Newspaper article The Evening Standard (London, England)

Debenhams at New Low on Talk of Bank Trouble

Newspaper article The Evening Standard (London, England)

Debenhams at New Low on Talk of Bank Trouble

Article excerpt

Byline: MICKEY CLARK

SHARES in Debenhams hit another new low today as whispers in the SquareMile claimed the troubled department stores group was on the verge of breakingits banking covenants.

They retreated 212p to 8712p in heavy turnover of more than 39 million shares.That compares with the 195p at which they were refloated in May last year.Credit Suisse, a big seller of Debenhams, today said its holding had droppedbelow the disclosable 3% level.

A clutch of large parcels of shares went through on the ticker, including 5.47million at 84.82p, four million at 84.83p and two million at 86.1p.

The group last week reported a slump in like-for-like sales of 5% in the yearto 1 September, and warned that trading conditions were likely to get worse.

It is expected to report pre-tax profits of about [pounds sterling]130 million next monthfollowing several profit warnings.

Credit Suisse has lowered its target on DSG International, down 6.9p at 128p,from 155p to 95p and on Kesa Electricals, 1234p cheaper at 26312p, from 320p to265p. The broker warns that profitability at both groups could be hit byregulatory attempts to restrict the extended-warranties market, coupled withgrowth in the lower-margin e-commerce business. On a worst-case scenario,Credit Suisse sees profits at DSG declining by between 65% and 75% and at Kesaby 30%.

Royal Bank of Scotland, with its partners Belgian-Dutch bank Fortis and BancoSantander of Spain, is stepping up the pressure to take over ABN Amro bydoubling its stake in its Dutch rival to more than 8%.

The move gives the consortium more leverage and reduces the cost of the bid, amixture of cash and shares, by at least a full percentage point, or betweene600 million ([pounds sterling]420 million) and e700 million. Word is the consortium has boughtthe extra 4% stake through a series of derivative trades. The RBS bid, worthabout e37.76 billion, faces opposition from Barclays, which has tabled an offerworth e31 billion.

Mortgage provider HBOS, up 32p at 86212p, is expected to benefit as GoldmanSachs adds its shares to its "conviction buy" list. …

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