, the global information solutions company, has appointed a former Cable & Wireless Vice-President, Stuart Keeping, to the post of Director - International Telecoms. In this role, he will have responsibility for leading Experian’s business activities across the telecoms sector, working alongside existing sales, marketing and operational staff to further develop this already significant area of the business.
Keeping joined Experian from Cable and Wireless in September 2001 after many years’ experience in the telecommunications and IT industries. He began his career as a strategy consultant for companies including BT and GPT. Following two years in the USA with General Electric, he held a number of senior marketing and product management positions in GPT and C&W.
Announcing the appointment, Jayne Barber, Experian's Global President of Marketing & Strategy, said: "This is a new role which reflects the strategic importance of the Telecoms sector in the global economy. It is one of the few truly global markets and requires a global approach. Whilst the sector is undergoing fundamental restructuring, there is growing demand for the innovative systems and solutions offered by Experian that address many of the issues facing the Telecoms industry, which it has to overcome if it is to continue to develop and grow profitably.
"We are very pleased to have someone of Stuart's experience and reputation in the marketplace lead this initiative."
EQUIFAX NOTED IN BARRON'S FOR CONSISTENT STOCK PERFORMANCE
ATLANTA - This week’s Barron’s highlighted Equifax Inc. (NYSE: EFX) as one of only eight companies in the Russell 1000 Growth index whose stock performance has been consistent regardless of whether “growth” or “value” stocks are in vogue.
Barron's interviewed Harish Kumar from Aeltus Investment Management, who conducted research to find those hybrid stocks that have growth characteristics, but outperform value indexes – even when value indexes are outperforming growth. He mined the last 15 years of data for the Russell 1000 Growth and Russell 1000 Value indexes, and found very few companies exhibiting these hybrid characteristics – Equifax being one of the companies named.
“We are delighted to receive this recognition from Barron’s,” said Tom Chapman, chairman and CEO, Equifax. “Equifax is committed to innovation and growth, and the execution of our strategy that translates into value for our stakeholders.”
The other seven companies highlighted in the article with Equifax, which in total equal only one-half of one percent of the Russell 1000, are Anandarko Petroleum, Automatic Data Processing, Home Depot, Schering-Plough, Sysco, Tribune and UST.
ECGD SUPPORTING BRITISH BRIDGES IN THE PHILIPPINES
Remote communities in the Philippines are to be linked to the country's national roads bridges network thanks to a £25 million contract won by a British consortium with help from the Export Credits Guarantee Department (ECGD).
The consortium of Balfour Beatty and Cleveland Bridge will supply 256 bridges to replace existing damaged and old bridges across isolated areas within the Philippines. They will give local people improved access to markets, schools and hospitals.
The ECGD - which benefits the UK economy by helping exporters win overseas business by insuring against non-payment - is supplying export credit guarantee cover to Standard Chartered Bank which is providing a loan to the Philippine Government to purchase the equipment from the British consortium.
The bridges can be easily and quickly erected but are permanent structures that require no maintenance for at least 30 years. Under the contract, British engineers will also provide technical support for local contractors as well as oversee the installation of the bridges.
Minister for Trade and Investment Baroness Symons said:
"I am pleased that the Balfour Beatty and Cleveland Bridge consortium has been successful in winning this contract with backing from the ECGD. The project will not only have a positive impact on remote communities in the Philippines but will also benefit the British economy."
About 13,500 tonnes of steel will be used to build the permanent bridge superstructures at the consortium's sites in Derby and Darlington over the next three years.
ECGD, Britain's official export credit agency, is a separate Government Department responsible to the Secretary of State for Trade and Industry. Its main functions are to underwrite bank loans to enable overseas buyers to purchase capital and project related goods/services from the UK, and to insure the return on investments made by UK companies in overseas enterprises.
EQUIFAX'S 2001 RESULTS CONTINUE RECORD PERFORMANCE
ATLANTA, January 24, 2002 -- Equifax Inc. (NYSE: EFX) announced record 2001 results driven by continued growth in North American operations.
