(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Chinese property titan Evergrande said it has agreed a deal with domestic bondholders that should allow the embattled conglomerate to avoid missing one of its interest payments and avoid default, but its deeper debt burden remains. In a statement to the Shenzhen stock exchange, Evergrande's property unit Hengda said it had negotiated a plan to pay interest due on its 2025 bond, worth CNY232 million, about USD35.9 million. Evergrande has admitted facing "tremendous pressure" as it tackles a debt pile of more than USD300 billion, and has warned that it may not be able to meet its liabilities. Yet founder Xu Jiayin, a billionaire once counted as Asia's richest man, on Tuesday said the company will "step out of the darkest moment soon". In Wednesday's statement, Hengda said investors "who bought and held the bonds" before Wednesday "are entitled to interest paid this time".
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Entain shed more light on the takeover interest received from DraftKings, and said it is mulling the latest proposal. London-listed Entain on Tuesday, responding to a CNBC report, confirmed it had received a takeover approach from New York-listed fantasy sports and online betting firm DraftKings. It said it had received a cash and shares proposal, though did not outline any other terms of the tilt. On Wednesday, Entain elaborated on DraftKings's interest. It confirmed it received an earlier approach worth 2,500 pence per share - the price reported by CNBC on Tuesday - made up in stock and cash, which was rejected. It then received a further proposal on Sunday, this time worth 2,800p per Entain share - a premium of 46% to Monday's closing price. This offer consisted of 630p in cash and the rest in DraftKings shares. Entain shares extended gains into Wednesday. The stock was up 5.8% at 2,392p in London in early dealings, after surging 18% on Tuesday. The stock closed at just 1,915.5p on Monday. With around 585.6 million shares in issue, the latest DraftKings approach values Entain at around GBP16.4 billion. DraftKings went public last year, foregoing a traditional IPO and instead merging with a special purpose acquisition company. The stock closed down 7.4% in New York on Tuesday at USD52.77, giving it a market capitalisation of USD22.99 billion. The stock was down 0.9% in pre-market trade on Wednesday.
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Gambling peer Flutter Entertainment said its legal dispute with the US state of Kentucky has been settled in full. Flutter agreed to pay USD200 million to Kentucky in addition to USD100 million previously forfeited. In return, Kentucky has agreed to cease all further actions with respect to the case. The case related to the reinstatement of a USD870 million fine by the state, first imposed in 2010 against subsidiaries of Stars Group, prior its merger with Flutter last year.
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Westpac Banking said it has terminated the agreements for the sale of its Pacific businesses to Kina Securities. Completion of the sale of Westpac Fiji and Westpac's 90% stake in Westpac Bank PNG Ltd was subject to various regulatory approvals. The termination follows last week's decision by Papua New Guinea's Independent Consumer & Competition Commission to deny authorisation for the transaction. Westpac first announced the proposed sale in December 2020 and recognised a loss on sale of USD121 million in its results for the six months to June 30. That loss included the write-down of some assets, transaction costs and provisioning for estimated costs of separation. The company noted that some of these items may now need to be written back. Westpac said it will continue to operate these businesses and support its Pacific customers while assessing other exit options in line with its focus on banking in Australia and New Zealand.
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Liberty Global said it has agreed to sell its UPC Poland business to Iliad. Paris-based telecommunications firm Iliad operates under the names of Free in France, Iliad in Italy and Play in Poland. Iliad said it will combine UPC Poland with Play, meaning it will serve 17 million mobile and fixed-line subscribers in the country, up from 15 million. UPC Poland and Play made EUR1.96 billion total revenue in 2020. Iliad will pay a total enterprise value of PLN7.0 billion, about USD1.8 billion, for the business.
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Sony said it is in talks to combine its Indian unit with Zee Entertainment Enterprises. The non-binding term sheet provides an exclusive negotiation period of 90 days during which Zee and Sony Pictures Networks India will conduct mutual diligence and negotiate definitive, binding agreements. The combined company would be a publicly listed in India and be better positioned to lead the consumer transition from traditional pay TV into the digital future, Sony said.
