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Comment: Premier Oil should stop throwing mud and answer questions

2020-01-25 03:50:17 admin

The battle for Premier Oil has got 2020 off to a thrilling start for City watchers.

To recap, Premier specialises in squeezing the last drops of North Sea oil reserves once the BPs and Exxons have moved on. It can be lucrative work, but along the way, Premier has run up debts of $2.4 billion — double its equity value. 

Under a restructuring in 2017, repayment was extended to May 2021. Now, Premier wants to buy another slug of North Sea assets and has asked its lenders to allow it to delay repayment again.

The biggest lender is an energy fund called ARCM. It is deeply opposed to Premier’s plan; not only is this a hugely risky deal, it says, but we want our debt repaid, in full, when you promised.

ARCM is out on its own; 95% of the creditors agree with the plan.

They, and those close to Premier, say ARCM is only out to damage Premier’s share price. Why? Because as it bought the debt, it also took short positions betting against Premier’s shares. This was to hedge against possible losses on the debt if Premier got into strife. Stupidly, ARCM didn’t disclose the short to the market.

But while the short is huge from Premier’s perspective — 17% of the company — it’s small fry for ARCM, which has $4 billion under management. And its exposure to Premier’s debt — $455 million — outweighs the short fourfold. 

It doesn’t want Premier to fail. 

Today, it posed the first in a series of questions asking if Premier has overstated the worth  of the assets it wants to buy.  

Rather than just banging on about the short, Premier should answer them. Let’s see if its biggest lender has a point or not.

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Meet Sharan Pasricha: The CEO of Ennismore is making a mint from hotels

2020-01-25 03:50:11 admin

He can hand-sew Bavarian lederhosen, sign up thousands of students to bank accounts, and sell plush Scottish hotel rooms costing £3000 a night. Sharan Pasricha’s CV would be a diverse one. But given the success of the entrepreneur’s Ennismore hotels group, where boutique venues from Shoreditch to Chicago have helped his personal wealth tot up to £289 million, it doesn’t look like he’ll need to scrawl himself a puff piece for the jobs market anytime soon.

Pasricha’s empire spans 10 Hoxton Hotels, the £150 million luxury Gleneagles hotel, a new budget hotel brand and co-working offices. He started it in 2012, and he’s still only 39. Pushing Shoreditchy glasses up his nose, legs crossed on a capacious sofa in his enormous Clerkenwell office, Pasricha says his career took off fast because “I started hustling early”. 

Growing up in Mumbai, he sold his mum’s sandwiches to schoolmates from the age of five, earning hefty rupees until someone moaned about the prices to his unaware parents. His start-up was swiftly shut down. 

More entrepreneurial success followed. In an American-Indian-British accent, with a sprinkling of business-school catchphrases and speaking faster than the “terms and conditions” guy, Pasricha describes spending three years building a media marketing firm targetting students in London before selling it off in parts.

Next came his success at turning a sleepy Indian lederhosen factory into a sleek international leather clothing firm. 

He doesn’t, though, emphasise the fact that the rocket-fast success of Ennismore was ignited by family cash. Pasricha asked his father-in-law, Indian telecoms billionaire Sunil Mittal, to spend £60 million buying the first Hoxton Hotel, in Shoreditch; Pasricha ran it via a “prop co and op co” arrangement. Now he’s made it his own success, though, he pooh-poohs living off daddy (in-law’s) cash, paling in front of my eyes when I ponder if he’ll ever sell his business, or shift to a chair role: “what would I do with myself? Work is what I do.” 

He had to learn independence early: “When I was 10, my sister, who was a year older than me, passed away from cancer. My parents took her around the world [for treatment] for three years before. I was staying at grandparents, at friends’ houses, I had to grow up fast.” 

That continued a decade on, when an uncle in Delhi asked Pasricha to return to India after selling his marketing business, to help with his leather factory. “It had one product, lederhosen, and two customers. It was losing a lot of money. 

“I’d never been inside a factory, but I walked into this place, and 300 staff looked at me and thought, ‘who the hell is this 22-year-old kid…’ It was a dark hole, loss-making business. The staff were asleep at the wheel. I had to make tough decisions.” Sackings, mainly, which led to Pasricha’s car being smashed up, while effigies of him burnt outside the factory walls.