"Equifax reported outstanding earnings and cash flow in 2001, delivering exceptional value to our shareholders," said Thomas F. Chapman, Equifax chairman and CEO. "These great results are attributed particularly to North America as the consumer reporting business continually outperformed each preceding quarter."
"We are proud of our accomplishments in 2001. Equifax achieved eight consecutive quarters of share price growth - the longest among S&P 500 companies. In addition, Equifax was ranked among the top five in return on equity among Business Week's Best Performers for 2001," Chapman said.
2001 Highlights (excludes divested and discontinued operations):
Consolidated revenues increased 8 percent to $1.1 billion.
Earnings per share increased 5 percent to a record $1.15, before restructuring charges of $60 million ($35 million after tax or $.25 per share), and met analysts' estimates.
Consolidated operating margin of 29 percent was reported for the year.
North American revenues increased 13 percent and operating profit increased 14 percent.
Consumer reporting volumes increased each quarter in 2001 with total volume growth for the year at 20 percent - an Equifax record.
Equifax's new direct-to-consumer business reported a tripling of revenues over last year. Equifax Credit Watch™, which protects consumers against ID theft, was recently named one of 25 "Best Products of 2001" by BusinessWeek Magazine.
During the year, Equifax repurchased 2.2 million shares at a total investment of $50 million.
"With powerful momentum fueled by our product, technology and customer initiatives, we move into 2002 as the clear market share leader in North America and the number one or number two position in every one of our global markets," said Chapman.
The Company sold its risk management businesses in the U.S., Canada and the U.K., its vehicle information business in the U.K., and its City Directory business. Beginning with the fourth quarter of 2001, the Company's previous Consumer Information Services segment has been combined into the North American Information Services segment.
2002 Outlook.
Equifax expects reported earnings per share growth of 20 to 22 percent, or $1.38 to $1.40, in 2002, including the impact of SFAS 142 which eliminates the amortization of goodwill. Operating earnings per share are expected to grow 10 to 11 percent, excluding the impact of SFAS 142. Revenue growth for the year is expected at 4 to 6 percent. For the first quarter ending March 2002, Equifax expects earnings per share of $.29 to $.31.
LONDON BRIDGE GROUP SIGNS RECORD BREAKING DEAL FOR THE PHOENIX SYSTEM
London Bridge Group, a leading provider of software for the financial services industries, announced that Beal Bank has signed a five-year agreement, valued at over $4 million, to implement the Phoenix System. Beal Bank, with assets of over $2.5 billion, is consistently ranked on top of the most profitable banking institutions in the United States. In addition to their main office in Plano, Texas, the bank has branches in Dallas, San Antonio and Houston. "We selected the Phoenix System due to the robust, easy-to-use, and feature rich quality of the product," said Otis Rogers, Director of Operations and Systems for the bank. "Another reason we selected the Phoenix System is its flexibility and adaptability to our unique and rapidly growing business." The Phoenix System's use of a truly open relational database utilizing a Microsoft SQL server will allow the bank to reach its full potential.
Beal Bank has chosen to run the Phoenix System through London Bridge's outsourcing offering. The bank will be the first client to run the Phoenix System out of London Bridge's state-of-the-art data center located in Atlanta. The Phoenix System is delivered in a true client/server environment, with data stored on an NT-based server in an SQL-compliant relational database. Data is accessed through a Novell or NT network of workstations that are standard Intel-based PCs, using a true Windows graphical user environment. "We are very excited about Beal Bank's selection of the Phoenix System," said Bill Zayas, Vice President of U.S. Sales for London Bridge Group. "This contract reinforces London Bridge Group's position in the marketplace. It also confirms the market's desire for a flexible, relational database technology. We are the only vendor in the market who can deliver this technology utilizing a complete Microsoft suite of products, including NT and SQL server."
