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Tuesday newspaper round-up: Tesco, Eurotunnel, British Airways

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Date: Tuesday 29 Apr 2008

LONDON (ShareCast) - Northern Rock breached capital rules six months before its collapse, yet failed to tell shareholders and continued to be given favourable “light touch” treatment by financial regulators, it emerged yesterday.

Details of the breach and fresh information on the catalogue of mistakes made by the Financial Services Authority (FSA) were revealed as the regulator published an expurgated version of its review into its flawed supervision of the bank, reports the Times.

George Osborne provoked a confrontation with the unions last night by suggesting that a Tory administration could introduce new measures to curb their power. The Conservatives were considering reforms to employment legislation as a matter of “urgency” because of the threat of widespread unrest in the public sector over pay, the Shadow Chancellor said yesterday, reports the Times.

A group of Britain’s leading authors has accused Tesco of using “deeply chilling” tactics to silence its critics. Nick Hornby and Mark Haddon are among the writers who have signed a letter in The Times today condemning the supermarket for prosecuting a Thai business leader for making a speech that decried Tesco’s expansion. If the supermarket is successful Jit Siratranont could be jailed, reports the Times.

Alistair Darling was facing major embarrassment last night after the European Union downgraded its economic forecast for the UK and launched an inquiry into the state of public finances. The Commission announced a probe after it confirmed the UK's budget deficit will be bigger than the EU limit this year and next. The news will undermine the Chancellor's plans to spend extra cash on measures for families affected by the abolition of the 10p tax rate, reports the Telegraph.

Eurotunnel will announce a €900m (£700m) rights issue today that it hopes will be the last piece of the massive financial restructuring at the long-stricken Channel Tunnel operator. Shares in the company were frozen yesterday by the AMF, the French markets regulator, in anticipation of what the company said was an "important" announcement, writes the Independent.

British Airways will issue its second profit warning of the year next month due to the record oil price. Analysts said yesterday that since then the carrier has been "actively guiding" their expectations lower before its annual results on 16 May, writes the Independent.

The Office of Fair Trading is also looking into beverages as part of its latest probe into alleged price-fixing between supermarkets and their suppliers, with requests for information sent to Coca-Cola Enterprises and Britvic. Coca-Cola Enterprises, the world’s largest soft drink bottler, said that it had been asked to provide information to the OFT and that it may have to meet the regulators. Nestlé, the maker of Nescafé coffee, confirmed on Monday that it, too, had been contacted by the OFT, reports the FT.

Retail developments are being shelved across the country as the effects of a funding crisis for commercial property are exacerbated by fears of flagging consumer demand. The proportion of currently planned shopping centre space expected to be abandoned or delayed could be as high as 40 per cent over the next five years, according to Savills, the property consultancy, reports the FT.

Opec’s president on Monday warned oil prices could hit $200 a barrel and there would be little the cartel could do to help. The comments made by Chakib Khelil, Algeria’s energy minister, suggest Algeria wants Opec to continue to resist calls by US and European leaders for the cartel to pump more oil to help ease prices. But Mr Khelil blamed record oil prices on the weak dollar and global political insecurity, says the FT

Laura Ashley, the homewares and fashion retailer famed for its floral prints, has further increased its stake in Moss Bros, the menswear retailer, fuelling speculation that it could bid for the chain. Moss Bros has received an indicative takeover approach by Baugur, the Icelandic retailer which has a large stake in the chain and has been carrying out due diligence. Laura Ashley increased its holding in Moss Bros to 6.6% from 6.3%, writes the Telegraph.

Warren Buffett took advantage of the credit crunch yesterday as Mars announced an agreed $23bn (£11.5bn) takeover of Wrigley in a deal that the world’s richest man helped to finance in return for a cut-price stake in the chewing gum group. Buffett’s Berkshire Hathaway investment vehicle, which has $40bn of cash to spend at a time when deal financing has largely dried up, has contributed $4.4bn of the funds Mars needed to purchase the world’s biggest chewing gum company, reports the Times.