Doubts grow over Reaction Engines rescue deal with UAE fund

Published

2 weeks ago

October 20, 2024

admin

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.

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.

Business

Cambridge semiconductor company at Forefront of investors’ thoughts

Published

3 hours ago

November 6, 2024

admin

Cambridge semiconductor company at Forefront of investors’ thoughts

A Cambridge semiconductor company has defied the tough funding environment for early-stage businesses by securing £16m to fuel its expansion.

Sky News understands that Forefront RF, which was set up in 2020, will announce this week that it has raised the money from new venture capital backers Octopus Ventures and Cambridge Innovation Capital, as well as existing investors BGF and Foresight Group.

Forefront RF is a fabless semiconductor company which makes multi-band smartphones, wearable and Internet of Things-connected devics simpler to design.

Its technology aims to solve some of the challenges presented by printed circuit board (PCB) size limitations, enabling mobile devices to manage complex radio frequency environments.

The Series A fundraising takes the total sum raised by Forefront RF to nearly £25m.

The company employs 17 people, and intends to use the new capital to support a major product launch in 2026.

Ronald Wilting, Forefront RF chief executive, said its innovation would “help device manufacturers create smaller, more powerful wearables that support a wider range of communication bands”.

Mr Wilting, a former executive at Ericsson and Qualcomm, joined the company in 2022.

“[Forefront RF’s] patented technology will revolutionise how mobile devices are designed, reducing complexity, and streamlining supply chains,” said Owen Metters, investor at Octopus Ventures.

“The continuing proliferation of cellular-enabled devices means there is a significant opportunity for technology such as [the company’s flagship product] ForetuneTM.”

Business

Donald Trump promised to cut inflation – markets expect the opposite

Published

3 hours ago

November 6, 2024

admin

Donald Trump promised to cut inflation - markets expect the opposite

Donald Trump’s victory was secured on an unequivocal promise to stretched American households that he would “end inflation”, but markets and economists are anticipating his second term will do the opposite.

A combination of corporate tax cuts, government borrowing, lower migration and swingeing tariffs on overseas imports are all expected to heat up the American economy and stoke price rises.

Bond yields on 10-year US Treasuries, effectively the price of borrowing for the American government, were up by 3.6% overnight, rising more than 15 basis points to above 4.4% as European markets opened.

That signals investors believe that borrowing will rise, and the Federal Reserve will be forced to slow rate cuts in order to tackle inflation.

US election latest: Trump beats Kamala Harris in race to White House
Money latest: The market winners and losers after Trump’s win

A clearer picture will emerge on Thursday when Federal Reserve chairman Jay Powell, who Mr Trump said will not be reappointed, announces the next move on rates.

Markets still expected a 0.25 percentage point cut (a similar move to that anticipated from the Bank of England earlier in the day) but Mr Powell’s comments will be scrutinised for signals of what Trump 2.0 means for the prospect of further cuts.

But higher prices for consumers are not necessarily bad news for corporate America, with the dollar surging against sterling and the euro as swing states fell to Mr Trump, and Wall Street futures trading indicating a rally when they reopen with him confirmed as president-elect.

Shares in US banks were boosted with J.P. Morgan, Goldman Sachs and Morgan Stanley all up more than 6% in pre-market trading, along with Tesla, boosted by more than 13% as markets anticipate a dividend for Elon Musk’s campaign-trail support.

Defence stocks were higher too and not just in the US – BAE Systems and Rolls Royce were both up – reflecting likely pressure on America’s NATO allies to make good on their commitments to increase spending.

Bitcoin was also positive in anticipation of a more benign regulatory environment from a president who used the campaign platform to launch his own cryptocurrency.

By contrast renewable holdings, the target of much of Joe Biden’s economic stimulus, were in negative territory, with wind and solar priorities likely to be replaced by a pledge to “drill baby, drill”.

Of most concern to America’s trading partners and allies will be Mr Trump’s promise to erect barriers to free trade.

The man who said tariffs “is the most beautiful word in the world” has pledged a 60% levy on Chinese imports and 10% on those from elsewhere, a deeply protectionist move that could trigger a trade war with China and the EU.

These can only increase prices in the US, with importers paying the levies at the point of entry, and other trading blocs likely to respond in kind.

The EU has already imposed its own 35% tariff on Chinese EVs to the dismay of the continent’s carmakers the measure is intended to protect.

While these tensions play out, post-Brexit Britain, a relatively small player outside the major trading blocs, is likely to be a spectator.

Business

Post Office campaigner Sir Alan Bates says he is yet to receive reply to letter to PM

Published

1 day ago

November 5, 2024

admin

Post Office campaigner Sir Alan Bates says he is yet to receive reply to letter to PM

Post Office campaigner Sir Alan Bates is yet to receive a reply from Sir Keir Starmer, despite writing to him over a month ago.

Sir Alan said he had written to the prime minister to remind him the “clock is still ticking” on a financial redress deadline for victims.

In his letter, he demanded a March 2025 deadline for compensation for sub-postmaster victims of the Horizon scandal.

Sir Alan confirmed to Sky News he was yet to hear back from the prime minister.

“It was over a month ago,” he said.

“I sent him a reminder yesterday. I told him the clock is still ticking and it’s now five months from the March deadline, which I’m told is still achievable by other professionals.

“So let’s get on with it, that’s all we want. Get on with it.”

This breaking news story is being updated and more details will be published shortly.

Please refresh the page for the fullest version.

You can receive breaking news alerts on a smartphone or tablet via the Sky News app. You can also follow @SkyNews on X or subscribe to our YouTube channel to keep up with the latest news.