(Alliance News) - Stock prices in London were higher at midday Wednesday as concerns about Chinese property firm Evergrande's debt pile moderated, with market focus now on a US Federal Reserve rate decision later in the day.
Evergrande 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.
In Wednesday's statement, Hengda said investors "who bought and held the bonds" before Wednesday "are entitled to interest paid this time".
The FTSE 100 index was up 82.00 points, or 1.2%, at 7,063.04. The mid-cap FTSE 250 index was up 134.07 points, 0.6%, at 23,744.50. The AIM All-Share index was up 5.12 points, 0.a%, at 1,265.26.
The Cboe UK 100 index was up 1.3% at 702.40. The Cboe 250 was up 0.7%, at 21,524.30. The Cboe Small Companies was 0.6% higher at 15,505.69.
In mainland Europe, the CAC 40 stock index in Paris was up 1.1% and the DAX 40 index in Frankfurt was up 0.7%.
US stock market also was pointed higher. The Dow Jones Industrial Average was called up 0.5%, the S&P 500 up 0.4%, and the Nasdaq Composite up 0.3%.
The Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its decision at 1900 BST. This will be followed by a press conference with Fed Chair Jerome Powell at 1930 BST.
AJ Bell's Russ Mould commented: "One key event is China's troubled property developer Evergrande striking a deal over a bond repayment, thereby bringing a sense of relief to markets we might not see the business collapse - something that could cause ripples in multiple markets. Evergrande still has plenty of problems to fix including more bond payments later this week, but today's deal would suggest catastrophe is not immediately around the corner.
"We also have the Federal Reserve issuing a policy statement later today and speculation is growing that we won't get the dreaded tapering announcement at this event. That would be a massive relief to investors and could give further support to markets."
In the FTSE 100, Entain was the best performer, up 7.1% at 2,416.00 pence, after the Ladbrokes and Coral betting chains owner provided further details about the takeover approach from Boston, Massachusetts-based Draftkings.
Late Tuesday, Entain had confirmed a report by CNBC that it had received a takeover approach from US sports betting firm DraftKings, but it hadn't provided the price offered.
Entain said on Wednesday that an earlier approach from DraftKings at 2,500 pence per share, which comprised of a combination of DraftKings shares and cash, was rejected. Then, another proposal was received on Sunday by which DraftKings would offer 2,800p per Entain share, consisting of 630p in cash and the balance payable in new DraftKings Class A common shares.
The latest offer represented a premium of 46% to Entain's closing share price on Monday.
In response, Entain said it would "carefully consider" the proposal and a further announcement will be made as and when appropriate. Shareholders were urged to take no action.
The DraftKings takeover proposal comes after Entain had rejected an USD11 billion offer from Las Vegas, Nevada-based MGM Resorts International in January, saying it undervalued the company. Entain has a US joint venture with MGM called BetMGM.
DraftKings closed down 7.4% in New York on Tuesday at USD52.77, while MGM ended 1.8% lower at USD40.55. DraftKings was up 0.1% in the New York pre-market on Wednesday, while MGM was up 1.0%.
Hargreaves Lansdown analyst Laura Hoy commented: "We suspect that BetMGM is a big part of the reason DraftKings is interested at all, which may mean it will look to offload other parts of the business like the Ladbrokes and Coral physical betting shops down the line, as Caesars Entertainment has done with William Hill's shops. But MGM will have a hand in negotiating the terms of the deal, which could ultimately put DraftKings off following through.
"There's also a chance DraftKing's bold move could push MGM to make another offer for Entain, though we think this possibility is unlikely considering it would require MGM to substantially increase its former offer."
London-listed midcap gambling firms Rank Group and 888 Holdings were up 1.0% and 8.1% respectively, in a positive read-across.
Flutter Entertainment was up 4.1% after the Paddy Power owner said its legal dispute with the US state of Kentucky has been settled in full.
As part of the settlement, Flutter has agreed to pay USD200 million to the Commonwealth of 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 Commonwealth of Kentucky, first imposed in 2010 against subsidiaries of Stars Group, prior its merger with Flutter last year.
BT was up 0.2%. The telecommunications firm 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.
Kingfisher was the worst performer in the FTSE 100, down 2.0%. The DIY retailer was extending losses from Tuesday amid fears of slower growth in the second half of the year, as consumers spend less time at home. Kingfisher had ended 5.1% lower on Tuesday, following its interim results.
London Stock Exchange Group was down 0.5%. LSEG on Tuesday evening announced the closure of its derivatives segment, CurveGlobal Markets, after it failed to gain enough market share against long-established rivals like Deutsche Boerse and IntercontinentalExchange.
LSEG said CurveGlobal will stop trading at the end of January next year.
It is mostly long-term and medium-term contracts which will be suspended with immediate effect. These include Schatz Futures, Bobl Futures and Long Gilt Futures.
In the FTSE 250, personal care products maker PZ Cussons was the worst performer down 3.5%, but recovered somewhat from early losses, as hygiene habits start to normalise from heightened pandemic levels.
For the financial year ended May 31, revenue was GBP603.3 million, up 2.7% from GBP587.2 million. Pretax profit was GBP63.2 million, more than triple GBP18.3 million a year ago.
PZ Cussons raised its total dividend 5.0% to 6.09p from 5.80p.
It highlighted organic revenue growth of 7.1% in the year, with all geographic regions and the core categories of Hygiene, Baby and Beauty all performing strongly.
However, separately, PZ Cussons said for the first quarter to August 28 revenue declined 9%, driven by its Hygiene business, with Carex soap in the UK experiencing double-digit decline.
Looking ahead, PZ Cussons pointed to inflationary pressures on commodities and freight, with price increases being implemented across its markets in Nigeria and Indonesia.
Assuming no further cost pressures, or global supply or other Covid-related disruption, PZ Cussons expects to deliver financial 2022 adjusted pretax profit within the current range of expectations. It posted adjusted pretax profit of GBP68.6 million in financial 2021, compared to consensus estimates which were in a range between GBP63 million to GBP65 million.
Oxford BioMedica was up 5.5%. The gene and cell therapies company said sales more than doubled in the first half of 2021 thanks to Covid vaccine manufacturing contracts, and it announced an investment from the Serum Institute of India.
The Oxford-based firm made revenue of GBP81.3 million, up from GBP34.0 million in the first half of 2021. That helped it swing to a pretax profit of GBP19.2 million from a loss of GBP6.1 million.
Separately, Oxford BioMedica announced that vaccine manufacturing giant the Serum Institute of India has agreed to make a strategic investment of GBP50.0 million. The Serum Institute will buy 3.4 million newly issued shares for 1,478p each, equal to Tuesday's closing price, giving it a 3.9% stake.
The pound was quoted at USD1.3640 at midday on Wednesday, little changed from USD1.3643 at the London equities close on Tuesday.
The euro was priced at USD1.1730, up from USD1.1714. Against the Japanese yen, the dollar was trading at JPY109.53, higher against JPY109.26.
Brent was quoted at USD75.35 a barrel Wednesday at midday, up sharply from USD73.84 late Tuesday. Gold stood at USD1,775.85 an ounce, down from USD1,781.03.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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