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Wednesday newspaper round-up: Paragon, Vodafone, Severn Trent

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Date: Wednesday 23 Jul 2008

LONDON (ShareCast) - TPG Capital, the US private equity group, is considering a bid for Paragon, a specialist mortgage lender, less than three weeks after it infuriated the City by pulling out of a £179m capital injection for Bradford & Bingley.

Paragon’s shares rose 31% to 110p on Tuesday after the company said it had received a number of approaches and was exploring various options. Blackstone is one interested party, reports the FT.

Water companies are pressing the government to give them more powers to tackle unpaid water bills amid fears that bad debt will rise as the economic situation worsens. They want the government to use the forthcoming Floods and Water Bill to make it easier for companies to pursue customers who refuse to pay their bills. Some in the industry suspect that customers deliberately avoid payment as they know that they cannot be disconnected, reports the Times.

The Independent adds that Severn Trent warned yesterday that Britons would find it increasingly hard to pay their water bills as the credit crunch heaps pressure on consumers. The Midlands-based water company said that the state of the economy had driven it to monitor "our customer debt and cash collection performance".

Vodafone's shares fell almost 14% yesterday, the biggest one-day fall in the company's history, after the UK mobile phone operator shocked investors by issuing a sales warning. Vodafone has scaled back its revenue forecast for 2008-09 to £39.8bn after admitting the economic downturn was hurting its mobile businesses in Spain and the UK, reports the FT.

A surge in tax avoidance by multinationals could drain the exchequer of up to £1.1bn a year if the Treasury bows to their request for a “no strings” tax break on foreign profits. The Treasury has laid bare its fears in a technical note that exposes the disagreements with business that have dogged attempts to forge a new foreign profits regime, reports the FT.

Jon Moulton, one of the best-known figures in private equity, suffered a setback yesterday when a company he invested in just 18 months ago called in the administrators after sales collapsed. Alchemy Partners, a private equity vehicle founded by Mr Moulton, backed the £52m management buyout of Floors-2-Go, Britain's biggest wood and laminates flooring retailer, in December 2006, reports the Times.

The taxman believes up to 60,000 Britons could be caught by its ongoing offshore bank account probe. HM Revenue & Customs (HMRC) said yesterday that around 300 wealthy Britons who have hidden money in the tiny European tax haven of Liechtenstein are facing investigation and criminal prosecution, but that those individuals represent only a tiny proportion of those who could be charged, writes the Telegraph.

Aldi and Lidl, the German discount supermarkets, increased their market shares to record levels in the three months to July 13, as customers "traded down" in order to preserve their hard-pressed household budgets. According to TNS Worldpanel, discount retailers now account for 5.9% of all grocery spending. Aldi grew its market share by 19.5% to 2.9% over the period, while Lidl's share rose by 14.3% to 2.4%, writes the Telegraph.

A mortgage lender is offering a discount of 8% to homeowners who repay their mortgage early in a new sign of the turmoil gripping the mortgage market. Edeus, a sub-prime lender, is waiving all exit fees and early redemption penalties for some borrowers who pay off their mortgage, as well as accepting between 92 and 99% of the original loan as full payment, reprots the Times.

Embattled internet group Yahoo! admitted that net profits during the second quarter of the year had fallen by almost 19% to $131m, while total revenue increased 6% to $1.79bn. Net revenue increased 8% to $1.35bn, just shy of Wall Street expectations of $1.37bn, reports the Times.

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