About London Bridge Group
London Bridge Phoenix Software, Inc., a wholly owned subsidiary of London Bridge Software Holdings,
plc., who specialize in customer interaction software for organizations in the retail financial services,
telecommunications and utilities sectors. Its products provide software applications for all customer
interactions, from customer acquisition through servicing, retail risk management to credit management
and debt collection. The Company has more than 1,000 clients worldwide and London Bridge had over
$78 million in revenue in 2000, more than 60 percent of which originated in the U.S. The company has
more than 750 employees and offices in London, Atlanta, Orlando, New York, Irvine, Denver, Stratford
(UK), Australia, New Zealand, South Africa and Singapore. London Bridge Software Holdings plc is
listed on the London Stock Exchange. For more information, visit www.london-bridge.com
R3, the organisation representing professionals who deal with under-performing businesses, on the 21 January 2002 launched a series of guides explaining unsecured creditors' rights and called for them to play a fuller part in business rescues.
"Trade creditors have historically been unaware of their rights when a debtor is declared insolvent" said Roger Oldfield, President of R3.
"We believe our new series of creditors' guides will demystify the insolvency process and help ensure those who are owed money by insolvent companies will be fully aware of their rights and how to exercise them.
"We also hope the guides will encourage more creditors to take up the opportunities available to become involved in the insolvency process. Enlightened creditors are vital to the evolution of the UK's rescue culture. These guides are an important step on the road towards a greater understanding of the business rescue process by business in general."
R3 research has consistently shown that unsecured creditors receive minimal returns from insolvent debtors. However, this may change if planned insolvency law reforms take place. R3 hopes that these changes will provide real motivation for ordinary creditors to take a more active role in insolvencies.
Under the legislative framework proposed in the forthcoming Enterprise Bill, preferential creditors, such as Customs and Excise and the Inland Revenue, will lose their right to dip into the pot before trade creditors. This will mean greater returns for unsecured creditors and, through increased use of administrations, a greater say in proceedings.
Together, these developments mean that now is the time for unsecured creditors to abandon their traditional attitude to insolvency, that it is not worth throwing good money after bad, and get involved.
The five guides will promote greater creditor involvement by informing unsecured creditors of their rights and how to exercise them in each type of insolvency, be it administration, administrative receivership, compulsory liquidation, creditors' voluntary liquidation or bankruptcy.
It is hoped that more active creditors will lead to more business rescues and eventually result in greater returns for creditors. This will contribute to the rescue culture which government, banks and other lenders are striving towards.
The guides are detailed yet easy to understand, a point illustrated by the Administration guide which asks such questions as What are the powers of an administrator?, As an unsecured creditor, what information am I entitled to? and What should I do I if I am dissatisfied with the administrator?
Advance orders of the guides have exceeded 240,248 and many insolvency practitioners will be automatically sending the guides to creditors in the future. However, if you would like a copy sent directly to you then contact R3 on 0207 831 6563.
NEVER TOO BIG TO CHECK
Contributed by Neil Wood, CEO of Global Credit Solutions Ltd, Australia
E-mail neil@gcs-group.com
Website http://www.gcs-group.com
The Enron collapse just three months has become a case study like no other, for credit and finance managers around the world.
With operations in over seventy countries, and a turnover equal to and in many cases exceeding the GDP of their host countries, Enron was a byword in the power industry.
Assisted by the desire of many State and Federal Governments around the world to privatise and cash in their public assets, Enron had expanded its operations rapidly over the past ten years, through acquisition of power projects.
The company became a major power supplier in Australia after the Victorian Government, under its former Premier Jeff Kennett, elected to privatise its State Electricity Commission, and used the same methods of acquisition in many countries to continue its expansion.
The company today comprises some very sound business's, but its Chapter 11 Bankruptcy application has brought urgent changes to the way in which Credit and Finance Managers are now reviewing their financial models.
Those corporations who provided and extended credit terms beyond what would be considered prudent based solely on the size and 'apparent' financial wealth of the company, have learnt a bitter lesson and the costs to many may be enough to force them to seek some protection from their own creditors whilst they restructure.
It can be truly said that those SME businessman who are free of debt and strong in assets, have proven to be better managers than those responsible for the present situation Enron finds itself in.
