Tuesday, 15 January 2008

Northern Rock board to face shareholder scrutiny

The Northern Rock board is set to face a tough scrutiny from angry shareholders at an extraordinary general meeting of the crisis-hit bank. Many of the 100 000 smaller shareholders will attend this showdown at the Metro Radio Arena in Newcastle.

Northern Rock was at the centre of the UK's first bank run in nearly 150 years in September after soaring borrowing costs in the credit crunch forced it to seek an estimated £26 billion in emergency funding from the Bank of England. The board will argue that proposals from its two largest shareholders - hedge funds SRM Global and RAB Capital who jointly own 18% of the company and do not want it sold off - will hinder rescue efforts.

Potential bidders Virgin and Olivant are, however, reportedly struggling to secure financing for the deal amid a tightening in credit markets and due to the complexities of the deal. If these two bidders back off then the stricken bank could face nationalisation, although there are now claims that the move could breach the Government's self-imposed sustainable investment rule which says national debt should not exceed 40% of GDP.

Northern Rock chairman Bryan Sanderson is calling on shareholders to vote against the resolutions, labelling the demands "potentially damaging". The bank's board believes that the measures could tie their hands in engineering a rescue of the stricken bank. The Government is also reportedly looking at the possibility of a £12 billion to £15 billion bond issue which could help pay off some of Northern Rock's Bank of England loans and pave the way for a private sale. (source: ITN)

In a move likely to disappoint existing owners (according to analysts), Apple could soon offer a new iPhone with twice the memory but for the same price as the original device as an increase in capacity from 8GB to 16GB or even 32 GB is expected soon.

Speculation about the next stage in the iPhone’s development came as talks between Apple and China Mobile to launch the device in China were halted yesterday. In the United States, a 3G iPhone is also understood to be in production.

Mr Jobs, Apple’s CEO, is also expected to announce plans to enter the film-rental business, which will operate through its online iTunes Store. This is largely dependant on deals with the movie studios. It is believed that Apple might use Macworld as an opportunity to introduce such a service. (source: Timesonline)

Silverjet, the start-up business-class only airline, was the worst performing small cap stock yesterday after an analyst set a share price target of nil for the company and branded it "likely to fail". The note comes just three weeks after MAXjet, a rival business-class only carrier, filed for administration under a mountain of losses and debt.

Silverjet fell 28% to 35.5p. It issued a Stock Exchange announcement pointing out "numerous material mistakes and inaccuracies" in the note, including an assumption that return flights cost nearly twice as much to operate than they do in reality. The company said it remained confident that it would hit its target of reaching pre-tax profitability by March.

Silverjet, which began service a year ago this Friday, flies its fleet of three 767's – refitted to fit 100, lie-flat beds – from London to New York and Dubai. Silverjet's largest investors are the Reuben Brothers, who have given loans to the company convertible next month to a 22% stake.
Arden Partners, the company's broker, put out a note with an opposed view yesterday, urging investors on with a "Buy" rating and forecasting a more than quintupling of its 2007 revenue. (source: The Independent)

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