Yesterday's trading: Silverjet in for crash-landing

By Geoff Foster for MailOnline
Updated: 02:51 EDT, 15 January 2008

Storm clouds hovered above Luton-based business class only airline Silverjet as its shares nosedived 14p to 35½p after Daniel Stewart said sell and put a zero price target on the stock.

It believes the group's business model will never work and the company will eventually run out of cash. It raised £12m in a placing at 60p in November. The broker forecasts a pretax loss of £31m for the year to end-March 2008 and a £27m deficit for 2009.

Silverjet's claim that it only needs to sell a certain number of seats to break-even was rubbished by Daniel Stewart which said that its figures do not account for additional costs, such as advertising, administration and depreciation.

These could be quite substantial and with jet fuel prices up around 16% and 'dire' current traffic levels, all airlines are having a rough time. An angry Silverjet fought back last night and said that Daniel Stewart's note contained numerous material mistakes and inaccuracies.

Directors led by chief executive Lawrence Hunt said that Silverjet will achieve its first month of profit before tax in the current year and continues to trade strongly with 5,000 bookings made last week. They say the airline is in a strong financial position having just raised £22m (at 60p).

Rival Maxjet's bankruptcy on Christmas Eve, one of the busiest travel days of the year, was blamed on rising fuel and operating costs, competitive pressures, a decline in consumer spending and the delayed delivery of two Boeing 767-200s.

Broker Arden says that with Maxjet gone, Silverjet is now the cheapest business class service to New York. Meanwhile, investors should remember that the Rueben brothers' stake in the company should rise to 22% on conversion of a loan on February 11.

Meldex International, the former Bioprogress healthcare company, shot 29¼p higher to 83¼p on news of a bid approach. It recently hit the headlines when Ronaldo, the previously totally bald Brazilian striker, suddenly sported a 1970s style Afro haircut and told the world it was all down to Crescina, a hair product which is part of Meldex's growing portfolio of health treatments.

An indicative offer from Dutch software vendor Unit 4 Agresso at 205p a share in cash helped Coda soar 27p to 197½p. The news accompanied a positive trading update from the finance software specialist.

Sparks flew at fuel cell group Ceres Power after Centrica (4¾p off at 336¾p) said it would acquire a 9.99% stake at 300p a share in the combined heat and power systems provider.

Hard on the heels of last week's social housing contract awards, Mears advanced 7p more to 270p after announcing significant new home help contracts in Rotherham and Hertfordshire won by its Careforce division.

Wall Street's opening rally of 151 points following better-than-expected fourth-quarter figures from IBM, the world's biggest computers services group, helped the Footsie finish 13.7 points better at 6,215.7. Trading conditions remained cautious though with rumours rife that Citigroup will today take a write-down of up to £12bn as a result of the sub-prime crisis.

Hammerson topped the leaderboard with a leap of 86½p to 1020p. Buyers climbed aboard on hearing that it's joint venture partner Town Centre Securities has agreed with Marks & Spencer to anchor their proposed 140,000 square metre Eastgate scheme in Leeds.

Other properties were buoyed by a bullish Lehman circular and reports that UK hedge fund Laxey Partners wants to raise £1bn in debt and equity for a new fund to invest in the sector. Liberty International added 60p at 990p and British Land 45½p at 944½p. Land Securities rose 54p to 1516p.

Nosy buyers sniffed around Schroders, 11p better at 1100p, amid rumours that it could be up to something. Dealers reckon that the wealthy Schroder family could sell all, or part, of its majority stake, in order to diversify their asset base during the credit crunch. Some say Schroders, which sits on £700m in cash, could decide to sell its international asset management business to concentrate on its private banking operations.

Bear closing and some cheap buying after the recent sharp fall on rights issue talk helped Premier Foods recover 27p to 160p.

Carpetright, which has been threadbare since boss Lord Harris of Peckham dropped his plans to take his beloved company private at 1250p a share, picked up 83½p to 828½p.

• Expect a re-rating at Kopane Diamond Developments, unchanged at 15¼p. Formerly known as European Diamonds, the explorer and developer of diamonds is on the verge of getting a quote on the Johannesburg Stock Exchange. It has extensive interests in South Africa and will attract local investment. An update also confirmed a joint venture agreement with Mantle Diamonds to operate and finance its assets in Finland.