Connect with us

Published

on

The prospects of a rescue deal being struck for a British hypersonic aviation pioneer appeared to recede this weekend when it emerged that talks with a Gulf-based state fund had stalled.

Sky News has learnt that negotiations between Reaction Engines and the UAE’s Strategic Development Fund, the investment arm of the UAE’s Tawazun Council, about it anchoring a recapitalisation of the company have begun to falter.

The reasons for the apparent breakdown in discussions with SDF were unclear on Sunday, although several people close to the situation said the situation was fluid and could be resolved.

They added that Reaction Engines was engaged in active pursuit of several other investment options.

Time is running out to secure a financial package that would prevent the company falling into administration, however.

Reaction Engines is said to require millions of pounds of funding support within days, with strategic shareholders BAE Systems and Rolls-Royce Holdings also said to have been asked to agree more flexible terms with the company.

Under the earlier discussions, SDF would have emerged as the single-biggest investor in Reaction Engines, which has developed cooling technology which is aimed at powering aircraft to Mach 25 – or 19,000 miles per hour – outside the Earth’s atmosphere.

More from Business

Sky News revealed earlier this month that the company had opened talks with the government about the deal, because of the sensitive defence and security implications in the context of the National Security and Investment Act.

A two-part financing that would include leading shareholders extending loans to the company before providing a further equity injection was the focus of the discussions in recent weeks.

The nature of the alternative rescue options being pursued was unclear on Sunday.

PricewaterhouseCoopers (PwC), the accountancy firm, has been put on standby to act as administrator if the quest for new funding fails.

A number of City investors have in the last two months slashed the value of their stakes in the business amid doubts about its survival.

According to Reaction Engines’ most recent update to shareholders, it grew its commercial revenues by more than 400% last year and is understood to have a strong pipeline of contract and R&D opportunities.

In January last year, Reaction Engines announced that it had raised £40m of additional equity, taking the total sum it had banked from investors to roughly £150m.

Founded in 1989, the company is chaired by Philip Dunne, a former defence minister.

Reaction Engines and Rolls-Royce both declined to comment.

Continue Reading

Business

Apollo in talks to finance New York Sun-owner’s £550m Telegraph bid

Published

on

By

Apollo in talks to finance New York Sun-owner's £550m Telegraph bid

One of the world’s largest investment groups is in talks to help finance a £550m takeover of The Daily Telegraph by the owner of The New York Sun.

Sky News has learnt that Apollo Global Management, which oversees assets worth $733bn, has been holding initial talks with Dovid Efune and his advisers in recent days about lending part of the money required for the deal.

Banking sources said on Tuesday that the discussions were preliminary in nature and might not lead to an agreement.

Other debt providers are also in talks with Mr Efune, the sources added.

The development has emerged just three days before an exclusivity period for the US-based businessman expires, although insiders say it is almost certain to be extended.

Apollo ranks among the world’s biggest financial institutions and is a major player in both private equity and private credit around the globe.

In the last fortnight, a string of media reports have cast doubt on Mr Efune’s ability to complete the deal, with potential lenders including Oaktree Capital Management and Hudson Bay Capital said to have withdrawn from the process.

More on Daily Telegraph

Sky News revealed at the start of November that the former Conservative chancellor Nadhim Zahawi and the party’s former treasurer, Sir Mohamed Mansour, had been enlisted by Mr Efune to aid his bid for the right-leaning newspapers.

Mr Zahawi, who has been tipped for a peerage in Rishi Sunak’s resignation honours list, and Sir Mohamed are expected to invest tens of millions of pounds in the deal if it goes ahead.

In September, Sky News revealed that Sir Mohamed had been approached to provide as much as £150m to a standalone bid for the Telegraph titles that were being spearheaded at the time by Mr Zahawi.

If completed, the transaction will crystallise an unlikely profit for RedBird IMI, the Abu Dhabi-backed vehicle which paid £600m to acquire a call option that was intended to convert into ownership of the Telegraph newspapers and The Spectator magazine.

Depending on the final structuring of the deal, it could be worth as much as £575m, with less than a third of that expected to be in the form of debt.

The Spectator was recently sold for £100m to Sir Paul Marshall, the hedge fund billionaire, who has installed Michael Gove, the former cabinet minister, as its editor.

Insiders said that Mr Zahawi was likely to be handed an ongoing role at the Telegraph if the bid from Mr Efune was successful.

The former chancellor, education secretary and vaccines minister has been involved in the Telegraph process in various guises, initially helping broker a deal with RedBird IMI before assembling his own offer.

He has close connections to many of the Gulf-based figures involved in the process, including Sultan Ahmed al-Jaber, chairman of the bidding vehicle.

Mr Zahawi has also since been named chairman of Very Group, the online retailer owned by the Barclay family which controlled the Telegraph for two decades, and which is now part-funded by IMI.

The UAE-based IMI, which is controlled by the UAE’s deputy prime minister and ultimate owner of Manchester City Football Club, Sheikh Mansour bin Zayed Al Nahyan, extended a further £600m to the Barclays to pay off a loan owed to Lloyds Banking Group, with the balance secured against other family assets.