Not surprisingly, Mr. Duncan, the former Arthur Anderson's partner responsible for the auditing of Enron, and now alleged in some sections of the media to have failed to stop the shredding of thousands of documents held at Arthur Andersen's relating to the Enron audits, has pleaded the fifth amendment (grounds for self incrimination) when being examined January 24th, 2002 before a Congressional enquiry.
Enron's chief executive, Kenneth Lay, resigned after a creditors committee had urged his removal. Mr Lay had founded the Texan energy-trading giant and continued to express optimism about its future even as it headed into bankruptcy.
If you would like to contribute articles like this to our widely read newsletter please e-mail them to John Arnold jarnold@creditman.co.uk with full contact details.
*** FORTHCOMING CREDITORS MEETINGS ***
For detailed information on the British Isles insolvency's (liquidation's, receiverships, administrations, dividends, creditors) please visit http://www.insolvency.com/cgi-bin/gazette/liq/nots.plTHERE IS A NEW SERVICE COMING SOON!
WATCH OUT FOR ANNOUNCEMENTS.
TW LW TW LW
USA 1.42 1.43 Canada 2.28 2.31
Austria 22.36 22.47 Portugal 325.78 327.45
France 10.65 10.71 Belgium 65.55 65.89
Finland 9.66 9.71 Italy 3146.50 3162.65
Germany 3.17 3.19 Sweden 15.01 15.14
Holland 3.58 3.59 Switzerland 2.38 2.39
Spain 270.38 271.77 Ireland 1.27 1.28
Australia 2.75 2.80 Denmark 12.07 12.13
Hong Kong 11.11 11.22 Euro 1.62 1.63
Africa Com 16.25 16.69 Saudi Arabia 5.34 5.39
India 68.85 69.45 Malaysia 5.41 5.46
Singapore 2.62 2.63 Norway 12.80 12.88
Japan 191.97 190.24
TW This week LW Last week.
Kmart, America's second-largest discount retailer, filed for Chapter 11 bankruptcy protection.
Daiei, a Japanese supermarket group, suffered a 30% drop in its share price and a lowered credit rating after it unveiled restructuring plans that failed to impress.
AOL Time Warner sued Microsoft in the battle of the Internet browsers. AOL's Netscape once monopolised computer desktops until it was unseated by Microsoft's now dominant Internet Explorer. AOL, while doubtless rueful of its lost position, merely seeks heavy compensation and the opportunity to compete.
An improved offer for P&O Princess of GBP3.5 billion ($5 billion) by Carnival Corporation failed to scupper P&O's planned merger with Royal Caribbean Cruises. Greece's two largest banks, National Bank of Greece and Alpah Bank called off a merger after Alpha's top managers objected to the division of jobs between the two banks' employees.
Exxon Mobil said that profits had fallen by 49% in the fourth quarter to $2.7 billion.
BG, the British gas company, along with Italy's Edison and Egyptian partners, found a buyer for some of Egypt's abundant natural-gas reserves. Gaz de France agreed to buy $8 billion worth of liquid natural gas over the next 20 years.
Source - The Economist
Misys announced pre-tax profits of 2.3 million pounds, after exceptional charge, on turnover of 480.2 million, for the six months ending 30th November 2001.
Renishaw announced pre-tax profits of 5.28 million pounds, after exceptional charge, on turnover of 51.2 million, for the six months ending 31st December 2001. Earnings per share stand at 5.8p.
MERGER NEWS
EUROPEAN COMMISSION GRANTS GOVERNMENT REQUEST TO REFER CARGILL INCORPORATED BID FOR CERESTAR TO THE UK.Melanie Johnson, Minister for Competition and Consumer Affairs, last Monday welcomed the European Commission's decision to refer an element of the proposed acquisition of Cerestar by Cargill Incorporated to the UK competition authorities under Article 9 of the EC Merger Regulation.
Melanie Johnson said:
"I am pleased that the Commission has agreed with our request to refer this case to the UK authorities. We were of the view that consideration of this case by the UK authorities would be beneficial, since it appears to raise competition concerns in the UK in relation to glucose syrups and blends which warrant further investigation."