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Halma said it has made strong progress in the first half with its financial performance ahead of expectations, as the UK safety equipment maker issued improved guidance for the full year. Halma said revenue growth and return on sales has exceeded expectations and order intake is up year-on-year. Halma expects to report strong organic constant currency revenue and profit growth for the first half of the year to September 30, with profitability benefiting from a slower-than-expected return of variable overhead costs as Covid restrictions eased. This performance compares to a weaker comparative period in the first half of the 2021 financial year, when Halma saw the worst damage from the pandemic, it added. However, the company warned on higher costs. "Although we expect to see continued impact on revenue, costs and working capital from increased supply chain, logistics and labour market disruption, we currently expect adjusted profit before tax for the full year to be slightly ahead of our previous guidance. Therefore, our results for the full year are expected to be more weighted to the first half than in previous years," Halma said.
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BT is in the advanced stage of talks to sell its sports broadcasting arm to DAZN, the Financial Times reported on Tuesday. The FT, citing multiple people with direct knowledge of the talks, said a deal could be struck within weeks. DAZN is majority-owned by investment firm Access Industries, which also holds a stake in Warner Music. The newspaper said an agreement for DAZN to buy BT Sport is not certain, however, with a number of factors, include sale price, a sticking point in talks. The sale price could be in the region of hundreds of millions of pounds. Because of a cross-licensing deal, Sky would need to green light DAZN's potential purchase of BT Sport, the FT added.
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Adobe on Tuesday said it achieved record revenue in its third quarter, though it expects slower growth in its final quarter. The San Jose, California-headquartered computer software firm said revenue in the three months ended September 3 climbed 22% annually to a quarterly record of USD3.94 billion from USD3.23 billion a year earlier. Pretax profit climbed 34% to USD1.42 billion from USD1.06 billion a year earlier.
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American Airlines called the US Department of Justice's lawsuit against its Northeast Alliance with JetBlue Airways Corp "misguided". The US Department of Justice is concerned the pact will lead to overly hiked fares for customers, as well as anticompetitive coordination in the industry. American Chair & Chief Executive Doug Parker said: "Last summer, American and JetBlue announced an innovative alliance to increase competition in the Northeast. In just a few months, the Northeast Alliance has delivered on its promise to ensure growth and provide clear consumer benefits in New York and Boston." Back in January, American and JetBlue said their strategic alliance is moving forwards following review by the US Department of Transportation.
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Mastercard on Tuesday said former chief executive Ajay Banga will step down as executive chair at the end of the year. The payments firm will not name a new executive chair. Instead, it will appoint Merit Janow as non-executive independent chair from January 1. Janow is currently lead independent director. Banga's departure is part of an executive transition plan the company announced back in February 2020. Michael Miebach, former chief product officer, took over as CEO at the start of 2021. Banga was CEO for 11 years before replacing Richard Haythornthwaite as chair.
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Mike Manley, the Fiat Chrysler chief who guided the Italian-American automaker's merger with PSA to form Stellantis, is stepping away, the company announced on Tuesday. Manley, who had replaced Sergio Marchionne at the helm of Fiat Chrysler following his abrupt departure, will take over as head of major US car dealership network AutoNation in November, according to the statement. Manley most recently served as Stellantis' Americas director following its formation in January.
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MARKETS
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Stock prices were higher globally, as concerns about contagion from a huge potential debt default in China eased. With the Hong Kong market closed for a holiday, property developer Evergrande said it will meet coupon payments on bonds held by domestic investors, leaving foreign investors in the cold for now.
Ahead Wednesday, markets await a policy decision by the US Federal Reserve, due at 1400 Washington time.
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CAC 40: up 1.1% at 6,626.70
DAX 40: up 0.7% at 15,450.26
FTSE 100: up 1.1% at 7,056.11
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Hang Seng: Hong Kong market closed for National Day holiday
Nikkei 225: closed down 0.7% at 29,639.40
S&P/ASX 200: closed up 0.3% at 7,296.90
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DJIA: called up 0.6%
S&P 500: called up 0.5%
Nasdaq Composite: called up 0.4%
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EUR: up at USD1.1733 (USD1.1714)
GBP: flat at USD1.3640 (USD1.3643)
USD: up at JPY109.50 (JPY109.26)
Gold: down at USD1,775.04 per ounce (USD1,781.03)
Oil (Brent): up at USD75.44 a barrel (USD73.84)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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US President Joe Biden downplayed prospects of brokering a post-Brexit trade deal with UK Prime Minister Boris Johnson, as UK government ministers consider downgrading their efforts to joining an existing trade pact. Biden did not counter the assertion from his predecessor Barack Obama's that Britain would be at the "back of the queue" for a post-Brexit free trade agreement. Sitting next to Johnson in the Oval Office, the president told reporters: "We're going to talk a little bit about trade today and we're going to have to work that through." The UK government was understood to be instead considering whether to join an existing pact with the US, Mexico and Canada to boost trans-Atlantic trade, in a major departure from their prior ambitions. Downing Street said brokering a comprehensive deal with the White House remains "the priority" but did not rule out joining other pacts as a backup.
