Major International Business Headlines Brief::: 06 August 2020
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Major International Business Headlines Brief::: 06 August 2020
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ü Shoprite to close another store in Kenya, 115 jobs to go
ü Gold Fields sees 300% profit rise on gold rally
ü Somalia expects to announce winners of first petroleum auction early 2021
ü Telkom Kenya pulls the plug on merger with Bharti Airtel
ü Namibia competition watchdog blocks West China Cement's Schwenk deal
ü South Africa's diamond polishers look to lockdown lovers to add shine
ü Telkom Kenya pulls the plug on merger with Bharti Airtel
ü Kenya private sector expands at strongest level in a year - PMI
ü South Africa's sharp economic downturn extends into July - PMI
ü TikTok to open $500m data centre in Ireland
ü Gold price rises above $2,000 for first time
ü Sweden's economy hit less hard by pandemic
ü Shoprite: Africa's biggest supermarket considers pulling out of Nigeria
ü Disney focuses on streaming as it falls to a loss
ü Virgin Atlantic warns it is running out of money
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Shoprite to close another store in Kenya, 115 jobs to go
JOHANNESBURG (Reuters) - South Africa’s Shoprite Holdings will lay off 115
staff and close another Kenyan store, less than a year after its opening as
part of the supermarket’s expansion into the east African country, a letter
seen by Reuters shows and the company confirmed.
A man wearing a protective face mask walks outside a Shoprite store in
Abuja, Nigeria August 3, 2020. REUTERS/Afolabi Sotunde
In the letter, addressed to the Kenyan Union of Commercial Food and Allied
workers (KUCFAW), Shoprite said it will close its City Mall store in Nyali,
Mombasa.
“It is contemplated that the intended date of termination on account of
redundancy will be August 31, 2020,” Shoprite said in the letter dated July
30 and seen by Reuters on Wednesday. It added trading would cease before the
end of August.
In an emailed response, Shoprite confirmed the closure and said it was
evaluating all of its operations across Africa “based on current and future
performance”.
“It is unfortunate that we have no alternative but to terminate the
employment of the valued employees that have helped to establish this store.
The decision was not taken lightly,” it said.
In April, Shoprite closed one of its four stores in Kenya, citing a few
months of “trading in a difficult economic climate”, after the store was
opened last September.
The closure of the Nyali store, which opened on Aug. 29 last year, will
leave two in Kenya.
Shoprite, owner of supermarket chain Checkers, has been reviewing its
long-term options in Africa as currency devaluations, supply issues and low
consumer spending in Angola, Nigeria and Zambia have reduced earnings.
On Monday it said it was considering reducing or selling all of its stake in
its Nigerian subsidiary.
It opened its first supermarket in Kenya at Westgate Mall, Nairobi, in
December 2018.
The retailer, with stores in 14 African countries, had hoped to take
advantage of disarray in Kenya’s grocery sector after the collapse of Uchumi
Supermarkets and Nakumatt, two of Kenya’s top three retailers, potentially
made way for international chains such as Shoprite and Carrefour.
Gold Fields sees 300% profit rise on gold rally
JOHANNESBURG (Reuters) - South African miner Gold Fields said on Wednesday
booming gold prices could drive up half-year profits by more than 300%,
triggering a 10% rally in its shares.
Gold Fields has already said the COVID-19 pandemic would have a limited
negative impact on its performance, even though miners have had to shut
operations during lockdowns and infections among employees.
Now, it says it is set to reap hefty gains as an ultra-low interest rate
environment and expectations of more economic stimulus packages to offset
the economic impact of the pandemic have driven gold, its main product, to
record highs.
It said its headline earnings per share - the main profit measure in South
Africa - for the six months to June 30, were likely to be between 290% and
310% higher than the $0.05 per share reported last year.
“The increase in earnings for the period is driven largely by the increase
in the gold price received,” it said in a trading statement, adding that
attributable gold equivalent production rose only marginally.
Gold Fields kept its production guidance for the full-year at the same
level, but said its costs could be higher than previously flagged after
these rose during the first half.
