Mounting debt headache for Patient Capital bosses

BELEAGUERED Neil Woodford faced more bad news yesterday.

The fund manager has had to hammer out changes to the lending agreement between his Patient Capital Trust and its lender. The Woodford Patient Capital

Trust (WPCT), which is listed on the stock market and is separate to the fund manager’s frozen Equity Income fund, has a £150m lending facility with Northern Trust bank.

But a series of hits to companies held by the WPCT meant it was in danger of breaching lending agreements, in another worry for savers who had entrusted the once-star manager with their nest eggs.

The facility is similar to an overdraft but the agreement limits the amount that can be drawn to a certain percentage of WPCT’s value.

This has plunged over recent weeks, as the value of WPCT’s stakes in a slew of businesses have been written down.

Yesterday WPCT announced it had agreed ‘greater flexibility’ around the lending agreements with Northern Trust, although the interest rate on the loan will now increase slightly. WPCT is aiming to sell some of its unlisted holdings to help pay off its debt, after investors raised concerns, and it is aiming to have the whole lot paid off in the next 12 months.

Investors seemed relieved that the company had avoided a row with its lender, and shares edged up by 1.4pc, or 0.6p, to 43.2p.

Security company G4S was also on the rise yesterday after reports its cash handling business was set to be snapped up by a US buyer.

American rival Brinks Co is in talks about buying the division for more than £1bn, according to Sky News. The report sent G4S shares surging 6.5pc, or 11.3p, higher to 186.5p. The company hoisted the ‘for sale’ sign over its cash handling division – which uses armoured vans to transport money around the country – earlier this year and said it wanted to focus on its main business of providing security services to prisons and private organisations.

It came as another day of Brexit drama – in which opposition parties seemed to rule out Boris Johnson’s demand for an early election – seemed to bamboozle investors, with the FTSE 100 hardly moving, edging up just 0.2pc, or 11.17 points, to close at 7282.34 points last night.

The FTSE 250 similarly notched just a 0.3pc gain, rising by 55.96 points to 19705.52 points.

But analysts at Deutsche Bank decided the latest political developments were probably bad news for Royal Bank of Scotland (RBS) and Lloyds, downgrading their ratings from ‘buy’ to ‘hold’.

They argued Barclays was a better bet for investors, because it had operations abroad and was less exposed to swings in the economy. Lloyds barely shifted, edging up 0.02pc, or 0.01p, to 50.04p, while RBS shares closed 1.2pc, or 2.35p, lower at 188.1p. Barclays crept up 0.2pc, or 0.28p, to 140.1p.

And political uncertainty wasn’t just a topic of the day on this side of the Atlantic.

President Trump received a ticking-off from investment firm Ashmore, which said the US president’s ‘ confrontational trade policy’ was posing the biggest risk to the global economy.

Ashmore, which specialises in emerging markets, said the ‘aggressive US trade stance has created uncertainty and is beginning to affect growth, both domestically and in its partners such as China and Europe’.

Despite the ripples which Trump’s trade policies have sent out across the global markets, Ashmore posted a positive set of results for the year ending June 30. Profits were up to £219.9m from £ 191.3m last year, and exceeded analysts’ expectations of £213.3m. Shares climbed 0.8pc, or 3.6p, to 458.2p.