Virgin Atlantic creditors vote on £1.2bn rescue deal
Tuesday will see Virgin Atlantic creditors vote on a £1.2bn rescue deal.
If the plan is not approved, the airline has warned that it is likely to run out of money by September.
After Virgin Atlantic applied and was rejected for state support, the group planned a privately-funded recapitalisation plan, which will fund the airline for the next 18 months.
Virgin Atlantic requires 75% support from creditors – who are voting today at a High Court hearing.
The group announced plans to axe over 3,500 jobs earlier this year in response to the pandemic.
Shai Weiss, Virgin Atlantic’s chief executive, said last month when the group proposed the deal: “Few could have predicted the scale of the Covid-19 crisis we have witnessed and undoubtedly, the last six months have been the toughest we have faced in our 36-year history. We have taken painful measures, but we have accomplished what many thought impossible.”
“The solvent recapitalisation of Virgin Atlantic will ensure that we can continue to provide vital connectivity and competition to consumers and businesses in Britain and beyond. We greatly appreciate the support of our shareholders, creditors and new private investors and together, we will ensure that Virgin Atlantic can emerge a sustainably profitable airline, with a healthy balance sheet,” he added.
The travel sector has been hit hard by the effects of the pandemic. The Association of British Travel Agents (Abta) has said that in total, 39,000 people in the sector have lost their jobs or been told their role was at risk since the pandemic.
The trade body has written to Rishi Sunak asking for support for jobs in the sector.
The latest firm to fall victim is to the pandemic is STA Travel, which last week ceased trading after the business was brought to a “standstill”.
Melody VR buys Napster for $70m
Melody VR (LON: MVR) has announced plans to buy Napster in a $70m (£53.8m) deal.
Melody VR is a tech startup, which uses virtual reality as a way to allow fans to experience music gigs from a range of artists.
The two businesses will initially continue as two separate platforms, however, Melody VR plans to use Napster’s 90mn songs as a shop for users who are streaming gigs.
Shares in Melody VR soared over lockdown, as the group benefitted from the demand in at-home entertainment. Users were able to stream concerts from artists ranging from Lewis Capaldi to Wiz Khalifa.
Shares are currently suspended but are sat at 4.4 pence.
“MelodyVR’s acquisition of Napster will result in the development of the first ever music entertainment platform which combines immersive visual content and music streaming,” said Melody VR’s chief executive, Anthony Matchett.
“For music fans today, live and recorded music are intrinsically linked. We are as keen to see our favourite artists perform live as we are to listen to their albums. Our purchase of Napster, one of the music industry’s original disruptors, is born out of our wish to deliver the world’s foremost music experience, available seamlessly across audio and visual media and in turn presenting a truly next generation music service.”
Bill Patrizio, Napster chief executive, said: “This is a tremendous outcome for two organisations with complementary platforms and loyal audiences, and we could not be more excited to be moving forward as one company.”
“The product, technology and cultural synergies of Napster and Melody VR will bring tremendous innovation for music lovers, artists and the entire music industry,” he added.
DFS shares up on strong demand
DFS (LON: DFS) posted strong results on Tuesday morning after the retailer saw a growth in revenue and demand following the lockdown.
Demand over the past six weeks has surged and totals revenues of around £70mn – higher than the group’s initial expectations.
Despite the growth in revenues, the retailer remains cautious around Brexit and the pandemic.
“The financial year has started strongly, however, we do note that significant uncertainty related to Covid-19 on UK consumer confidence and the potential impact of Brexit exists and it is exceptionally difficult to assess the outlook beyond the short term,” said the group.
“While positive trading momentum currently remains we do note that some consumers may be bringing forward spending decisions and this may impact trading later in the financial year.”
Shares in the group (LON: DFS) rose over 13% this morning. Shares in the group are currently trading +13.60% at 170.40 (1034GMT).
Arrow Global shares surge on HY results
Arrow Global (LON: ARW) shares soared on Tuesday morning after the group posted “resilient” results for the six months ending June 30.
The asset manager revealed a fall in cash collections from £202.1mn last year to £175.8mn. The group also posted a pre-tax loss of £108.9mn amid the “significant economic uncertainty”.