Somalia expects to announce winners of first petroleum auction early 2021
CAPE TOWN (Reuters) - Somalia expects to announce the winners of its first
oil and gas licensing round early next year, as the country seeks petro
dollars to help rebuild its struggling economy, a senior government oil
official said on Wednesday.
Battered by violence and an Islamist insurgency since clan warlords
overthrew a dictator in 1991, Somalia is offering seven deep water offshore
blocks in its maiden licensing round in one of the world’s last frontier
markets.
The oil and gas auction officially opened on Tuesday.
“We are expecting that in the first quarter of next year to finalise and
award the block contracts,” Ibrahim Ali Hussein
told Reuters in his first interview with international media since his
appointment last week as the CEO of the Somali Petroleum Authority (SPA).
The government had previously mooted offering 15 blocks in this licensing
round but cut this down to seven due to capacity constraints, Hussein, a
former advisor to Somalia’s energy minister, said. Seismic data previously
indicated the 15 blocks could contain around 30 billion barrels of oil.
He said the coronavirus pandemic had delayed talks between the government
and a joint venture of legacy rights holders Shell and Exxon Mobil to
convert their existing concession into a production sharing agreement (PSA).
“If there was not coronavirus, the roadmap that we agreed ... was to get the
contract back before the end of this year, December,” he said.
Converting the concession into a PSA would also help end a force majeure by
the oil majors that has been in place since 1990, Hussein said. Shell and
Exxon hold exclusive petroleum exploration and production rights over five
shallow water offshore blocks.
“We have an ongoing and constructive dialogue with the Somali authorities
about a roadmap potentially to convert the existing concession to a
production sharing agreement,” a Shell spokesman said.
No-one at Exxon was immediately available to comment.
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Telkom Kenya pulls the plug on merger with Bharti Airtel
NAIROBI (Reuters) - Telkom Kenya said on Wednesday it was no longer looking
to merge its business with the Kenyan unit of India’s Bharti Airtel, citing
challenges of securing the required regulatory approvals for the deal.
Bharti Airtel had said in February 2019 its Airtel Networks Kenya unit had
agreed to buy Telkom Kenya, the East African nation’s smallest operator in
which the state still has a 40% shareholding, after a majority stake was
sold in 2007.
The deal, whose terms have never been disclosed, would have created a
stronger challenger for Safaricom, which controls more than 60% of Kenya’s
mobile subscriptions market.
“Telkom has opted to adopt an alternative strategic direction and will no
longer be pursuing the proposed joint venture transaction,” Telkom Kenya
said in a statement, adding that the decision had been agreed with Airtel
Kenya.
Besides the challenges of securing the required approvals for the deal which
it did not elaborate upon, it also cited opportunities presented by growing
demand for internet services on the back of the coronavirus crisis, which
has forced many to work and learn from home.
Among the hurdles the company faced in getting the deal approved include
fierce employee opposition to a move to lay off some workers in July last
year.
The intention to cut staff has now been taken off the table, Telkom said,
after the decision not to merge the two operators.
Telkom, which competes on lower prices for broadband, launched the world’s
first commercial internet to rural areas using balloons last month, in
partnership with Alphabet’s Loon.
Namibia competition watchdog blocks West China Cement's Schwenk deal
JOHANNESBURG (Reuters) - The Namibian Competition Commission has blocked the
sale of Schwenk Namibia’s stake in Ohorongo Cement to West China Cement over
fears the deal could lead to anti-competitive behaviour in the local market,
the regulator said Wednesday.
West China Cement Limited already owns a majority stake in another cement
maker in Namibia, Whale Rock Cement, which trades as Cheetah Cement.
Schwenk Namibia owns a 69.8% stake in Ohorongo Cement, the southern African
country’s biggest cement maker.
In the ruling, the competition watchdog said if the 1.5 billion Namibian
dollars ($870 million) deal was allowed to proceed it would stifle
competition and lead to possible collusion and price-fixing.
“The Namibian Competition Commission (has) made a decision to prohibit the
acquisition of Schwenk Namibia (Pty) Ltd by West China Limited due to the
fact that it would result in coordination between Ohorongo Cement (Pty) Ltd
and Whale Rock Cement,” the regulator said in its statement.
