LONDON BRIEFING: IAG Secures Financial Support For British Airways

(Alliance News) - International Consolidated Airlines Group said on Monday that British Airways ...

Alliance News 22 February, 2021 | 8:23AM
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(Alliance News) - International Consolidated Airlines Group said on Monday that British Airways has agreed two financial-support pacts worth GBP2.45 billion in total.

BA has secured a GBP2.0 billion UK Export Development Guarantee loan facility of GBP2.0 billion. The term-loan is for five years. It is underwritten by a syndicate of banks and partially guaranteed by UK Export Finance.

British Airways also agreed a deferral of GBP450 million in pension deficit contributions. The deferral involves GBP37.5 million in monthly contributions that were due from October 2020 to this coming September. BA will repay the deferred contributions, plus interest. The accumulated amount will be added as monthly payments to the end of its existing recovery plan, currently March 2023.

BA will pay no dividend to IAG before the end 2023. From 2024 onward, any dividends paid to the parent company will be matched at a 50% rate by contributions into the pension fund until deferred contributions have been repaid.

Also bolstering its immediate finances early Monday was pub and bar operator Mitchells & Butlers, announcing an open offer of shares.

Airlines, pubs and the wider travel & leisure industry will be in focus later Monday as UK Prime Minister Boris Johnson outlines how the Covid-19 curbs will be eased, paving the way for the first easing of restrictions since England's third national lockdown was announced on January 4.

IAG shares were up 0.8% early Monday. Mitchell & Butlers shares were down 0.1%.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: down 0.6% at 6,582.69

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Hang Seng: down 1.1% at 30,321.87

Nikkei 225: closed up 0.5% at 30,156.03

DJIA: closed up 0.98 of a point at 31,494.32

S&P 500: closed down 0.2% at 3,906.71

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EUR: down at USD1.2108 (USD1.2139)

GBP: down at USD1.3984 (USD1.4020)

USD: up at JPY105.74 (JPY105.53)

GOLD: up at USD1,792.94 per ounce (USD1,786.45)

OIL (Brent): unchanged at USD63.48 a barrel (USD63.47)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Monday's Key Economic Events still to come

1100 GMT Ireland wholesale price index

1000 CET Germany Ifo Business Climate Index

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Schools, socialising and some sports are set to return next month under the UK government's plan to relax coronavirus lockdown restrictions in England, the PA news agency understands. PM Johnson will tell members of Parliament that all pupils in all years can go back to the classroom from March 8, with outdoor after-school sports and activities allowed to restart as well. Socialising in parks and public spaces with one other person also will be permitted in a fortnight when the rules are relaxed to allow people to sit down for a drink or picnic. A further easing of restrictions will take place on March 29 when the school Easter holidays begin – with larger groups allowed to gather in parks and gardens. The "rule of six" will return along with new measures allowing two households totalling more than six people to meet – giving greater flexibility for families and friends. Outdoor sports facilities such as tennis and basketball courts are set to reopen at the end of next month. And organised adult and children's sport – including grassroots football – can return from March 29.

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BROKER RATING CHANGES

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BOFA RAISES AVIVA TO 'BUY' ('NEUTRAL') - TARGET 440 (388) PENCE

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JPMORGAN RAISES GLENCORE TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 350 (280) PENCE

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BARCLAYS RAISES STANDARD LIFE ABERDEEN TO 'EQUAL WEIGHT'('UNDERWEIGHT') TARGET 330 (240) PENCE

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COMPANIES - FTSE 100

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Pharmaceutical firm AstraZeneca withdrew its Imfinzi drug in the US, a decision made following a consultation with the Food & Drug Administration. Back in May 2017, the drug secured accelerated approval based on promising tumour response rates from a Phase I/II trial. "Continued approval was contingent on results from the DANUBE Phase III trial in the 1st-line metastatic bladder cancer setting, which did not meet its primary endpoints in 2020. The withdrawal is aligned with FDA guidance for evaluating indications with accelerated approvals that did not meet post-marketing requirements, as part of a broader industry-wide evaluation. This withdrawal does not impact the indication outside the US and does not impact other approved Imfinzi indications within or outside the US," Astra added.

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HSBC Holdings is moving some of its more senior executives to Hong Kong, the Financial Times reported, as the Asia-focused lender moves away from its US retail operations. Executives relocating to Hong Kong are likely to include Greg Guyett, co-head of global banking & markets, Nuno Matos, chief executive of wealth & personal banking, and Barry O'Byrne, chief executive of global commercial banking, according to people familiar with the matter. With those three moving to east-Asia, the units that record almost all of HSBC's global revenue will be run out of Hong Kong. The personnel moves, first reported by Bloomberg, are dependent on regulatory approval, said a person close to the bank. HSBC declined to comment. The bank is also preparing to announce a withdrawal from consumer banking in the US after concluding it cannot turn round the struggling unit, the FT reported.