As Arrow Global Group swings into a loss, the group remains positive and has seen “improving trend in collections performance following the impact of COVID-19 lockdowns.”
Lee Rochford, the chief executive, said: “I am proud of Arrow’s response to the challenges posed by the pandemic. We have protected our people, strengthened our funding and balance sheet, maintained robust operational performance and supported our customers.”
“As we exit the crisis, European banks will be under significant pressure to provision for non-performing loans. With €1.1 billion of discretionary undeployed fund management capital, we are extremely well placed to be a leading investor in this huge market with increasingly attractive returns. We remain resolutely focused on executing our strategy to build a compelling integrated asset manager, offering differentiated access to high yielding assets whilst continuing to treat customers fairly,” he added.
Arrow Group shares (LON: ARW) are trading +13.27% at 90.50 (1008GMT).
FTSE 100 rallies on hopes of Oxford-led vaccine
The FTSE 100 rose on Monday as investors found confidence in reports a vaccine could be fast tracked in the United States where there was also optimism around a possible treatment using plasma.
“European markets have kicked off the week in style, with the FDA’s decision to approve the convalescent plasma coronavirus treatment raising hopes that we could see a vaccine fast-tracked before long,” said Joshua Mahony, Senior Market Analyst at IG.
“Rumours of a move to fast-track the Oxford-led vaccine may have provided a boost for global market sentiment, yet significant question remain over whether we would see significant participation without the full development process having been undertaken.”
“This move to push through a treatment could play a crucial role in helping to bring down the casualty rate in the US, with that coronavirus response intrinsically linked to the upcoming election,” Mahony said.
With elections in November, the roll out of a vaccine in October would be seen as a boost to Trump’s chances of another term in the White House.
However, a UK Government spokesman said the Oxford vaccine would first be distributed in the UK as the UK already has a 100 million order in place. This raises questions over a fast tracked distribution in the United States, given October is now juts 6-weeks away.
AstraZeneca, the pharmaceutical company driving the trials for the vaccine, rallied 4% on the news.
The FTSE 100 was followed higher by European indices as travels shares rose on hopes of a return to normalised travel.
“Jumping – literally – at the chance to turn their attentions to something positive, the European markets came out of the gate hot. The FTSE just about returned to 6100 following a 100 point surge, with the DAX crossing 12950 thanks to a 1.7% increase. Better than both of its more popular peers, the CAC added 2%, leaving it at 4980,” said Connor Campbell, analyst at Spreadex.
Travel sector jobs hit as STA Travel ceases to trade
The travel sector is calling on the government for support as it continues to be hit hard amid the pandemic.
The latest firm to fall victim is STA Travel, which over the weekend ceased trading after the business was brought to a “standstill”.
As the UK falls into the deepest recession on record and the travel sector is particularly hit, STA Travel wrote in a statement on its website:
“Over recent months, we have taken decisive measures to secure the business beyond COVID-19.”
“However, sales have not picked up as anticipated due to consumer uncertainties, further restrictions and renewed lockdown measures, which are expected to largely continue into 2021.”
Up to 500 jobs are estimated to be at risk on STA Travel’s closure.
The Association of British Travel Agents (Abta) has said that in total, 39,000 people in the sector have lost their jobs or been told their role was at risk since the pandemic.
The trade body has written to Rishi Sunak asking for support for jobs in the sector.
A spokesperson for Abta said the closure of STA Travel would: “send a shockwave through the industry, bringing to life the very real pressures that travel is under at the moment.”
“STA Travel will be a name that is familiar to most people who will have used them to travel or been aware of their name on the High Street, and this distressing news will sadly affect the livelihoods of hundreds of employees.”
Abta is calling for a wider coronavirus testing regime and regionalised quarantine and travel advice.
FTSE 100 falls as the pound weakens on mixed economic data and Brexit concerns
The FTSE 100 fell on Friday as news of a potential vaccine helped the sentiment but mixed economic data in the form of European PMIs curbed the enthusiasm.
London’s leading index touched lows of 5,947 in mid afternoon trading on Friday.
