Hope from pharma giants
Potential vaccine and rapid test
Days apart, pharma giants Johnson & Johnson (US:JNJ) and Abbott Laboratories (US:ABT) respectively announced a potential coronavirus vaccine and a rapid test kit for the disease. Johnson & Johnson expects to start clinical studies of its vaccine candidate by September 2020, and reckons that the first batches could be available for emergency use authorisation early next year – much faster than the usual development process. Abbott said that its test can detect the novel coronavirus in as little as five minutes. It expects to ramp up manufacturing to deliver 50,000 tests a day.
Tobacco giants access new credit
Imperial’s trading is in line
Imperial Brands (IMB) has announced a new €3.5bn (£3.1bn) multi-currency revolving credit facility, coordinated by NatWest, Santander and SMBC, and provided by a syndicate of 20 banks. This provides the group with committed bank financing until March 2023, and replaces its existing £3bn facility. In the same breath, the tobacco giant said that it has seen no material impact from Covid-19 on performance to date. Trading remains in line with expectations. The same morning, British American Tobacco (BATS) announced the pricing of an offering of $2.4bn notes.
...While joining race for vaccine
BATS enters fray
British American Tobacco has also revealed that its biotech subsidiary, Kentucky BioProcessing, is developing a potential vaccine for Covid-19, which is now in pre-clinical testing. BATS is hopeful that with the right partners and support from government agencies, up to 3m doses of the vaccine could be made per week from June. The vaccine uses BATS’ fast-growing tobacco plant technology, which it claims has various advantages over normal vaccine production technology. Among these, it says that its technology is potentially safer – given that tobacco plants cannot host pathogens that cause human disease.
Pre-emption rights expanded
Investors can buy bigger share
The Pre-Emption Group has recommended that – in the current circumstances – investors consider supporting issuances of up to 20 per cent of companies’ shared capital, on a case-by-case basis. This compares to the current threshold outlined in the ‘Statement of Principles’, which allows for 5 per cent for general corporate purposes and an extra 5 per cent for specified acquisitions or investments. PEG added that if such additional flexibility is sought, companies should take steps including fully explaining their particular circumstances and consulting with a representative sample of its major shareholders.
Carluccio’s collapses
Could more follow?
Italian restaurant chain Carluccio’s has entered administration – begging the question of whether more businesses could follow, amid an unprecedented crisis that has brought the hospitality industry to its knees. Joint administrators Geoff Rowley and Philip Reynolds of FRP – appointed on 30 March – are urgently addressing all options for the future of Carluccio’s, including exploring the opportunity to mothball the business using government support, as well as speaking to interested parties about a sale. On the same day, Grant Thornton was appointed as administrator for rent-to-own company BrightHouse.
Aston Martin’s $100m credit line
Equity raise not enough
Aston Martin’s (AML) shareholders have green lit the group’s proposed £536m equity raise. This comprises a private placement of £171m-worth of shares to a consortium led by former F1 magnate Lawrence Stroll, and a £365m rights issue. These funds will enable production of its first SUV, the DBX, to begin with deliveries planned for the summer. But its troubles aren’t over yet. The luxury carmaker believes the “unquantifiable uncertainty” created by the Covid-19 pandemic could leave it with insufficient working capital over the next 12 months. It has therefore opened up a new $100m (£79m) inventory financing facility that will become available in May.
Xerox drops HP takeover
The bid was worth more than $30bn
Xerox (US:XRX) has dropped its hostile takeover bid for HP (US:HPQ) due to the market turmoil caused by the coronavirus. The Connecticut-based company will withdraw its tender offer and not seek to nominate candidates for HP’s board of directors. Xerox said that it believes there still remains a compelling case for combining the two businesses. It added that “the refusal of HP’s board to meaningfully engage over many months and its continued delay tactics have proven to be a great disservice to HP stockholders, who have shown tremendous support for the transaction”.
The FTSE 100 index fell by 26 per cent during the first quarter of 2020 – slightly worse than the decline of 23 per cent endured by America’s Dow Jones benchmark.
Driving such a severe contraction – the worst for the London bourse since 1987 – was uncertainty and disruption at the hands of the coronavirus outbreak, as it spread rapidly across the globe.
That said, markets did show some small signs of recovery in the days leading up to the end of the quarter, helped by the news that China’s manufacturing industry had grown in March.