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Trading platforms Hargreaves Lansdown, AJ Bell and Interactive Investor have all written to the treasury complaining about their exclusion from a majority of initial public offerings, the Times reported. he heads of the three companies wrote to City minister John Glen last week asking that he consider forcing companies to consider retail offers in new flotations as well as the opening of a wider consultation. The letter noted that smaller investors has been unable to buy into the recent IPOs from online personalised cards and gifts retailer Moonpig Group, as well as shoe maker Dr Martens and Hut Group owner THG. In all three cases, share prices for the companies rose to an instant premium to the IPO price, forcing private investors to pay premium prices. The letter, as cited by the Times, said: "As it stands, retail shareholder rights are almost completely ignored when it comes to the vast majority of IPOs, which largely take place between City institutions behind closed doors."

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Anglo American Platinum reported a surge in annual profit as the dollar basket price for platinum group metals soared in 2020, but cut its annual payout. The Johannesburg-listed subsidiary of Anglo American posted a pretax profit of ZAR40.86 billion, rising 61% from ZAR25.31 billion in 2019. Net revenue increased 38% to ZAR137.79 billion in 2020 from ZAR99.55 billion in the year prior. Total PGM metal-in-concentrate production fell 14% to 3.8 million ounces from 4.4 million ounces. Total PGM refined production sunk 43% to 2.7 million ounces from 4.7 million ounces in 2019. The decrease in production was due to the shutdown of operations due to national lockdowns aimed at reducing the spread of Covid-19, the company said.

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COMPANIES - FTSE 250

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Security company GardaWorld "stands firm" and its 235 pence per share offer for G4S is final. GardaWorld said early Monday the offer will not be revised. "There can be no better owner for G4S than GardaWorld, but we are disciplined buyers and we will not overpay for a company with systemic ESG issues that continue to come to light," GardaWorld Chief Executive Stephan Cretier said. The 235p offer values G4S at GBP3.68 billion. Earlier in February, London's Takeover Panel stepped in to put in place an auction procedure to resolve an ongoing takeover saga. Last month, G4S agreed to be taken over by Allied Universal in a GBP3.8 billion deal, but the cash offer has been extended and remains open for acceptances until March 6.

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Mitchells & Butlers launched a GBP351 million open offer of shares to bolster its balance sheet as its "liquidity position has deteriorated significantly as a result of the impact of the Covid-19 pandemic". The All Bar One owner said the extra cash will go towards reducing its unsecured debt. It also will support its secured debt financing. As of mid-January, M&B had GBP113 million in cash balance with all its financing facilities drawn. Its monthly cash burn during estate closures has been between GBP30 million and GBP35 million, and the company has GBP51 million in securitised debt servicing costs per quarter. The next quarterly payment is March 15. CEO Phil Urban said: "M&B was a high performing business coming into the pandemic and with the support of our main stakeholders, including the equity injection from this Open Offer, we have every confidence that we can emerge in a strong competitive position once current restrictions are lifted. "The hospitality industry has done everything that has been asked of it to date and, now that the vaccines are being rolled out and infections are dropping, we are hopeful that pubs and restaurants will soon be allowed to reopen safely." Since the end of December, none of M&B's sites have been open. In the period between, September 27 and January 16, total managed sales were 70% lower annually.

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COMPANIES - MAIN MARKET AND AIM

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Saga is in discussion with potential providers about a GBP170 million debt package, Sky News reported on Sunday, as travel and insurance group seeks to chart a course through the remainder of the coronavirus pandemic. The Kent-based company, focused on serving the needs of those aged 50 and over, has approached a group of debt funds about refinancing part of its existing borrowings. The move came after the talks with existing lenders were some way from being concluded, according to insiders cited by Sky News, and may not result in a deal. The news agency said Saga was considering trying to secure the new debt against its insurance arm - the stronger of its two businesses after a year in which its cruise operations have been largely dormant.

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COMPANIES - GLOBAL

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Xiaomi shares slipped in Hong Kong on Monday after the consumer electronics firm batted away rumours it may enter the electronic vehicle sector. "The group noticed certain media articles regarding the group's potential plans to enter into the electric vehicle manufacturing business," Xiaomi said. "The group has been paying attention to the developments in the electric vehicle industry, and has continuously studied the relevant industry trends. The group has not initiated any formal project regarding the study of electric vehicle manufacturing business." iFengNews first reported the story, saying the tech giant was planning on building its own car.

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Monday's Shareholder Meetings

Sabien Technology Group PLC- GM re investment by chair

Premier Oil PLC - GM re creditors meeting

Kibo Energy PLC - EGM re replacing Crest with Euroclear Bank

Contango Holdings PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Aviva PLC 361.90 GBX -2.92
Glencore PLC 290.70 GBX -4.69
Standard Life Aberdeen PLC 310.80 GBX -3.45 -
Mitchells & Butlers PLC 304.00 GBX -1.30 -
International Consolidated Airlines Group SA 191.95 GBX 3.06
Anglo American PLC 2,772.50 GBX -6.13

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