“News of a potential Q4 vaccine release from Pfizer is helping to boost stocks, although the strong GBP that comes with today’s impressive UK retail sales and PMI numbers is holding back FTSE 100 sentiment,” said Joshua Mahony, Senior Market Analyst at IG.
“European markets are treading water despite a set of largely disappointing PMI surveys from the eurozone, with UK economic outperformance doing little to help the FTSE as it underperforms once again.
“Market sentiment has received a welcome boost from the announcement that Pfizer could receive regulatory approval for their vaccine in October or November, allaying fears that we could be waiting until 2021.”
Pfizer’s latest vaccine testing results revealed a lower rate of side effects than in previous studies.
Pound weakness
Having seen strength early on Friday, Sterling weakened against the Dollar and Euro after mixed economic data and warnings from the EU’s Chief Brexit negotiator that a trade deal ‘seems unlikely’ by the deadline at the end of 2020. “UK retail sales managed to surge back into pre-crisis levels last month, with the reintroduction of bricks-and-mortar business building on the online boom we have seen since the onset of this crisis. “While markets have been fixated on whether we are set for a V shaped economic recovery, it appears such a phenomenon has been restricted to subsections such as retail sales and US stock-markets. “With the UK currently in a technical recession, the surge in consumer spending does highlight the lack of spending elsewhere in the country, as travel and entertainment savings get redistributed. “A raft of European PMI surveys have dominated sentiment in early trade today, with the UK economy outperforming after a disappointing set of readings throughout the eurozone,” Mahoney concluded. The UK IHS Markit / CIPS Flash UK Composite PMI rose to the fastest rate since 2013 as the reading jumped to 60.3 from 57 in July but the report came with a warning on the UK jobs market. “Private sector firms reported another sharp fall in employment numbers as scarring from the pandemic and lingering doubts about the sustainability of recovery resulted in a need to cut overheads.” said Tim Moore, Economics Director at IHS Markit. “The rate of job shedding accelerated since July, with survey respondents frequently noting that redundancy programmes had been running in tandem with efforts to return some staff from furlough.”Cadence Minerals shares down as group raises £1.25m to pay down debt
Cadence Minerals (LON: KDNC) shares have fallen over 16% on Friday morning after the group raised capital via a placing.
The group announced that to pay off debt and bolster finances, it had placed shares at a discount and raised £1.25m.
Cadence Minerals has issued a price of 12 pence per share – roughly a 21.7% discount to the closing mid-price on 19 August 2020.
In mid morning trade on Friday shares were trading above the placing price at 13.65p.
The group said in a statement: “Cadence intends to use the net proceeds of the Placing for general working capital and to provide flexibility to the Company to repay loan notes from cash reserves rather than from its holdings in quoted investments. The outstanding balance on Cadence’s loan notes, which were announced on 15 June 2019 and 1 August 2019, is currently c. £1.7 million.”
Cadence Minerals (LON: KDNC) shares are trading -16.51% at 13,65 (0926GMT).Estée lauder shares down on plans to axe 2,000 jobs
Estée Lauder (NYSE: EL) shares have fallen after the group revealed plans to close stores and axe 2,000 jobs.
After a slump in profits and sales at the beauty company, Estée Lauder hopes to save $400m (£300m) a year.
Net profits fell by over 50% in the year to June, despite the group saving money on advertising and travel during the pandemic.
The jobs most likely to be affected by the cuts will be in store and support roles. In total, 3% of the global workforce will be affected. Of the group’s freestanding stalls, between 10 and 15% will be axed.
Sales of skincare have remained resilient during the pandemic, with sales up. However, makeup, haircare, and fragrance fell.
Since the lockdown, there has been a change to makeup sales. Emma Fishwick, Account Manager, NPD UK Beauty, explained: “The popularity of eye makeup can be attributed to increased experimentation at home and wearing make-up whilst socialising with family and friends virtually or during conference calls with colleagues.”
For Estée Lauder, record sales and earnings growth in the first half of the financial year, which were then hit by the pandemic.
Estée Lauder shares (NYSE: EL) are trading -6.83% at 198,27 (0824GMT).