($1 = 17.2430 Namibian dollars)
South Africa's diamond polishers look to lockdown lovers to add shine
JOHANNESBURG (Reuters) - South Africa’s diamond industry, famed for sales
the world over and supplying gems for the British crown jewels, is looking
closer to home to revive its fortunes following the coronavirus slump.
Even before the new virus triggered the COVID-19 pandemic, diamond prices
and demand were weak. Global economic weakness has exaggerated that and
Anglo American’s De Beers unit last week reported a plunge in earnings.
[L5N2F16GD]
Some of the many small players who polish the rough diamonds that De Beers
and other miners unearth say they have been pleasantly surprised by the
extent of lockdown jewellery-buying as enforced proximity kindled romance
and feel-good spending.
South African cutting and polishing firm Nungu Diamonds said its custom-made
jewellery sales have grown 60% since South Africa imposed a strict lockdown
in March.
Customers used their weeks at home for online consulations and were lining
up for their purchases when stores reopened in June, the company’s founder
Kealeboga Pule said.
“We remain resilient. We fight on,” Pule said at his shop in a Johannesburg
suburb. June was the best month in a year, he said, with sales including
engagement and wedding rings.
Bucking the trend of rising unemployment, Nungu has hired an in-house
jewellery designer - joining a team of 5 polishers and 9 jewellers.
Nungu says jewellery prices have held steady. Profit margins, however, could
improve as lower global demand has depressed the prices of uncut, unpolished
rough stones bought from the mines.
Thoko’s Diamonds, another South African company whose business was based on
selling rough and polished stones, said it was turning to jewellery.
Zipho Dlamini, co-owner of Thoko’s Diamonds, said in a typical year the
family business would supply more than 500 carats.
So far this year, the company had sold less than 20 carats and profits have
fallen 65% as the exports that account for more than half of its business
dried up.
Thoko’s hopes its new line in earrings will appeal to the local market.
“Because of COVID-19 we have managed to move into the jewellery space,”
Dlamini said.
Telkom Kenya pulls the plug on merger with Bharti Airtel
NAIROBI (Reuters) - Telkom Kenya said on Wednesday it was no longer looking
to merge its business with the Kenyan unit of India’s Bharti Airtel, citing
challenges of securing the required regulatory approvals for the deal.
Bharti Airtel had said in February 2019 its Airtel Networks Kenya unit had
agreed to buy Telkom Kenya, the East African nation’s smallest operator in
which the state still has a 40% shareholding, after a majority stake was
sold in 2007.
The deal, whose terms have never been disclosed, would have created a
stronger challenger for Safaricom, which controls more than 60% of Kenya’s
mobile subscriptions market.
“Telkom has opted to adopt an alternative strategic direction and will no
longer be pursuing the proposed joint venture transaction,” Telkom Kenya
said in a statement, adding that the decision had been agreed with Airtel
Kenya.
Besides the challenges of securing the required approvals for the deal which
it did not elaborate upon, it also cited opportunities presented by growing
demand for internet services on the back of the coronavirus crisis, which
has forced many to work and learn from home.
Among the hurdles the company faced in getting the deal approved include
fierce employee opposition to a move to lay off some workers in July last
year.
The intention to cut staff has now been taken off the table, Telkom said,
after the decision not to merge the two operators.
Telkom, which competes on lower prices for broadband, launched the world’s
first commercial internet to rural areas using balloons last month, in
partnership with Alphabet’s Loon.
Kenya private sector expands at strongest level in a year - PMI
NAIROBI (Reuters) - Activity in Kenya’s private sector rose at its fastest
pace in a year last month on the back of a gradual easing of coronavirus
lockdown measures, a survey showed on Wednesday.
The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) jumped to
54.2 in July, from 46.6 in the previous month, well above the 50.0 mark that
separates growth from contraction. July’s level was the highest since June
last year.
“The removal of county travel restrictions supported output and business
sentiment in July,” said Jibran Qureishi, head of Africa Research at Stanbic
Bank, referring to the opening up of the capital Nairobi and the port city
of Mombasa.
