the times | Saturday September 5 2020 1GM 55
Business
The relaxation of rules on corporate
fundraisings has been extended by
another two months in case businesses
need further access to quick cash to
help them through the pandemic.
The Pre-Emption Group, which
issues guidance on rights issues and
share placings, has extended the easing
of its guidelines until the end of
November.
The rules were softened at the start of
lockdown and the group said that the
additional flexibility had helped UK-
listed companies to raise £23.7 billion
from investors since coronavirus
struck, with most of that going to
companies needing emergency funds.
Companies may raise money by
creating new shares and selling them to
investors. Typically they are allowed to
issue up to 10 per cent of their share
capital without having to give all their
existing shareholders the right to buy. If
they want to raise more than that, they
Berkeley on
track to give
back £280m
to investors
Simon Duke
ALAMYMike Ashley’s Frasers Group has ac-
cused Debenhams’ advisers of blocking
it from rescuing the department store
chain by claiming a gagging order
prevents it from talking to landlords.
Chris Wootton, 40, chief financial
officer of Frasers, told The Times that
his group was not formally involved in
the sale because it refused to sign a non-
disclosure agreement that would pre-
vent it from talking to Debenhams’
landlords for 18 months.
Debenhams sources said there was
concern that Mr Ashley’s business
would use confidential data to strike
separate deals with landlords to cherry
pick the best Debenhams stores.
Debenhams’ administrators at FRP
fear this would reduce the value of the
business for creditors.
Debenhams, founded in 1778, em-
ploys 14,500 people and has 124 stores
in the UK but it is thought that any sale
will result in significant closures.
Frasers has been in dispute with
Debenhams since Mr Ashley’s
£150 million equity investment was
wiped out in last year’s administration.
His company did not make a takeover
approach for the business while it was a
public company, which sources at
Debenhams insisted was a sign the
tycoon only wanted its best outlets
rather than to inherit its liabilities.
Mr Wootton said: “We feel, once
again, we have been locked
out of the process.
Restricting a willing
buyer from being
involved in the
sale will clearly
result in a nega-
tive impact on
the price of
Debenhams.
“We are
not going
to buy a
Gagging order
is blocking deal
for Debenhams,
Frasers claims
business without knowing how stores
are performing”, he said. “We have a
track record of buying businesses and
we are the most likely party to save
jobs.”
Frasers warned recently that it would
close more House of Fraser shops two
years after buying the business out of
administration, but Mr Wootton said
that the the group had “still saved a hell
of a lot more jobs than anybody else”.
A Debenhams spokesman said: “All
participants in the process have been
asked to sign a non-disclosure agree-
ment, which is standard in a situation
like this where commercially sensitive
information may need to be shared.
While the process is at an early stage,
and there is no guarantee the business
will be sold, there is an encouraging
level of interest.”
Frasers has said it believes it is the only
viable trade buyer to rescue Debenhams
but sources insisted there were other
strategic players involved, although it is
unclear whether they would proceed to
the second round of bidding.
Bankers at Lazard are looking for
buyers of the 242-year-old chain while
a liquidator at Hilco has been
put on standby as a last
resort. Mark Gifford,
chairman of Deben-
hams, told the BBC
yesterday that the
retailer was not facing
a “cliff edge” after spec-
ulation that a deadline
for bids by the end of this
month could seal its fate.
Debenhams’ hedge
fund owners, led
by Silverpoint,
could retain the
chain but it is
thought more
investment
would be re-
quired.
Mr GiffordAshley Armstrong Retail Editor
The upmarket housebuilder Berkeley
Group is sticking with its plan to return
nearly £300 million to shareholders.
The FTSE 100 company said that
demand had rebounded since the gov-
ernment eased coronavirus restrictions
and that prices had been “robust”.
House prices rose to a record high
last month as production and sales
activities resumed after the corona-
virus lockdown, according to a survey
from Nationwide this week.
Berkeley, which focuses on London,
Birmingham and the south of England,
said that it expected pre-tax profits of
£500 million, in line with previous
guidance. In a trading statement yes-
terday before its annual shareholder
meeting, the group renewed its com-
mitment to hand investors £280 million
a year through dividends and share
buybacks.
