19 - 23 October: Vol 2, Issue 42 - (Page 6)

6 NEWS Crain’s Manchester Business / October 19, 2009 Winners and Losers MARKET EXPECTS STOBART TO DELIVER The market must be expecting good news from Warrington-based intermodal transport firm Stobart Group when it presents interim results on Thursday. Its shares climbed 12 per cent last week to 123p, pushing its market cap above £310m. Not bad for a firm which last year made a pre-tax profit of £23m. The group has announced contract wins with Tesco and Nestle and has switched its UK rail business to DB Schenker Rail, with whom it has a Spanish joint venture. Asset-based lender Davenham continued to slip following its full-year results which showed a loss £55.4m after the firm wrote off almost £50m worth of bad property loans. Chief executive David Coates believes that the worst is over, but the share price of 7.1p (down 5 per cent) gives it a lowly market cap of just £2.08m. With a strategic review under way, any potential bidder capable of reassuring the banks about its own solvency could pick the business up cheaply. Haydock-based plant hire firm Speedy Hire’s announcement that sales were 29 per cent down on last year led to a slump in its stock’s value. The firm announced another wave of depot closures and a further 270 redundancies on top of last year’s cull of 17 per cent of the workforce. It said sales were stabilising, but off “a very low base”. The shares fell 12.5 per cent to 38.25p. The circus surrounding Wigan-based retailer JJB Sports rumbles on, with publication of the rights issue prospectus flushing out such tasty morsels as the investigation of former staff by the Serious Organised Crime Agency and potential bonus payments of £100,000 each to four senior directors if the fund-raising is successful. The shares fell by 7 per cent to 32p. Wythenshawe-based industrial products firm Brammer’s plan for a £38m rights issue to bolster its balance sheet found favour with shareholders. The firm’s stock climbed 19 per cent to 190p. Despite a brief rally in the aftermath of a pretty ordinary-looking set of interims in September, shares in Manchester-based marketing group Hasgrove have been on a steady decline since. The news that its digital marketing arm, Amaze , had bought MCL Digital (a London-based developer of iPhone apps) did little to lift the gloom. Its stock finished 6 per cent lower at 73.18p. The rollercoaster ride endured by shareholders in Manchester-based infection control firm Byotrol continued last week. The firm’s shares barely moved in the days after a trading update announcing a 250 per cent sales increase earlier this month, but they climbed again last week by 15 per cent to 39p. Uncertainty surrounding the future of the construction sector may have coloured the opinion of investors in Rethink Group. The Manchester firm provides permanent and contract staff to the industry, which saw a 7 per cent rise in firms going into administration in the first nine months of the year. Its shares dropped 19 per cent to 8.27p. An upbeat assessment of James Halstead’s fortunes from in-house broker Altium Securities seemed to push up its fortunes last week. As the stock climbed 11 per cent to hit its previous target price of 550p, analyst David O’Brien upgraded it to 625p, arguing this would represent a price-earnings ratio of 14, still below others in the sector such as Carpetright and Headlam. He also said the Radcliffe-based company had a “more resilient business” than its listed peers. Taking Stock US link is one for the future, says BTG chief Joint venture aims to create one of world’s largest insolvency practitioners BY CRAIN’S STAFF REPORTER Oil boss sells 4.4 million shares – then price soars BY CRAIN’S STAFF REPORTER A new joint venture with a US financial services firm will deliver profits in “three to five years”, according to Begbies Traynor Group executive chairman Ric Traynor. Begbies and its partner, Mesirow Financial Consulting, said they were creating “one of the largest insolvency and restructuring practitioners in the world” when they announced their plans two weeks ago. One of the reasons for the tie-up, however, is the need to compete with even bigger players such as the Big 4 accountancy firms and US-based restructuring consultants such as Huron, FTI, Navigant and AlixPartners. “It gives us the opportunity to move up into that league as well as continuing with what we already do,” Traynor told Crain’s. “We have been looking for some time to find an appropriate partner over there who was sufficiently large and was getting the sort of work that would give us opportunities outside the States.” Traynor said the match between the two firms was made by a London-based lawyer, known to both sides, who does international restructuring work. Due diligence revealed that Chicago-based Mesirow, which is owned by its partners, had been run conservatively and did not have the toxic debt problems plaguing other US institutions, despite its involvement in investment banking and real estate. Traynor said the joint venture, BTG Mesirow Financial Consulting, would enable Begbies