Tullow’s gloom deepens as shares slump again
A DIRE couple of months for Tullow Oil has left the company’s shares on track for their worst year since they joined the stock market in 1988.
The oil exploration company slid another 10.2pc, or 6.9p, to 60.9p yesterday a week after the company ousted its chief executive, slashed its future production forecasts and cancelled its dividend.
Analysts at HSBC cut their recommendation on the FTSE 250 stock from hold to reduce, prompting last week’s 52pc slump to resume.
Investors had already been hit by a sell-off in November, after Tullow revealed problems with its Ghana drilling operations and the disappointing discovery of heavy crude oil, rather than the more desirable light crude, at its site in Guyana. Shares are down a painful 65pc over the year to date – Tullow’s worst-ever annual performance.
Studio Retail Group, however, added to Mike Ashley’s stellar day. The value clothing and homeware company, previously called Findel, sold its educational resources arm for £50m to the Council of the City of Wakefield, which is the lead authority in the Yorkshire Purchasing Organisation.
The deal, which should help Studio to focus on its consumer business, caused shares to jump by 6.1pc, or 13.5p, to 233.5p.
It boosted the value of Ashley’s 37pc stake, owned through Sports Direct, by more than £1m.
But there is trouble on the horizon for Playtech, the online gaming software company.
Influential asset manager Royal London said the company’s latest pay proposals, which are due to be put to a vote this Thursday at the annual shareholder meeting, give investors a ‘raw deal’. The bonus scheme Playtech (up 2.6pc, or 10.2p, to 396.3p) is suggesting it could hand its chief executive Mor Weizer more than £30m of shares, and has already been rejected by shareholder advisory groups ISS and Glass Lewis.
Royal London’s head of responsible investment, Ashley Hamilton Claxton, pointed out that the scheme offers Weizer rewards for meeting share price targets which are below the level at which Playtech’s shares traded in July last year, before a profit warning.
She added that Weizer will be able to claim his rights to each chunk of rewards after the shares have seen just one month of sustained performance.
Hamilton Claxton said: ‘Structures like this can potentially encourage management to prioritise short-term share performance over long-term value creation.
‘We will therefore be voting against this plan at the company’s upcoming general meeting.’
The FTSE 100, still basking in the afterglow of last week’s General Election, was up 2.25pc, or 165.61 points, at 7519.05, while the
FTSE 250 climbed 1.92pc, or 412.9 points, to 21920.69.
A weekend meeting between the bosses of gold miner Centamin and its suitor Endeavour means the possibility of a deal between the two companies is now inching closer. Centamin, which is focused mainly on Egypt, rejected a £1.47bn bid from Canadian rival Endeavour earlier this month, saying the deal did not offer enough value to shareholders.
But Centamin’s chairman and Endeavour’s chief executive met in the Australian city of Perth this weekend and agreed that they would both examine each other’s companies as part of a due diligence exercise.
Endeavour said this would be ‘a critical precursor’ to agreeing further terms of the deal.
Under takeover rules, Endeavour must state whether it will make a formal bid or not by December 31. It now wants Centamin to request an extension to the deadline, to give it more time. Centamin shares were flat at 119.7p.