CityAM 11/01/2010

BUSINESS WITH PERSONALITY

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Certified Distribution02/11/09 – 29/11/09 is 102,194

Boris: exodus from Cityto knock public finances

MAYOR Boris Johnson yesterday calledon the Treasury Select Committee tolaunch an “urgent” investigation intothe government’s new tax on bank bonuses, which he said would serious-ly endanger the City’s position as acompetitive global financial centre. The Mayor’s advisers predict up to9,000 bankers could leave the UK formore favourable jurisdictions due tothe so-called “supertax”, the new 50per cent income tax band, rules onnon-doms and a raft of damaging EUfinancial services regulation.“These ‘salami-slicing’, shortsightedproposals could potentially and per-manently damage the competitive-ness of London as a financial centre by driving away the city’s unique clusterof highly skilled people, ideas andexpertise,” Johnson said.City Hall said the exodus couldpotentially cost the economy over£1.2bn in lost tax revenues annually. Johnson’s call to arms came as itemerged that the Financial Services Authority plans to force all bankersearning over £1m to defer their bonus-es under its new remuneration code.Under the FSA’s original plans, only those exerting a “significant influ-ence” over a bank would be affected, with those earning over £500,000 hav-ing to defer 60 per cent of their bonusover three years.But the regulator has now widenedits net to ensure all bankers earningover £1m will be subject to the 60 percent bonus deferral. JP Morgan will on Friday kick off the annual results round at the world’s biggest banks, which are this year expected to pay out around£40bn in compensation. The bank isexpected to hand out a record $29bn(£18.1bn) in salary and bonuses,thanks to a resurgence in activity atits investment banking division. JP MORGAN: PAGE 7

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MANCHESTERUnited said last nightit was seeking to raise £500mthrough a bond issue to alleviate its£699m debt burden. The Premiership club had beenexpected to raise £600m via a bondissue. Its finance arm will issue seniorsecured notes due 2017 to refinanceexisting debt secured against the club.Last year United’s annual profit of £72m was almost wiped out by inter-est payments of £69m.Old Trafford’s owners, the American Glazer family, bought theclub for £828m in May 2005, fundingone third of the deal with equity, onethird bank debt and one third with apayment-in-kind note.Manager Sir Alex Ferguson hasdenied that the club’s debt pile hasaffected his spending on players. Sincethe Glazers’ takeover of the club,Ferguson has spent a net £32m onnew players. He has claimed that hisreluctance to spend the record £80mUnited made from selling CristianoRonaldo to Real Madrid last summer was purely because he “couldn’t seeany value in the market”.Last week the owner of ManchesterCity, Sheikh Mansour bin Zayed alNahyan, wrote off £304.9m of personalloans to the club to make it debt free.

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The Mayor says 9,000 bankers will quit London Picture: Micha Theiner/ CITY A.M.

CADBURYshares are set to jump thismorning after mounting talk lastnight that Ferrero could make a joint bid with Hershey for the British con-fectionery group.Ferrero is thought to be working ona syndicated loan of about

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3bn(£2.8bn). According to an Italian news-paper, Mediobanca, which advises theItalian chocolate maker, has contactedother Italian banks –Intesa Sanpaoloand UniCredit - in the hope of gettingup to five banks to lend between$750m and $1bn each.Ferrero has until 2 February tomake a counterbid to an offer fromKraft, which Cadbury has rejected.Both Ferrero and US confectionerHershey are smaller than Cadbury andneed significant funding to launch anoffer. Ferrero declined to comment,reiterating a November statement thatit was assessing its options.Cadbury sets out its final defenceagainst the Kraft bid tomorrow, fol-lowed by a trading update on Friday. Itis expected to attack Kraft’s stock priceperformance over the past few years.Kraft sold its North American pizza business to Swiss food group Nestlelast week, enabling it to improve thecash component of its offer. Nestle hasruled itself out of the bidding.Cadbury’s chairman launched yetanother fierce attack on Kraft yester-day. Roger Carr accused the US firm of being run by its biggest shareholder, Warren Buffett, He said Buffett’s oppo-sition to the bid and pressure from rat-ings agencies severely limited Kraft’sability to improve its offer.It has until 19 January to decide whether to raise its cash and shares bid, which currently values Cadbury at 769p a share, or £10.5bn. Ferreroand Hershey are likely to wait untilthen before entering the fray.Cadbury’s chief executive ToddStitzer has made it clear that the com-pany would prefer being taken over by Hershey rather than Kraft because of the companies’ cultural similarities.

D-DAY LOOMSFOR CADBURYPHONEY WAR

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Cadbury chairman RogerCarr says Kraft is run byits biggest shareholder,Warren Buffett, whoopposes the firm’s bid.

www.cityam.comIssue 1,048 Monday 11 January 2010

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