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Bank of Japan decided by an 8-1 majority vote to keep a negative interest rate of 0.1%. BoJ also kept its loose monetary policy unchanged. The bank said it will continue expanding the monetary base until the year-on-year rate of increase in the consumer price index exceeds 2% and stays above the target in a "stable manner". Japan's central bank noted that local economy has picked up as a trend, although it has remained in a "severe situation" due to coronavirus, both at home and abroad. Exports and industrial production have continued to increase despite supply-side constraints. However, the bank noted that the level of Japan's economic activity in the face-to-face services sector is expected to be lower than that prior to the pandemic for the time being.
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US lawmakers voted Tuesday to keep federal agencies running through December 3 and avoid a government shutdown at the end of the month – although the stop-gap measure is likely dead on arrival in the Senate. The House Democrats' interim bill, known as a "continuing resolution," includes a suspension of the US debt limit until after next year's midterm elections – a measure that allows the US to avoid defaulting on its loans and sending the global economy into meltdown. But Senate Republicans argue that Democratic spending is out of control and have vowed to vote against any attempt to lift the borrowing cap – insisting that the Democrats have enough lawmakers to pass the initiative on their own. Not a single Republican voted for the continuing resolution, which passed 220 to 211.
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China's economy can cope with the fallout from the possible collapse of Evergrande and contagion to other markets would be limited, the OECD's chief economist said Tuesday. Global markets have seesawed this week over fears that the company's travails could have a ripple effect on the world's second-biggest economy and beyond. "We think the Chinese authorites do have fiscal capacity and monetary capacity to buffer the shock," OECD chief economist Laurence Boone said. The group has a USD300 billion debt pile – equivalent to two percent of China's GDP – and is struggling to pay it back, with payments on two bonds due on Thursday. In a report issued earlier this week the S&P ratings agency indicated it believed authorities in Beijing would intervene if they believed any large-scale fallout was likely to materialise.
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China will stop funding coal projects overseas, President Xi Jinping said Tuesday, ending a major source of support for a dirty energy contributing to climate change. Addressing the UN General Assembly, Xi made the promise as he vowed to accelerate efforts to help the world battle the climate crisis. "China will step up support for other developing countries in developing green and low carbon energy and will not build new coal-fired power projects abroad," Xi said in a pre-recorded address. "We should foster new growth drivers in the post-Covid era and jointly achieve leapfrog development, staying committed to harmony between man and nature," Xi said.
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The Asian Development Bank trimmed its economic growth forecast for Asia and the Pacific amid lingering concerns over the pandemic. In its annual Asian development outlook report, the Manila-based bank said economies in developing Asia were now projected to grow 7.1%, down from the forecast of 7.3% in April. The growth outlook for 2022 was raised to 5.4% from 5.3%, it added. "Developing Asia remains vulnerable to the Covid-19 pandemic, as new variants spark outbreaks, leading to renewed restrictions on mobility in some economies," said ADB acting Chief Economist Joseph Zveglich Jr.
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A rare earthquake rattled southeastern Australia early Wednesday, shaking buildings, knocking down walls and sending panicked Melbourne residents running into the streets. The shallow tremor hit east of the country's second-largest city just after 9:00am local time and was felt hundreds of kilometres away. The US Geological Survey put the magnitude of the quake at 5.8, later revised up to 5.9, and said it struck at a depth of 10 kilometres. With Melbourne beginning its eighth week of pandemic lockdown and bracing for a third straight day of violent anti-vaccine protests, most residents were at home when the quake struck. In a popular shopping area around Melbourne's Chapel Street, masonry debris tumbled from buildings and littered the roads.
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By Tom Waite; thomaslwaite@alliancenews.com
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