The case will now be considered under the merger provisions of the Fair Trading Act.
The proposed concentration between Cargill and Cerestar was notified to the European Commission on 27th November 2001 under the terms of the EC Merger Regulation (Council Regulation 4064/89 as amended). In accordance with Article 19 of the Regulation, the UK received a copy of the notification on 29th November 2001.
Under Article 9(2)(a) of the EC Merger Regulation a Member State may inform the European Commission that a merger threatens to create or strengthen a dominant position as a result of which effective competition will be significantly impeded on a market within that Member State which presents all the characteristics of a distinct market.
The Commission has decided to refer the case to the UK insofar as it relates to the market in the UK for glucose syrups and blends. On referral of a case to a Member State, the Member State has four months to publish any report on the merger or to announce its findings.
The UK has previously made eleven Article 9 requests to the Commission for a case to be referred to the UK authorities. These requests were in the cases of Govia /Connex South Central (2001), C3d/ Rhône Capital /Go Ahead (2000), Interbrew SA/Bass Holdings Ltd (2000), Nabisco Group Holdings Corp/United Biscuits (Holdings) plc/Horizon Biscuit Company Ltd (2000), Hanson plc/Pioneer International Ltd (2000), Anglo American plc/Tarmac plc (1999), Exxon Corporation/Mobil Corporation (1999), Electricité de France/London Electricity plc (1999), Redland plc/Lafarge SA (1997), GEHE/Lloyds (1996), Tarmac/Steetley (1992).
JOHNSON ACCEPTS UNDERTAKINGS FROM INTERBREW
Competition Minister Melanie Johnson announced on the 23 January that she has decided to accept undertakings from Interbrew on the divestment of either Bass Brewers or Carling Brewers. Her decision follows advice from the Director General of Fair Trading (DGFT).
Melanie Johnson has also signed a new order to allow Interbrew to divest Bass Holdings Ltd business in accordance with the undertakings.
The undertakings follow a Competition Commission report published in January 2001 which found that the Interbrew/Bass merger would operate against the public interest.
Melanie Johnson said:
"The DGFT has recommended that these undertakings will address the adverse effects that were identified in the Competition Commission's inquiry into the Interbrew / Bass merger.
"The undertakings will allow for the sale of the business and assets of Bass Brewers or Carling Brewers to a single purchaser approved by the DGFT, and include behavioural undertakings if the Carling Brewers remedy is effected."
The merger between Interbrew SA and Bass was referred to the Competition Commission (CC) on 7 September 2000. The CC found that the merger would operate against the public interest and recommended that the UK interests of Bass Brewers be disposed to a single buyer approved by the DGFT. The CC's report was published on 3 January 2001, when it was announced that the then Secretary of State had decided to accept the CC's recommendations. Following a judicial review into the decision the Secretary of State announced on 18 September 2001 that she had accepted the further advice of the DGFT that the adverse effects of the merger could be remedied by the divestment to a buyer approved by the DGFT either of Bass Brewers, or of the businesses and assets known as Carling Brewers. She decided Interbrew should be given the opportunity to divest one of these businesses by 28 February 2002, and asked the DGFT to seek suitable undertakings from Interbrew to effect the disposals, including behavioural undertakings associated with the Carling Brewers remedy.
The Merger Report (Interbrew SA and Bass PLC) (Interim Provision) (Revocation) Order 108/2002, which has been signed by Melanie Johnson, revokes an order made in 2001. The Merger Report (Interbrew SA and Bass PLC) (Interim Provision) Order 2001 was made to prohibit Interbrew SA, Interbrew UK Limited and any other member of the Interbrew group (collectively referred to as "Interbrew") and Bass Holdings Limited ("Bass") from doing things which might impede the operation of an Order which the Secretary of State had under consideration for the purpose of remedying or preventing the adverse effects specified in the Competition Commission report on the Interbrew / Bass merger. In particular, it required Interbrew and Bass to maintain the business of Interbrew separately from that of Bass and prohibited the sale of any of the assets and businesses of Bass in the United Kingdom used in the production for supply of beer in Great Britain or for the supply of beer in Great Britain.
