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Tuesday newspaper round-up: Bradford & Bingley, Debenhams, J Sainsbury

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Date: Tuesday 24 Jun 2008

LONDON (ShareCast) - Clive Cowdery, the insurance entrepreneur, yesterday muscled in on Bradford & Bingley's (B&B) rights issue, backed by the mortgage bank's four biggest investors.

The investors - Standard Life, Legal & General Investment Management, M&G and Insight - want B&B to drop plans to sell a 23% stake to TPG Capital as part of the bank's £400m capital raising. Instead, they offered to inject £400m themselves and put Resolution, Cowdery's vehicle, in charge of the bank. In a letter to B&B's board, the investors described their plan as “materially better” than selling a chunk of the bank cheaply to TPG, writes the Times.

Debenhams is to rush out a planned trading update as soon as Tuesday in an attempt to halt the dramatic slide in its share price and reassure investors that sales are sufficient to pay interest on its £1bn debt. Fears over the state of the department store chain’s balance sheet have been exacerbated in the last week by reports that it has tightened supplier terms in an effort to conserve cash, reports the FT.

Passengers face acute overcrowding on key railway routes because capacity will be exhausted many years before any new lines could be built, according to Network Rail. The infrastructure company is to commission a study into the costs and benefits of new lines on five inter-city routes. But it admitted that a high-speed network was unlikely to be built soon because of funding constraints and environmental concerns, reports the Times.

Justin King’s plan to accelerate the growth of J Sainsbury’s non-food business has been dealt a blow with the surprise defection of Richard Jones, its head of general merchandise, to arch-rival Tesco. Jones, who set up Sainsbury’s TU clothing business before being promoted to the post of director of the entire non-food operation, abruptly quit last week for a job in sourcing and range development at Tesco, reports the FT.

HBOS shares tumbled below the rights issue price yesterday as it emerged that a hedge fund run by one of the industry's best-paid managers had taken a gamble on their decline. Harbinger Capital, the fund run by former Barclays Capital head Philip Falcone, revealed it had built up a major short position of 3.29% in Britain's biggest mortgage lender, writes the Telegraph.

Halliburton locked horns with the Takeover Panel on Monday over its failed attempt to kick-start an auction for Expro International, as the High Court postponed its approval of the sale of the British oil services company to a rival bidder. During a dramatic hearing in London, Halliburton and Mason Capital, a US hedge fund that holds a 7.1% stake in Expro, won a two-day delay on efforts to gain a court sanction on the sale of the UK company to the Candover-led consortium Umbrellastream for £1.8bn, reports the FT.

The eurozone on Monday slid closer to stagflation – low growth combined with rising inflation – as private sector output contracted this month for the first time in five years. The eurozone purchasing managers’ index dropped from 51.1 in May to 49.5 in June, the first contraction in activity since July 2003, writes the FT.

Rio Tinto, the mining giant fighting off a hostile takeover from rival BHP Billiton, has secured a near-doubling in price of the iron ore it sells to Chinese steel maker Baosteel. The company agreed a settlement that will see it paid an average of $127 (£64.86) a tonne for lump iron ore - an increase of 97% - and $90 a tonne for iron ore fines - an increase of 80%, reports the Telegraph.

More than a third of a million jobs will be lost to the economy over the next 18 months, according to a survey of business leaders. Research from the consultants Hay Group and the Centre for Business and Economic Research suggests that the downturn will cause a fall in employment of 350,000, with £900m wiped off corporate profits, writes the Independent.

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