He said the outlook was uncertain, however.
Firms continued to shed jobs in July, the survey found, but a slower pace
than in the previous months.
The government cut its GDP growth forecast for this year to about 2.5% due
to the pandemic, from an initial 6%.
South Africa's sharp economic downturn extends into July - PMI
JOHANNESBURG (Reuters) - South Africa’s economic downturn extended into last
month, though businesses still reeling from the impact of the COVID-19
pandemic reported slightly less steep in output and new orders, a survey
showed on Wednesday.
The pace of job losses also slowed, but July still saw the third-fastest
reduction in employment on record.
The IHS Markit Purchasing Managers’ Index (PMI) rose to 44.9 from 42.5 in
June, its second increase in a row but still far below the 50 mark that
separates expansion from contraction.
Africa’s most industrialised economy imposed a hard lockdown in late March
to contain the spread of the coronavirus. It has gradually eased curbs on
most economic activity since.
The July reading was the 15th in succession below 50, showing the downturn
began well before the pandemic.
David Owen, economist at IHS Markit, said: “Businesses that remained closed
or under working-from-home policies continued to report a weak level of
sales, with exports also falling steeply.”
This led to a further cut-back to output, and further job losses.
“However, some firms are beginning to operate closer to normal capacity and
are seeing an increase in demand. As lockdown restrictions are loosened, we
expect more firms to move towards a recovery,” he said.
South Africa has recorded more than a half a million cases of COVID-19, the
most in Africa, with the number of infections continuing to rise rapidly in
recent weeks.
Government forecasts are for gross domestic product to shrink by at least 7%
this year.
TikTok to open $500m data centre in Ireland
TikTok has said it plans to build a $500m (£375m) data centre in Ireland.
It will store videos, messages and other data generated by European users
from the short-form video-sharing app.
Until now all of its users' records were stored in the US, with a back-up
copy held in Singapore.
The announcement comes at a time when President Trump has threatened to ban
the app in the US on the grounds its Chinese ownership makes it a national
security risk.
TikTok's Beijing-based parent company Bytedance denies the charge. However,
it is in talks to sell its US, Canada, Australia and New Zealand operations
to Microsoft.
'Long-term commitment'
Like many social media apps, TikTok gathers a wide range of information
about its users. Its privacy statement says this covers:
· users' ages, passwords, email addresses and phone numbers
· phone numbers in their address books and social network contacts
· geo-location logs including GPS coordinates and internet protocol
(IP) addresses
· details about their devices including the operating system used,
handset model and other unique identifiers
· comments, photos and videos they have posted or at least
part-prepared
· browsing and search histories within the app
· web browsing data that takes place outside the app and is gathered
via cookies and other technologies
· payment information
· data obtained from third-party services and publicly available
sources
· keystroke patterns and screen tap rhythms exhibited while using a
computer and/or smartphone that are particular to each user
The data is collected to target advertisements, and help tailor its powerful
algorithm. But critics say that the Chinese Communist Party could demand
access under its National Intelligence Law.
While the Chinese version of the app, Douyin, holds its records within
mainland China, TikTok says it keeps all its user data separate and does not
give the Chinese government access.
Given the Trump administration's recent actions, the existing company is
unlikely to carry on storing the information within the US.
But the firm said that the decision to set up a European centre was
something it had been thinking about "for a long time".
"It's a significant investment," Theo Bertram, the app's director of public
policy for Europe, told the BBC.
"It's a symbol of our long-term commitment to Europe, and I think that's an
important message for our users and our creators at this time."
TikTok's chief data protection officer for Europe is already based in
Dublin, so Ireland's Data Protection Commission already deals with related
privacy issues on behalf of other EU nations.
As such, the centre's creation should not impact European users in any
meaningful way.
But the firm said it should create hundreds of new jobs when it goes into
operation at an undisclosed location in between 18 to 24 months time.
The decision to base it in Ireland does not, however, mean London is out of
the running to host the app's global HQ.
Security review
There has been speculation as to why TikTok is in talks to sell parts of its
business outside of the US.
On the one hand, it had seemed odd that the deal covered all members of the
Five Eyes security alliance except the UK.