Global Network (BGN) to pick up work on major international assignments, some of which will be generated by all that toxic debt. “Mesirow has lots of contacts with US banks and law firms who act for bond holders. A lot of lending has gone into Europe with American money and the lenders will be trying to get that money back or trying to ‘We’ve been looking for some time to find an appropriate US partner’ RIC TRAYNOR, BEGBIES TRAYNOR 353 North Clark, Mesirow’s corporate HQ in Chicago preserve its value in the businesses they have invested in,” Traynor added. “We will be concentrating on insolvency because that is where the market is. In addition, forensic work, corporate finance work and valuation work are things that they do and we do and there may be opportunities in those areas as well. “It’s one for the future. It’s not material at the moment. It will be three to five years down the line before we see the major benefits from this.” Receivership The ultimate example of the work the JV will target is, of course, the receivership of the European arm of Lehman Brothers, which is generating a rumoured £200m in fees. “That will keep PwC going for years,” said Traynor. Mesirow and Begbies are a good fit culturally. Traynor said: “The Midwesterners are very nice people, very friendly and very like Mancunians actually. We get on very well with them.” Mesirow’s only office outside the US is in London, but BGN has 6,000 individuals in 50 member firms, including lawyers as well as accountants, and is in many major markets outside the US including continental Europe, Africa and China. The joint venture will mean Begbies hiring 15-20 people short term and up to 50 longer term. More immediately, Begbies is recruiting a further 50 people to cope with the growth in UK insolvency work. “It’s going to be even busier in 2010,” said Traynor. Stephen Benson, senior partner of Manchester-based law firm Cobbetts, said transatlantic JVs had to be “well ring-fenced” because of potential liability issues. “If you are trying to recover bond issues you are working at the top end of the market, so brand will be very important,” said Benson. “It sounds to me as though Mesirow will bring to the JV their reputation in the USA, which will then rub off on Begbies who will be providing the delivery network.” COMMENTS? manchesternews@crain.com Sales of shares by directors are sometimes a signal for other investors to dump their holdings. But not in the case of Manchesterbased oil company Enegi Oil. One trading day after a company controlled by chief executive Alan Minty sold 4.39 million shares, the price shot up 60 per cent. The shares belonged to Risk Management Research Institute Ltd, which received them as payment for work done for Enegi between January and July this year. RMRI got 5 million shares in August when Enegi raised £1.5m from a placing to finance more work on its main asset, the Garden Hill South oil well in Newfoundland, Canada. Enegi did not reveal the sale price but said the transaction took place between October 1 and October 9, when the share price went no higher than 17.5p, valuing 4.39 million shares at £768,000. On Monday, October 12, Enegi’s share price spiked by 60 per cent to 25p after a 1 per cent rise in the crude oil price sent most oil stocks higher. The shares finished the week at 23p, making 4.39 million shares worth just over £1m. A spokesman for the company told Crain’s that investors appeared to be responding well to the announcement on October 1 that the company would begin pumping oil again at Garden Hill. Enegi said Minty had not sold any of his own shareholding and still holds 18.17 per cent of the company, of which 7.48 million shares are held in his own right and 4.63 million via RMRI. In other trades last week, Barclays Plc increased its stake in Enegi to 3.54 million shares, or 5.31 per cent, compared with less than 3 per cent previously. Firebird Global Master Fund also announced that it had built up a 3 per cent holding. COMMENTS? manchesternews@crain.com Revamp of Lilac Mill less of a priority for N Brown BY CRAIN’S STAFF REPORTER ● Closing prices as of Thursday Expanding Lilac Mill is no longer such an urgent priority for N Brown Group, even though the warehouse in Shaw, near Oldham, could next year become the hub of an assault on the US market. Alan White, chief executive, said the home shopping group was now despatching more goods to customers direct from suppliers. This had resulted in a 5 per cent drop in stock levels to £67.4m, a figure disclosed in last week’s interim results. White told Crain’s that the combination of shipping from suppliers and a slowdown in sales growth, caused by a stricter credit policy, meant the extension was no longer so critical. “There is a problem to be sorted in the long term, but in the short term the pressure isn’t as great,” he added. N Brown has applied to increase the hei

Table of Contents for the Digital Edition of 19 - 23 October: Vol 2, Issue 42

Taking Stock
Opinion / Our View
Banking & Finance
Crain's List
For the record
Events, People, Gossip

19 - 23 October: Vol 2, Issue 42