He had to have police protection. “But I stuck at it. We diversified products and secured new, international clients [including Zara and Topshop]. I turned it around.” 

By then he was 26 “and at a fork in the road: do I want to be leather king of India, or try something else?” With a souvenir brown biker jacket he moved to London, with Eiesha Mittal, who he’d met in Goa one New Year’s Eve and went on to marry in a three-day do dubbed the biggest Indian wedding of the decade. 

He embarked on an MBA at the London Business School, and got a job at Jon Moulton’s Better Capital. “I’m an eternal optimist, and didn’t like the obsessive cost cutting” but projects included hotels chain Jurys Inn “and a lightbulb went on: “I’ve always loved real estate, and how neighbourhoods change. What about hotels?”

At the time, the Hoxton Shoreditch “was a budget hotel which had done incredibly well as the only gig in town, but by 2011, it was lagging behind”. Pasricha (and Mittal’s Bharti Global fund) swooped. He moved in for a year and turned it into the boutique hotel brand Hoxton is now — bare brick walls, natty slogans and why-doesn’t-anyone-else-do-that ideas like “flexy time”: guests have 24 hours in the hotel, starting at whatever time they want. 

“Hotels,” Pasricha reckons, “aren’t a complicated business. You can get jarred with the acronyms, but it’s just about making people happy.”

London now has three Hoxton hotels, the US has four, Rome opens soon, joining Paris and Amsterdam (where Pasricha’s try-before-you-buy stay involved “a horrible, two-star stay with bedbugs… we’ve totally transformed it now”). 

No such hardship when he bought Gleneagles from Diageo for £150 million in 2015. One of Britain’s most famous hotels, a Ryder Cup venue and favourite of the pearl-and-twinset set, it was a far cry from Hoxton. “There were… doubts. Gleneagles is an institution. I had to very quickly wrap my arms around 800 staff, who wanted to know who the hell is Ennismore? It was like when I first walked into that leather factory.”

Pasricha’s invested £30 million “and I still get a letter a week saying ‘why did you move the red carpet from the bar?’, ‘why did you take that painting of my great-grandfather off the wall?’ But Gleneagles has just come off a year of record revenue and occupancy. The numbers tell the story.” A spin-off, Gleneagles Townhouse, a 33-bedroom hotel in Edinburgh, opens next year. “If that works well, we’ll do something more with the Gleneagles brand.” 

He wants another 50 Hoxton hotels in the next five years, and reckons his 300-bedroom budget hotels brand, opening in Canary Wharf next year, “could easily be scaled to 300”.

Pasricha employs 2750 staff; assets under management tot up to $1.5 billion, after deals with investors Cedar Capital and York Capital. “We get a couple of calls a month from big hotel groups, from institutional investors, family office investors about a sale. 

“I’ve started taking the meetings, not because I’m ready to throw in the towel, but we need institutional partners to help us scale.” 

Will he still be at the helm in 10 years? “Yes. This doesn’t feel like work.” Despite home being an almost-10,000-square-feet Notting Hill  pound mansion, Pasricha’s not there much: 12-hour days at the office are bookended by 7am gym trips “and I’m often on the phone to the US until midnight”. 

Not everyone approves: the dad of two likes to know every detail across his hotels. “I’ve seen everything, trashed rooms, poo on the floor, I don’t want to get morbid but we’ve had calamities… at Gleneagles a mobster’s car was just set on fire…” So calls come at any time. 

“My two kids regularly take my phone off me and put it in the safe. There’s nothing more humbling that having a seven-year-old telling you to stop working. But I do love it.” 


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Marston's expects new wage rises to push up costs further

2020-01-25 03:50:03 admin

Marston’s on Friday warned the incoming national minimum wage rise will increase its second-half costs by up to £3 million. 

Shares fell more than 6%, to 109.5p, on the update which also pointed to “subdued trading” for part of December.

The recently announced 6.2% wage rise to £8.72 an hour from April is higher than anticipated, the brewer and pubs operator said. 

