PRESS DIGEST - British business - Aug 8

The Mail on Sunday

WINDFALL FOR POWER INVESTORS

International Power (IPR.L)>, the power generation company, is expected to announce on Tuesday a 14 billion pound merger with GDF Suez (GSZ.PA), the French energy group. The deal will give majority control to GDF. Details are being finalised that include a cash element for International Power's estimated 360,000 shareholders. The new company will be listed in London and will be formed through a reverse takeover in which International Power will issue shares while GDF will inject assets into the company. Sources said the new company is likely to be headed by International Power's chief executive Phil Cox.

CINVEN PLANS TO RAISE TEN BILLION POUNDS

Private equity group Cinven is talking to investors about raising a new fund worth up to ten billion pounds. Completion of the firm's fifth fund next year would be the largest raised in Europe during the past three years. Cinven, which owns PizzaExpress and restaurant chains Ask and Zizzi, is testing the appetite of investors ahead of expected large fundraisings by rivals such as BC Partners and Coller Capital. A source said Cinven was raising the fund with an eye on Europe and the leisure industry.

NUMBERS GO RED AT GALA CORAL

Gaming group Gala Coral has published its annual accounts that show a loss of 495 million pounds. In the year ending September 26 2009, turnover was 1.3 billion pounds. Write-downs and restructuring costs of 72 million pounds pushed the company into the red. An operating profit of 228 million pounds was wiped out by a 358.3 million pound reduction in the group's goodwill, 228.9 million pounds of which was the result of the smoking ban, the recession and bingo tax changes. Additional write-downs were made as a result of the closure of bingo clubs and casinos and the fall in value of investments and inter-company loans.

The Sunday Times

WIPEOUT LOOMS FOR CONNAUGHT INVESTORS

Social housing group Connaught CNT.L is considering a debt-for-equity swap as a way of recovering from recent controversy over its accounts that has seen its shares fall from 320 pence in early June to Friday's closing price of 15.5 pence. The swap would hand control of the firm to its creditors. On Friday, Connaught announced that it would record a "material" full-year loss after local authorities, hit by funding cuts, delayed spending on social housing. Connaught chairman, Sir Roy Gardner, said he "remained confident" that the company could be saved. Deloitte is conducting an independent review into Connaught's accounting policy.

LLOYDS' 15 BILLION POUND PAYOUT

Analysts at Swiss bank UBS believe that Lloyds Banking Group (LLOY.L) could pay out about 15 billion pounds in dividends to investors between 2012 and 2014 as the state-backed bank's recovery picks up speed. The bank has been banned from paying dividends until 2012 by the European Commission, which set the condition in return for giving Lloyds state aid. Lloyds reported a first-half profit of 1.6 billion pounds last week. Rival state-backed bank, the Royal Bank of Scotland (RBS.L), revealed a 500 million pound gain from the Asset Protection Scheme.

VIRGIN TO SELL 10 CHANNELS

Virgin Media [VMEDL.UL] is hoping to raise 350 million pounds from the sale of its 50 percent stake in UKTV, a joint venture with the BBC. The UK cable operator, which also provides phone and broadband services, is struggling with large debts and has asked investment banks UBS and Goldman Sachs to begin the search for potential bidders. Although Channel 4 and BSkyB could be interested, BBC Worldwide, the commercial unit of the BBC, can activate a clause in the joint venture agreement allowing it first refusal on Virgin's stake, making the company the frontrunner.

The Sunday Telegraph

SERCO AND CIRCLE IN NHS BID FIGHT

Outsourcing giant Serco (SRP.L) and Circle, Europe's biggest healthcare workers' partnership, are fighting to win the contract for Britain's first privately run NHS hospital. Hinchingbrooke hospital in Cambridgeshire ran up 40 million pounds of debt, leading the local health authority to take the unprecedented decision to offer its administration to market. The winning bid will be announced in December. Serco has experience in the sector, running pathology services at Guy's and St Thomas's hospital, and said that it is fully committed to this initiative. Circle, promises to create a model of employee ownership and said the NHS Trust needs to decide which values are best for the running of a hospital.