27 - 29 January 2002 FCIB - A Global Association of Executives in Finance, Credit & International Business 108th International Conference & Workshop In Europe Amsterdam Marriott Hotel The Netherlands For further information Telephone: + 44 (0) 1865 481 630 Fax: + 44 (0) 1865 481 482 Email: timlane@fcib-europe.org Website: www.fcibglobal.com 18 - 22 February Advanced Credit Analysis FT Knowledge Course 80 Strand, London For further details tel 020 7010 2508 Website www.nyif.com/emea Email finlearn@ftknowledge.com Friday 22 February 2002 Debt Sale & Purchase Credit Today, Savoy Hotel, London The second annual debt sale and purchase conference chaired by Rob Levick. For details e-mail carleen@credittoday.co.uk 6 - 7 March 2002 Softworld Accounting & Finance Software and E-business event. Grand Hall, Olympia, London Register in advance at http://www.softworld.co.uk/afs2002/register.html 11-13 March 2002 BCR's 2002 Receivables Finance International Conference Four Seasons Hotel, Singapore Website http://www.factorscan.com/static/asianpacific.htm Tel: +44 208 466 6987 Fax: +44 208 466 0654 Email mb@bcrpub.co.uk Wednesday 13 March 2002 ICM National Conference and Exhibition Heritage Motor Centre, Gaydon near Warwick For full details tel 01780-722907 or e-mail training@icm.org.uk Monday 25 March Wessex Branch of the ICM meeting Do Not Get Stung by Guarantees Presented by Jo Johnson of Moore Blatch Solicitors Royal Southampton Yacht Club Southampton 7.00pm for registration and refreshments 7.30pm Speakers 4 April Credit Today Awards 2002 Grosvenor House Park Lane London Black Tie Single Booking 120.00 plus vat. 10% discount to Credit Today subscribers Telephone 01403-786-726 or 020-7407-4700 E-mail sgc@mag-subs.demon.co.uk or awards@credittoday.co.uk or visit www.credittoday.co.uk 7 - 13 April The Credit Academy, 7 day Residential Course FT Knowledge Financial Learning London, 80 Strand, WC2R 0RL Contact Jane Lees - E-mail jane.lees@nyif.com Tel +44 (0)20 7010 2568 17 and 18 April Credit 2002 - The Definitive Event for the Commercial and Consumer Credit Industry Brompton Hall, Earls Court, London For more information contact vtolson@advanstar.com Website www.credit-expo.co.uk 22 - 28 April The Credit Academy, 7 day Residential Course FT Knowledge Financial Learning Venue - Hong Kong, location tbc Time: 08.30 Contact Jane Lees - E-mail jane.lees@nyif.com Tel +44 (0)20 7010 2568 10 - 16 June The Credit Academy, 7 day Residential Course FT Knowledge Financial Learning Venue - New York, location tbc Contact Jane Lees - E-mail jane.lees@nyif.com Tel +44 (0)20 7010 2568 21 June The ICM Fellows Luncheon Churchill Room, The House of Commons Westminster, London Guest Speaker Norman Lamb MP Cost 49.50 GBP inc of vat and all drinks Contact ICM Training Department on 01780-722907 E-mail sheila@icm.org.uk 3 to 5 July Receivables Finance International Europe (2002) Marriott Hotel, Prague Tel: +44 208 466 6987 Fax: +44 208 466 0654 Email mb@bcrpub.co.uk Wednesday to Friday 9 to 10 October International Credit Exhibition & Conference Raffles City Convention Centre Level 4 Swissotel Singapore , The Stamford Singapore Website http://www.internationalcredit001.com/ E-mail info@internationalcredit001.com If you have an event coming up which is credit management related and you would like us to make an entry in the Diary section please e-mail the details to jarnold@creditman.co.uk
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