On the other, Australia's Prime Minister has said a review by its security
agencies found that TikTok did not pose serious national security concerns,
and therefore no case for a local ban.
Mr Bertram explained that the reason the business was in talks to sell its
operations in Australia, Canada and New Zealand was because they were
currently managed along with the US as a single region under the same
executive.
Mr Bertram also acknowledged there had been calls for the UK's security
services to review the app, and said TikTok would be willing to let its
source code and algorithm be inspected if requested.
"We welcome scrutiny," he said.
"If the way that we're judged is for the security services to carry out a
factual review of what we are doing, we're happy with that. We don't have
anything to hide."--bbc
Gold price rises above $2,000 for first time
Gold has topped $2,000 (£1,527) an ounce for the first time as traders look
for havens amid the pandemic.
Investors have moved cash into the precious metal as Covid-19 cases rise in
the US and more money is pumped into the global economy.
The record high gold price has also been driven by concerns over tensions
between Washington and Beijing.
Prices of other precious metals, including silver, have also risen sharply
since the start of this year.
The price of gold has increased by more than 30% this year as coronavirus
cases continue to rise in America, causing dozens of states to halt or
reverse their plans to reopen.
The rapid rise in cases, which has dented hopes of a swift US economic
recovery, has also helped to drive up the price of silver by around a third
this year.
Among the reasons for those rises is investors preparing themselves for a
possible pick-up in inflation due to the impact of trillions of dollars of
stimulus from governments and central banks around the world.
In Washington, Trump administration negotiators have said that they will
work "around the clock" with Democrats as they attempt to strike a deal on
more economic relief measures by the end of the week.
According to Bank of America, governments around the world have already
announced approximately $20tn worth of stimulus to combat the economic
impact of the pandemic.
Media captionThe BBC’s Frank Gardner has been given access to the Bank of
England’s gold vaults
Some investors see the fallout from the Covid-19 crisis, along with ongoing
tensions between the US and China, continuing to push up the price of gold.
Market strategist Margaret Yang says she sees potential for bullion to
continue rising in the coming weeks and months: "The mid-to-long-term
prospect of gold and other precious metals remains bullish against the
backdrop of low interest rate environment and fiscal and monetary stimulus."
Peter McGuire from XM.com said he sees gold reaching "$2,200 by Christmas"
with silver, platinum and palladium also set to see strong gains.--BBC
Sweden's economy hit less hard by pandemic
Sweden, which avoided a lockdown during the height of the Covid-19 pandemic,
saw its economy shrink 8.6% in the April-to-June period from the previous
three months.
The flash estimate from the Swedish statistics office indicated that the
country had fared better than other EU nations which took stricter measures.
However, it was still the largest quarterly fall for at least 40 years.
The European Union saw a contraction of 11.9% for the same period.
Individual nations did even worse, with Spain seeing an 18.5% contraction,
while the French and Italian economies shrank by 13.8% and 12.4%
respectively.--BBC
Shoprite: Africa's biggest supermarket considers pulling out of Nigeria
Africa's biggest supermarket chain, South African-owned Shoprite, says it is
considering pulling out of Nigeria.
It said it was looking at selling all "or a majority stake" of its
operations in Africa's most-populous country.
Shoprite is the latest South African retailer to look at leaving Nigeria -
clothing firm Mr Price announced its exit in June, and Woolworths in 2014.
Shoprite's decision comes at a time when Nigeria's economy is struggling
amid the coronavirus pandemic.
Economists from the World Bank have warned that the oil-rich country could
be on the brink of its worst recession since the 1980s because of "the
collapse in oil prices coupled with the Covid-19 pandemic".
Shoprite said lockdown restrictions because of coronavirus had affected its
operations in 14 African countries, with sales declining by 1.4% in those
markets. Its South African operations on the other hand witnessed
"significant growth".
The retailer has also been battling currency-induced inflation surges -
especially in Nigeria, where it has been hit hardest.
Shoprite employs at least 2,000 people in Nigeria.
The retailer's stores in the capital, Abuja, and the commercial hub, Lagos,
became a flashpoint for outrage in 2019, following violent attacks in South
Africa on other migrants from elsewhere in the continent.