Mr Efune’s bid has raised the extraordinary possibility of a return to the British newspaper group for Conrad Black, its former proprietor, Sky News reported earlier in the autumn.

Other bidders for the Telegraph included National World, the London-listed vehicle headed by former Mirror newspapers chief David Montgomery, and Lord Saatchi, the former advertising mogul, who offered £350m.

Lord Rothermere, the Daily Mail proprietor, pulled out of the bidding earlier in the summer amid concerns that he would be blocked on competition grounds.

The Telegraph auction is being run by Raine Group and Robey Warshaw, the advisers to the Abu Dhabi-backed entity which was thwarted in its efforts to buy the media titles by a change in ownership law.

Apollo declined to comment.

Continue Reading

Business

Vauxhall Luton factory to close, parent firm Stellantis announces – putting more than 1,100 jobs at risk

Published

on

By

Vauxhall Luton factory to close, parent firm Stellantis announces - putting more than 1,100 jobs at risk

Vauxhall will close its Luton plant in April, the parent company Stellantis announced.

More than 1,100 jobs at the van-making factory are at risk, but Stellantis said it is hoping to transfer “hundreds” of Luton jobs to the group’s Vauxhall site in Ellesmere Port.

It is now in consultation with unions and employees over the proposals, which will also see it invest £50m into the Ellesmere Port factory.

Money blog: Billions wiped off value of top European carmakers over Trump tariffs

The company said it would offer “relocation support” and “an attractive package” to sacked employees who want to transfer to Ellesmere Port in the North West of England from Luton, north of London.

The closure had been warned of by the company’s managing director Maria Grazia Davino. In June she told an industry event, “Stellantis production in the UK could stop”, as more needs to be done to spur consumer demand for electric vehicles.

An industry-wide phenomenon

It is the second British car producer to announce job losses in less than a week. Just six days ago Ford revealed plans to cut 800 roles in the UK as part of a cull of 4,000 jobs across Europe.

Pressures have been on UK car makers to meet the government’s electric car mandate with talks on the 2030 deadline taking place between government and industry.

Read more
Only one fine issued for breaching Russian sanctions
First rise in rate of shop inflation in 17 months – industry data

Financial penalties are currently levied against manufacturers if zero-emission vehicles make up less than 22% of all sales. This will rise to 80% of all sales by 2030 and 100% by 2035.

Across Europe, the automotive sector has been feeling the pressure of slowed sales and competition from China. On Friday, Bosch – the world’s biggest car parts supplier – reported the loss of 5,500 jobs, predominantly in Germany.

A government spokesperson said: “We have a longstanding partnership with Stellantis and we will continue to work closely with them, as well as trade unions and local partners on the next steps of their proposals.

“The government is also backing the wider industry with over £300m to drive uptake of zero-emission vehicles and £2bn to support the transition of domestic manufacturing.”

Continue Reading

Business

First rise in rate of shop inflation in 17 months – British Retail Consortium

Published

on

By

First rise in rate of shop inflation in 17 months - British Retail Consortium

The trend of shop prices falling may be reversing as businesses face higher costs, according to industry data.

The pace of price drops slowed this month, according to figures from the British Retail Consortium (BRC).

November was the first time in 17 months that the inflation rate was higher than a month earlier.

While shop prices dropped 0.8% in October compared to a year earlier, the fall slowed 0.6% in November, according to BRC figures.

Money blog: Most common scam of 2024 revealed ahead of Black Friday

The figures may signal the end of falling inflation given cost pressures being placed on big businesses, according to BRC chief executive Helen Dickinson.

Retailers face a barrage of costs which the BRC forecasts will amount to an extra £7bn for retail businesses next year.

More on Cost Of Living

Budget measures such as the increase in employers’ national insurance contributions and a higher minimum wage form part of those costs as does the forthcoming packaging tax to fund recycling efforts.

Please use Chrome browser for a more accessible video player

CBI chief’s approach to budget tax shock

These extra costs will just push up consumer prices, Ms Dickinson said.

“Retail already operates on slim margins, so these new costs will inevitably lead to higher prices.”

The official measure of inflation is already on the up with the first rise in three months recorded in October as energy bills rose. The rate of price rises rose sharply to 2.3% from 1.7% recorded a month earlier as the energy price cap was hiked.

If the government wants to prevent higher shop prices it must reconsider the April 2025 timeline for the new packaging levy and reduce the commercial property tax known as business rates “as early as possible”, Ms Dickinson added.

Read more
Chancellor Rachel Reeves promises she will not raise taxes again

The minimum wage uplift will bring pay for people over 21 to £12.21 an hour and take effect in April. People aged 18 to 20 will have to earn at least £10 an hour – something the TUC (Trades Union Congress) said could benefit 420,000 young people – as part of the government’s goal of paying the same minimum wage to all workers, regardless of age.

Also from April, employers will have to pay more national insurance for their staff.

Businesses’ national insurance contributions will increase from 13.8% to 15% with the current £9,100 threshold at which employers start to pay the tax on employees’ earnings lowering to £5,000.

Chancellor Rachel Reeves has defended the increase saying half of all businesses – roughly a million firms – are paying either less or the same national insurance contributions as they were before the budget due to the uprated employment allowance, a tax credit for some employers.

Continue Reading

Trending