It is also grappling with high business rates and increased competition from casual dining chains that are offering discounts.

Comparable sales for the 16 weeks to January 18 rose 1%. Flooding and political uncertainty kept some customers away for part of the period , but boss Ralph Findlay cheered a “strong” Christmas fortnight, up 4.5%.

Findlay said: “Looking forward, greater clarity on the political agenda should positively impact consumer confidence.  Overall the economic environment for the consumer looks encouraging with low unemployment and healthy wage growth providing us with increasing confidence that the market will grow in 2020.”

Marston’s, which has around 1400 pubs and wants to reduce its debt pile, now plans to sell £90 million-worth of pubs this financial year.


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Coronavirus 'snake flu' panic spreads to the City and threatens economy

2020-01-24 03:46:08 admin

City fears that the China flu crisis could spread to the UK, hitting the stock market and the nascent economic recovery were rising on Thursday.

Asian shares tumbled after it was confirmed that the coronavirus “snake flu” has taken 17 lives. The Shanghai Composite suffered its worst day for eight months, falling 3% as the city of Wuhan was put in lockdown.

In London, the FTSE 100 fell below 7550 for the first time in two weeks, before rallying slightly to be off 18.84 points to 7553.08.

The panic, coming just days after China reported its slowest GDP growth for 30 years, increases concern that UK businesses could be hit.

The Sars crisis of 2003 took 1% off China’s GDP and cost the global travel industry around £40 billion. UK analysts say the cruise ships sector, luxury goods companies such as Burberry and Aston Martin and the hotels sector would all be biffed if this virus is as bad as Sars. The outbreak could dent international travel, said Morgan Stanley.

Shares in hotels giant InterContinental Hotels Group fell 3% to 4857p. Mining shares, particularly exposed to China, were also weak.

UK banks with a big Asian presence — HSBC and Standard Chartered — are clearly in the line of fire. Goldman Sachs says that if coronavirus is a Sars-level event it would scrub $3 a barrel from oil, hurting BP and Shell.

Neil Wilson at, describing City sentiment, said: “Don’t believe what the authorities tell you and never believe what the Chinese authorities tell you. This will get worse before it gets better. It could not be worse timing and I don’t see how they can stop the spread.”

Stephen Innes, chief Asian strategist for AxiCorp, said: “The cost to the global economy can be quite staggering in negative GDP terms if this outbreak reaches epidemic proportions.”

Capital Economics senior economist Gareth Leather was more sanguine. He said: “If the virus does spread, the worst-affected countries are likely to be those most dependent on Chinese tourist spending. Hong Kong stands as the most exposed. Thailand and Vietnam are also vulnerable.”

While recent UK economic data has been good, analysts note that other clouds are forming.

AJ Bell’s Russ Mould said: “The market’s mood isn’t helped by the Trump administration’s apparent threat of a trade war with the UK over its plans for a digital tax on US online giants.”


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Secret Cinema backer Active Partners raises £100m for more trend-setters

2020-01-24 03:46:02 admin

A venture capital firm behind a string of hip brands like Secret Cinema, Chick ‘n’ Sours, Honest Burger and Soho House has raised £100 million to back the next wave of start-ups.

Active Partners, co-founded by former BBC chairman Gavyn Davies and investor Spencer Skinner, has raised its third fund from a string of entrepreneurs, family offices and large institutions.

The company, founded in 2004, ploughs money into entrepreneur-led companies popular with people aged between 16 to 40, known as Millennials and Generation Z.

Managing partner Skinner said the company was looking to invest in companies with “an extraordinary level of consumer excitement”. London is central to its plans.

“If you are delighting customers in London it’s a sign you can attract customers in LA and Shanghai,” he said. Active raised two previous funds bagging £30 million in 2015 and £40 million in 2016. It has previously backed cycling brand Rapha, Leon and restaurant Caravan. 

Skinner, who is also chairman of Secret Cinema and Honest Burgers, said: “Consumers are favouring smaller brands. We are always looking for challenger brands.”

Active has three partners and 10 investment professionals and is based in Chelsea.

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