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Monday newspaper round-up: HBOS, Persimmon, Gulfsands

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Date: Monday 21 Jul 2008

LONDON (ShareCast) - The largest rump of shares ever to be placed following a rights issue will fall on the market today as investment bankers try to offload £3.5bn worth of HBOS stock.

Morgan Stanley and Dresdner Kleinwort, underwriters to the rights issue, have two days to sell the shares at 275p or above, or will be left with the rest. The "stick", as the final overhang is called, is likely to be significant as the banks are not expected to find buyers for all the anticipated 1.35bn shares, reports the Telegraph.

Alistair Darling will this week bow to pressure from business by scrapping contentious reforms to the taxation of foreign profits that threatened to provoke an exodus of companies from the UK. The concessions mark the latest in a string of climbdowns by the chancellor, who has been forced to rewrite large sections of his Budget and pre-Budget report, including proposals on income tax, capital gains tax and fuel duty, reports the FT.

Struggling housebuilder Persimmon has put strain on already fraught relationships with its subcontractors by calling on them to accept a second cut in rates this year. In a letter seen by The Daily Telegraph, the housebuilder, which recently laid off 2,000 staff, asked its subcontractors to "review their contract rates and if possible suggest further savings".

Big companies are delaying payment to smaller suppliers by more than 100 days in the biggest squeeze on small firms' cashflows since the early 1990s. Over the past few months, business groups have reported that some of their members are having to wait longer for payment, but Britain's leading small business lobby group says that the practice has now reached “outrageous proportions,” reports the Times.

Homeowners are resorting to increasingly aggressive price cuts in an effort to sell their properties, with asking prices across England and Wales an average £4,000 less than they were a year ago as a new realism sets in across the housing market. The average price is now £235,219, 2% less than last July, according to the Rightmove website, writes the Times.

Demand for commercial property has fallen to its lowest level in more than a decade, intensifying pressure on landlords who are facing demands to rip up rental agreements in the tough economic climate. The Royal Institution of Chartered Surveyors says that the outlook for commercial property has not been worse since it started its survey a decade ago, with weaker retail sales, frozen expansion plans among the big banks and plentiful office space, reports the FT.

An oil minnow quoted on London's Alternative Investment Market will this week announce the beginning of the largest new production of oil in Syria for up to 20 years. Gulfsands Petroleum, which has a stock market capitalisation of just £240m, will begin extracting "first oil" at the initially modest rate of 10,000 barrels per day, reports the Telegraph.

The economic slowdown is deepening and a slew of indicators published today point to falling confidence, contracting markets and gloomy predictions for recovery. The UK economy will struggle to avoid recession in 2009 as inflation remains above target and unemployment rises, the Ernst & Young ITEM Club will predict today, says the Independent.

Mobile network operators have another few months' grace on the question of roaming data prices, before the decision about regulation is made, the European telecoms commissioner says. Viviane Reding, whose rulings on voice roaming cut the cost to consumers by up to 70%, said last week that proposals to regulate the pricing of pan-European text messages will be put before the European Parliament in the autumn, reports the Independent.

Network Rail's 101 members have forced the company to pay for a review of its corporate governance, arguing that it must improve its accountability. The members, who were supposed to act as a proxy for shareholders when Network Rail took over the UK's tracks and stations in October 2002, have grown increasingly frustrated over their limited powers to exert influence on the board, which is chaired by Sir Ian McAllister, reports the Telegraph.

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