But it cautioned that volatility could
continue to affect the market as the UK
and other economies come to terms
with the longer-term impact of Covid-
19, particularly if there was a second
wave of infections. “We are also con-
scious of the risks around the UK’s
departure from the EU at the end of
2020,” it said.
Recently it cut back investment amid
a slowdown in the market. That has led
to an increase in its net cash position
from £107.5 million in 2016 to more than
£1 billion today. Productivity on its sites
was 90 per cent of its pre-Covid levels.
Current developments include
Twelvetrees Park in east London and a
former Horlicks factory in Slough,
where it has planning permission for
3,800 and 1,300 homes respectively.
Reservations for the first four
months of the financial year are about
20 per cent below last year’s levels, but
Berkeley said that it had “good visibility
over the next two years of earnings”.
Peel Hunt analysts said: “While we
don’t necessarily see lots of short-term
value in the shares, investors with
slightly longer timescales will see
Berkeley deliver a material step-up in
output over the next three to five years.”
Shares in Berkeley which rose in
early trading, closed at £44.75, a fall of
173p, or 3.7 per cent.Flexible rules on fundraising extended
must let every shareholder join in or ask
them to waive their pre-emption rights.
However, the group adopted a softer
stance in April and said companies
should be temporarily allowed to raise
20 per cent without having to obtain
shareholders’ approval.
The argument was that giving every
investor the chance to take part in a
fundraising, or setting up a vote toapprove the board’s plans, was too slow
when companies were desperate for
extra cash to shore up their finances.
The group said that the rules would
be relaxed until the end of September
but it has delayed the end date because
of the “developing pipeline of equity
offerings over the third quarter”.
It added: “By November 30 all com-panies will have had a reasonable
opportunity to review their liquidity
requirements.”
The dash for cash in the spring and
summer drew criticism in the City as it
effectively locked out smaller retail
investors from some lucrative share
placings. For example, small investors
were barred when Asos raised £247 mil-
lion by selling new shares at £15.60 in
April. The stock later soared above £47.
“Companies urgently need liquidity
now more than ever and we support the
extension of the relaxation of pre-emp-
tion rules for a further two months,”
Sam Smith, chief executive of Finncap,
the City stockbroker, said.
“However, the technology now exists,
through companies such as Primary Bid,
to run a retail offer as part of an
accelerated fundraise with no delay to
the issuance timeline or impact on
pricing. Given the very adverse eco-
nomic and business conditions, where
practical, every pool of capital should be
considered.”Tom Howard
About 2,300 jobs have been saved after
Nationwide Accident Repairs group
was partially rescued by Redde North-
gate in a pre-pack administration.
The bodyshops and repair vans
group, which had been bought by
Carlyle for £43 million in 2015, had
been struggling even before lockdown
plunged it into crisis.
The private equity group had been
hawking the business around over the
summer and the deal was agreed with
administrators from PWC on Thursday
night.
Under the terms of the deal Redde
Northgate will buy 77 of the company’s
102 bodyshops as well as a fleet of
mobile repair vans for up to £16 million.
The deal will result in the loss of up to
500 jobs.
Redde, formerly Helphire, mergedRedde Northgate snaps up
struggling repair business
with Northgate, which rented out white
vans, just before the pandemic struck in
a £650 million all-paper deal. Its chair-
woman is Avril Palmer-Baunack, the
industry veteran whose CV includes
heading British Car Auctions as well as
stints at Eddit Stobart and Autologic.
While pre-packs guarantee business
continuation, invariably save jobs and
ensure the selling shareholders retrieve
some money, such deals tend to leave
creditors and suppliers high and dry,
which can lead to strained relationships
with the businesses’ new owners.
Analysts liked the deal as Redde
already used Nationwide for repairs
and the company now has its own
capability in-house. Numis, the stock
broker, said: “We see substantial syner-
gy potential.”
Investors also gave the deal the
thumbs up, pushing the shares 15p, or
7.9 per cent, higher to 206p.Robert Lea Industrial Editor
Frasers Group, owned by Mike Ashley, left, says it will save jobs at Debenhams
said that Debenhams was “sitting with
over £95 million in the bank, more than
£50 million higher than we expected to
have when we went into administra-
tion. That’s really changed the wholecomplexion and prospects”. However,
restructuring sources have said that
Debenhams has retained its cash by not
paying business rates, rent owed or
some suppliers.£23.7bn
Funds raised under more flexible rules