The National Association of Nigerian Students (Nans) - which represents
university students at campuses across the country - picketed branches of
Shoprite and South African telecoms giant MTN, turning away staff and
customers.
The student body demanded that all South African-owned businesses leave the
West African state.
Shoprite's failure in Nigeria is not surprising, the shiny shopping malls
with escalators where its outlets are located are more popular for taking
pictures than actual shopping.
Though it is regarded as a working-class supermarket in South Africa, most
here consider it as catering to the upper classes.
Tens of millions of Nigerians are poor or unemployed - and the minority who
have the spending power to shop at Shoprite have seen their finances take a
battering because of the coronavirus pandemic.
These are hard times for businesses, but the slow growth at Shoprite Nigeria
predates the pandemic.
Consumers here want quality services, but they want it on the cheap.--BBC
Disney focuses on streaming as it falls to a loss
Disney plans to release Mulan on its Disney+ streaming site this year and
launch a new streaming service outside the US next year as it tries to build
on its early streaming success.
The new service will operate under the Star brand and stream a wider variety
of content than Disney+.
The firm said Disney+ had already attracted 60.5 million subscribers.
But the media giant reported enormous losses due to the pandemic as its
theme parks closed.
Disney lost $4.7bn (£3.6bn) in the three months to 27 June, as the virus
forced it to close theme parks and delay film releases and production.
That was down from nearly $1.8bn profit in the same period last year.
It said the pandemic was responsible for a $3bn hit to its operating income
- mostly due to the disruption to its theme parks, where revenues plunged
85% compared to 2019, chief financial officer Christine McCarthy said.
Overall revenue fell 42% compared with last year to $11.8bn.
Disney+ streaming hopes
As it grapples with coronavirus disruption, the firm is forging ahead with
its streaming ambitions, as it tries to position itself as a rival to
Netflix, Amazon and other streaming sites.
Last November, it launched the Disney+ streaming service in the US, later
expanding into other markets, including the UK.
Disney said it now has more than 100 million subscribers across its
on-demand sites, which also include ESPN+, the general audience Hulu
television site in the US, and the Hotstar streaming service in India.
The new international service will be somewhat similar to Hulu, but build on
the name recognition of the Star name outside of the US, where Hulu is not
as well-known, executives said.
It will offer material from the wider Disney empire, which includes
broadcaster ABC, 20th Century Films and SearchLight Pictures.
Chief executive Bob Chapek said Disney now plans to release its new live
action remake of Mulan on Disney+ in a $30 "premier access" deal in
September.
The decision to skip most of the world's cinemas and go straight to
streaming follows uncertainty about when big film theatre chains in the US
will be able to reopen.
Where Disney+ is not available, the film will be released in cinemas.
Mulan had been scheduled for release in March, but that has been postponed
several times as cinemas remain closed.
Most recently, it was set to open on 21 August and cinema operators had
hoped it would help spark a late-summer rebound for film revenues.
Paolo Pescatore, an analyst at PP Foresight, said Disney's streaming gains
were impressive but it would need to continue to add new shows and content
if it hopes to compete.
"It must continue to aggressively promote its growing suite of video
streaming services given the competitive nature of this market. There are
too many services chasing too few dollars," he said.
Beauty or Beast?
And despite the subscriber gains, Disney's streaming business is not yet
profitable, said Nicholas Hyett, equity analyst at Hargreaves Lansdown. That
part of the business recorded a roughly $700m operating loss in the quarter.
"It's tempting to look to the new Disney+ business for good news, and there
has certainly been good growth across all three major platforms," he said.
"However, this is really meant to be the icing on the cake rather than the
main event - and launch costs mean losses in the division have mounted," he
said.
He praised Disney for keeping its overall costs in check but said the
numbers "are far more Beast than Beauty. The forced closure of the group's
theme parks and no theatrical releases during the period mean revenue is on
the floor."--BBC
Virgin Atlantic warns it is running out of money
Sir Richard Branson's Virgin Atlantic could run out of cash next month if
creditors do not approve a £1.2bn rescue deal, a UK court has heard.
