Troubled music group Sanctuary is believed to have hit another bum note. This month the former BA boss Bob Ayling emerged as the frontrunner to take over as chairman of the group. But, if talk in City circles is to believed, he is not a popular choice among investors.
He is known to have been interviewed by Sanctuary and as being on a shortlist of either two or three to become the non-executive chairman once the debt-saddled company resolves its financial crisis by completing a £110m placing. The idea is that Sanctuary needed a City head to complement an executive management team packed with experienced figures from the music world. Sanctuary lost £143m last year, largely due to problems at its recently acquired Urban Records division, which has artists including Chaka Khan, De La Soul and Michelle Williams. The need for a chairman has arisen because the chief executive, Andy Taylor, had combined the two roles but is now trying to concentrate on being chief executive. Sources close to Sanctuary said there were no developments to report. The company is due to hold a shareholder meeting next month. Shares closed down 0.03p at 1.44p.
Back among the blue chips, the FTSE 100 closed up 17.3 points at 5846.2 points as Northern Rock raced ahead in late dealings on talk that its smaller rival Bradford & Bingley was planning to merge with it to create a mortgage specialist worth more than £8bn.
Neither would comment on the possibility of a deal but some in the market pointed to the fact that the wife of the senior independent director Sir George Russell sold 30,150 shares in the company on Thursday as suggesting it might all be a bit of "Friday froth" rather than an actual deal. More bullish traders, however, said that Bradford & Bingley had not yet made the approach so the director's dealings did not matter and the bid was still on. Bradford & Bingley closed up 12.75p at 461.5p with Northern Rock 50.5p higher at £11.50.
Elsewhere, analysts were busy among the blue chips with Rexam adding 14.5p to 499p as CSFB upgraded the maker of soft drink cans to outperform from neutral. The broker said the recent weakness in the stock owed much to soaring aluminium prices and, while that is obviously bad for the business, "a mitigating factor is that other packaging raw materials have seen even steeper price increases, improving the relative competitiveness of cans and making it easier to raise can prices to compensate for higher costs". The broker, raising its target price by 20p to 570p, added that it reckoned that healthy cash flows within the business should allow it to increase its estimated 3% growth through making acquisitions.
Among the second liners, Lonmin shot up 531p to £26.71 to become the biggest riser in the FTSE 250 after confirming Thursday's talk that it had received a bid approach. The FTSE 250 overall closed 103.9 points higher at 9472.8 points.
But the software company iSoft took a pasting, dropping 11.5p to 162.75p, the biggest faller in the FTSE 250, as news of the downgrade by the broker Morgan Stanley (which broke on Thursday night) trickled through the market. The broker has slashed its target price to 160p from 320p and traders said the stock could go as low as 120p.
Tomkins was also hit by a broker downgrade, with CSFB lowering its recommendation to neutral from outperform as the stock is nearing its maintained 330p target price. Tomkins closed down 8.25p at 322.25p.
Among the small caps, shares in Haynes Publishing dropped 47.5p to 325p, as the publisher of car manuals, racing, biography and history books announced a drop in half-year profits and admitted that despite attempts to raise cover prices the second half of the year may see a further decline.
Down on Aim, Empyrean Energy leapt 21p to 137.5p after positive drilling results from its well in California, while the digital content group Zoo Digital added 0.62p to 4p as the non-executive and former chief executive Ian Stewart bought half a million shares, taking his stake to 19%.
Shares in MicroEmissive Displays Group, makers of small and thin TV screens, added 1.5p to 90p on the appointment of a finance director, while Tristel added 3.5p to 68.5p after good results earlier in the week.
But Centurion Electronics plunged 18.5p to 1p as the ailing in-car entertainment group returned from suspension and announced plans to raise £3.5m to pay down its debt. Shares were suspended in November as it entered talks with bankers to restructure its debt. Having reached a deal, it is placing 510m new shares at 0.5p each to raise £2.5m and issuing £1m of convertible loan notes. Urals Energy leapt 60p to 360p as Morgan Stanley started coverage on the Aim-listed Russian company with an overweight recommendation and 413p target price.
Finally, the Aim-listed TV production company Ten Alps, which counts Bob Geldof among its directors, is expected to move next week as the management jet off to Boston and New York to meet potential American investors for the first time, according to traders. Shares closed flat at 62.75p.
MFI refits its finance
MFI pulled itself back from the brink yesterday by securing a £150m facility which will bankroll a massive restructuring of the home improvement chain. The 39-month loan has been underwritten by the Bank of Ireland's Burdale Financial business and Lloyds TSB, and replaces the bank's existing overdraft.
MFI, whose pension fund is £200m in the black, has cleared the plan with the new pension regulator. The regulator agreed because MFI's pension fund trustees have a similar level of security to its lenders, in a top-ranking fixed charge over the issued share capital of MFI's Howden Joinery business, and are second-rank creditors over the rest of the business. Attention will now focus on the group's results on February 28. Shares eased 3p to 84.5p.