TALKTALK AND BT RAISE COST OF CALLING

Telecoms companies TalkTalk (TALK.L) and BT (BT.L) have announced that they will increase the cost of calls made from landlines by ten percent. The cost of a TalkTalk daytime call will increase to a minimum of 17.3 pence, 6.4 pence for the call and 10.9 pence for the connection. TalkTalk, which has 5.1 million customers, said that the rise is a necessary increase that has to be done from "time to time". A BT spokesman, describing the justification for its ten percent increase, said: "Like many businesses, we have to review our prices as we seek to cover costs and emerge from recession in good shape."

BUSINESS TRAVEL BACK, SAYS INTERCONTINENTAL

Intercontinental Hotels Group (IHG.L), which owns the Holiday Inn chain, is expected to reveal operating profits of 205 million dollars in its half-year results, according to market analysts. The forecasts are based on a return of business travel and strong growth in China, which accounted for the 14.5 percent increase. The company is expected to announce that its plan to complete the three-year revamp of its 3,400 chain of hotels remains on track, despite worries about a downturn and Intercontinental's poor access to credit.

SUNDAY QUESTOR

Rio Tinto (RIO.L) (Buy)

The Independent on Sunday

M&B CHAIRMAN VOWS END TO SHARES CHAOS

John Lovering, chairman of pub and restaurant chain Mitchells & Butlers (MAB.L), has given a private vow to M&B's investors that he will work on resolving the group's divisive share ownership structure. Lovering's plans to "normalise the shareholder register" within two years by reinstating a dividend payment and encouraging investors Piedmont and Epsilon, which own more than 40 percent of the company between them, to sell some of their stake to more traditional funds. Lovering also plans to sell off several brands that are not part of the core pub-dining format, including Hollywood Bowl to AMF Bowling for 40 million pounds and its Innkeepers Lodge budget hotel chain, which sold last month for 91 million pounds.

NET DEBUTS ON AIM TO RAISE FIVE MILLION POUNDS

New Energy Technologies, provider of advanced energy management, has revealed plans to make its debut on the Alternative Investment Market next month with the aim of raising 5 million pounds for new plants. Robin Parker, NET's chairman, said: "With the UK facing power shortages, investing in biomass-sourced energy is highly efficient." Parker is currently negotiating with EDF, Scottish and Southern as well as other power generators to supply the biomass. Parker also said the market for wood pellets is forecast to rise from two million tonnes a year in 2008 to over 25 million tonnes by 2017.

PRUDENTIAL SHAREHOLDERS EXPECT FIVE PERCENT RISE IN DIVIDEND

Prudential (PRU.L), the financial services company, is set to report its half-year results on Thursday. Analysts at JP Morgan have predicted the results will show strong growth in the enterprise value of 8 percent for the first six months. The insurer has already reported a 26 percent rise in first-quarter sales to 807 million pounds as well as new business profit up 27 percent to 427 million pounds. Other companies set to report interim results include insurer Standard Life (SL.L) and Intercontinental Hotels (IHG.L).

The Observer

MINERVA BACKER URGES FELLOW SHARHOLDERS TO OUST DEVELOPER'S BOSSES

Nathan Kirsch, the billionaire South African investor who holds a 29.5 percent stake in Minerva MNR.L, is urging fellow investors to back his attempts to oust the property developer's chairman and chief executive. Kirsch has concerns about the way the group's property assets are managed and its failure to answer questions about its financing and strategy. Both Kirsch and his London representative Philip Lewis are confident that the boardroom coup attempt will be successful. The institutional investors Kirsch and Lewis have consulted with include Morgan Stanley, UBS and Goldman Sachs.

Prepared for Reuters by Durrants