LONDON’S BUSINESS NEWSPAPER
TROUBLE AT THE NET WHY A DAVIS CUP DEAL HAS ROCKED INTERNATIONAL TENNIS P18 WEDNESDAY 25 JANUARY 2023
ISSUE 3,922
DANCE IN THE DESERT ON THE GROUND FOR THAT BEYONCE DUBAI CONCERT P17
CITYAM.COM
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STARS ALIGN FOR ACTIVISTS AT CAPRICORN
CEO AND HOST OF BOARD MEMBERS FORCED TO STEP DOWN AS MERGER WITH NEWMED NOW LOOKS UNLIKELY NICHOLAS EARL AND STAFF ACTIVIST pressure sensationally forced Capricorn Energy’s chief executive out of a job yesterday, leaving the firm’s plans for a merger with Israeli rival Newmed seemingly in tatters. London-listed Capricorn had been hoping to tie up a deal with Newmed that would have totalled near on £800m once a special dividend was included. But activists – most notably major shareholder Palliser – appear to have nixed the deal, with boss Simon Thomson and chair Nicoletta Giadrossi stepping down yesterday alongside three other non-exec members of the board. Capricorn had moved for Newmed after cooling on an initial merger plan
with Tullow Oil in the autumn of last year. Palliser issued a letter earlier this month calling for the deal to be reconsidered, saying the Capricorn board was showing “brazen disregard” and said the firm had lost the “trust and confidence” of some 40 per cent of shareholders. That itself came after LGIM, which owns four per cent of Capricorn’s shares compared to Palliser’s more than seven per cent, also said it wouldn’t back the merger and would vote to oust the management team. Shareholder advisory outfits ISS and Glass Lewis also threw their weight behind the hedge fund’s criticisms, and a late notice offer to Palliser to add representatives to the Capricorn board appeared only to pique the fund more. Capricorn for their part
said that Palliser’s complaints relied on “outdated and incorrect facts and assumptions” and that their alternate plan to grow the business “underestimates the value creation potential of the Newmed combination”. The deal priced Newmed at £277m and would have come alongside a more than £500m special dividend. The vote on the deal, which had been due alongside a vote on the board’s make-up on 1 February, has been pushed back until the end of next month. Palliser welcomed yesterday’s dramatic developments. A spokesperson said: “We are confident that today’s announcement marks the first step towards governance reform and a new leadership team focused on optimising value and delivering real growth in Egypt.” Newmed, with significant operations in the Eastern Med, acknowledged that the likelihood of a deal had “significantly decreased”.
NOW THAT’S A HAPPY BURNS Scotch whisky firm in good spirits JAMES SILVER THE COMPANY behind connoisseurs’ favourite The Scotch Malt Whisky Society hailed “demonstrable momentum” yesterday as it reported a year of strong growth. The Artisanal Spirits Company reported revenues up some 20 per cent on the year before, with membership of its Scotch Malt Whisky Society – complete with access to
exclusive bars including one in Hatton Garden – up around 12 per cent. The firm also announced that David Ridley, the six-year boss, was stepping down with finance director Andrew Dane stepping in to lead the business. Shares popped just shy of nine per cent on the news – something sure to be toasted with a dram at the firm’s Edinburgh headquarters as attention north of the border turns to Burns Night.
Another headache for Home REIT as significant tenant stops paying rent EXCLUSIVE
CHARLIE CONCHIE ONE of the biggest tenants of troubled property investor Home REIT has stopped paying rent and is on the brink of going under as it struggles to secure sign off for government-backed housing
benefits, City A.M. has learned. Lotus Sanctuary, which provides supported housing and accounts for 12.2 per cent of former Home REIT’s rental income, warned staff yesterday it had built a “substantial debt” pile of £2.7m and is suffering from cash flow issues as it struggles to get approval for “exempt status”
from local authorities. The warnings further blow apart claims made by London-listed Home REIT that its rental income is ultimately backstopped by government-supported payouts. It also underscores the growing instability of its business model, after it admitted a “general
deterioration” in its rental income over the past two months. Some 35 per cent of Home REIT’s total rental income is now in jeopardy after City A.M. revealed a week ago that its biggest tenant Big Help was withholding rent. In an email to staff seen by City A.M., Lotus boss Gurpal Judge said
the organisation was finding it “increasingly difficult to get sign off on exempt status from local authorities and concurrently we are also seeing delays in the processing of housing benefit applications again from local authorities”. £ CONTINUED ON PAGE 3
INSIDE HIPGNOSIS BUYS JUSTIN BIEBER’S BACK CATALOGUE P3 AMAZON WORKERS WALK OUT P5 M&C SAATCHI HEAD TO STEP DOWN P6 THE NOTEBOOK P8 OPINION P14