The airline is "fundamentally sound" but a restructuring and fresh injection
of money is critical to securing its future, Virgin's lawyers said.
The plans need approval from creditors under a court-sanctioned process.
As part of that process Virgin Atlantic is also seeking protection under
chapter 15 of the US bankruptcy code.
That enables a foreign debtor to shield assets in the country.
'Critical levels'
Like other airlines, Virgin Atlantic's finances have been hit hard by the
collapse in air travel due to the pandemic.
Last month, the company agreed a rescue deal worth £1.2bn ($1.6bn) to secure
its future beyond the coronavirus crisis.
The court in London heard that the airline's cash flow would drop to
"critical levels" by the middle of next month and it would "run out of money
altogether" by the week beginning 28 September.
David Allison QC, for Virgin Atlantic, told Mr Justice Trower in written
submissions that the group had "a fundamentally sound business model which
was not in any problems at all before the Covid-19 pandemic".
"Passenger demand has plummeted to a level that would, until recently, have
been unthinkable," he said. "As a result of the Covid-19 pandemic, the group
is now undergoing a liquidity crisis."
Mr Allison said that without a "solvent recapitalisation", including an
injection of new money, Virgin Atlantic's directors would have "no choice"
but to place the company into administration in mid-September 2020 in order
to wind down the business and sell any assets, where possible.
He said the restructuring needed to be sanctioned by early September. Mr
Justice Trower gave the go-ahead for a meeting of creditors on 25 August.
In a related procedural move, Virgin Atlantic filed for US bankruptcy
protection, saying it had negotiated a deal with stakeholders "for a
consensual recapitalization" that will get debt off its balance sheet and
"immediately position it for sustainable long-term growth".
Virgin Atlantic said in a statement on Wednesday that it continues to
operate its limited flight schedule, adding: "With support already secured
from the majority of stakeholders, it's expected that the Restructuring Plan
and recapitalisation will come into effect in September. We remain confident
in the plan."
Under the airline's restructuring plan, Sir Richard's Virgin Group will
inject £200m, with additional funds provided by investors and creditors.
The billionaire Virgin boss had a request for UK government money rejected,
leaving the airline in a race against time to secure new investment.
In May, Virgin Atlantic, which is 51% owned by Virgin Group and 49% by US
airline Delta, announced that it would cut more than 3,000 jobs in the UK
and close its operation at Gatwick airport.
Virgin Australia cuts
Meanwhile, Virgin Australia's new owner, the US private equity group Bain
Capital, said it will cut 3,000 jobs, which is about a third of the
airline's employees.
The turnaround plan for Australia's second largest airline will also see it
retire the budget brand Tigerair.
"Working with Bain Capital, we will accelerate our plan to deliver a strong
future in a challenging domestic and global aviation market," Virgin
Australia's chief executive Paul Scurrah said.
In April, Virgin Australia went into voluntary administration, making it
Australia's first big corporate casualty of the coronavirus pandemic.
The following month it was bought by Bain Capital, which said it supported
the airline's current management team and its turnaround plan for the
business.
Bain also promised a "significant injection of capital" that would help
Virgin Australia recapitalise and retain thousands of jobs.
Carriers around the world are struggling as they deal with the severe plunge
in air travel caused by the coronavirus pandemic.
The International Air Transport Association warned in June that the slump
will drive airline losses of more than $84bn (£64bn) this year.--BBC
INVESTORS DIARY 2020
Company
Event
Venue
Date & Time
FCB
AGM
virtual
06 August 2020|3pm
Zimbabwe
National Heroes Day
Zimbabwe
10 August 2020
Zimbabwe
Defence Forces’ Day
Zimbabwe
11 August 2020
Old Mutual Zimbabwe
AGM
virtual
12 August 2020 | 3pm
CBZ
AGM
Virtual
14 August 2020 | 6pm
Lafarge
AGM
Virtual
18 August 2020 | 12pm
Companies under Cautionary
Bindura Nickel Corporation
Padenga Holdings
Delta Corporation
Meikles Limited
<mailto:info at bulls.co.zw>
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opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
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