FT : Unilever bid fiasco ramps up pressure on managers to deliver plan B

Unilever bid fiasco ramps up pressure on managers to deliver plan B
Consumer goods group faces biggest crisis in years as it seeks to correct faltering strategy

As Christmas approached, Unilever’s chief executive, Alan Jope, hoped to give investors something to celebrate: the company’s largest-ever acquisition.

He made an opening offer for GlaxoSmithKline and Pfizer’s consumer health division in early November, hoping to snap up the business before it was spun off on to the public market. That failed to bring them to the discussion table and, on December 20, Jope made a move he was sure would tempt them: a third, mainly cash bid of £50bn.

But that was also shot down, with the pharmaceutical partners rejecting his offer just before the new year. GSK and Pfizer had different interests — with Pfizer’s involvement purely financial — but they both agreed £50bn was too low.

This week, after news of the talks broke, investors dealt the final blow to any chance of a deal.

During calls with management they expressed confusion, scepticism and straight-out opposition, according to several shareholders. Unilever’s share price fell as much as 11 per cent before the company, which people with knowledge of the situation said had never been prepared to bid much higher, announced it would not be making a fresh offer.

The reaction to the bid has plunged the FTSE 100 consumer goods group into its biggest crisis since it fought off a hostile approach by Kraft Heinz five years ago, calling into question Jope’s management and blowing open a debate on how Unilever, which employs almost 150,000 people, can boost its sluggish performance.


“Unilever surely needs to address the fact that five years later the share price is only at the level of that [Kraft Heinz] bid,” said Terry Smith, a top-15 shareholder, in a letter to investors on Thursday. “Why then should we trust this management and board with preserving value for shareholders?”

Shareholder outcry
Discontent was already building at the more-than-90-year-old maker of Magnum ice cream, Domestos bleach and Pot Noodle, whose sales performance has lagged behind rivals despite promises from Jope of a sharper focus on high-growth areas.

The GSK acquisition was intended to accelerate sales growth by applying Unilever’s marketing and distribution machine to health brands including Advil painkillers, Centrum vitamins and over-the-counter medicines such as Theraflu. But instead it prompted an outcry.

Investors took fright at the scale of the potential deal, which could have pushed up Unilever’s debt to 4.5 or five times earnings. But not all were opposed to its general direction, said Bruno Monteyne, an analyst at Bernstein.

Bert Flossbach, founder and chief investment officer at Flossbach von Storch, an €80bn Cologne-based asset manager that is among Unilever’s top 10 shareholders, said: “Jope is in a tough position because Unilever has been a lame duck for a long time. But if there is nothing to buy at a reasonable price, then don’t buy anything.”

Jope had attempted to refresh Unilever’s strategy a year ago by expanding its offering in beauty products and supplements and drawing in younger customers — but that was greeted unenthusiastically by the market.

The GSK bid has further shaken confidence in the ability of the chief executive and his chief financial officer, Graeme Pitkethly, to deliver change. “They’ve shown their hand: they clearly don’t have confidence in the existing business, otherwise they wouldn’t have been contemplating this,” said an investor who asked not to be named.

After taking charge in early 2019, Unilever veteran Jope first maintained, then dropped a tough target of hitting a 20 per cent profit margin by 2020 that was put in place by his predecessor, Paul Polman, after Kraft Heinz’s bid.

But the lingering pressure to boost profitability, according to some investors and analysts, has resulted in insufficient investment in Unilever’s brands, which range from Knorr stock cubes to Dove soap and have an especially strong presence in emerging markets such as India.

One person who follows Unilever closely said some of its problems relate to the categories in which it operates. “Not even Superman could drive growth at Knorr or Hellmann’s to keep up with the growth of L’Oréal or Estée Lauder.”

Plan for growth
Most analysts agree Unilever should shift its portfolio faster into high-growth areas such as plant-based food and vitamins, emulating rival Nestlé, but they differ on the scale of potential acquisitions and disposals.

One top 15 shareholder said: “I don’t think they’ve mismanaged the business but I do wonder if they are too wedded to Unilever being the massive corporate giant that it is today.

“If they . . . slim down the portfolio by selling some of the ex-growth businesses, actually that could crystallise some value.”

Martin Deboo, an analyst at Jefferies, wants Unilever to downsize further its food and refreshment division, which has shrunk compared with its larger household and personal care operation. The company agreed a €4.5bn deal to sell its tea unit last year.

“The market thinks Unilever’s growth problem is rooted in lack of investment. We think it is attributable to a structurally challenged foods business, where we would like to see a faster pace of disposals,” he said.

Smith and others have also criticised Unilever’s focus on its sustainability credentials; Smith last week derided the company for talking about “purpose-led” Hellmann’s mayonnaise.

The consumer group had intended to sell some of its food divisions to fund the GSK acquisition, which meant Smith’s mayonnaise comments “could not have come at a worse time in terms of support of Alan or a more ironic time, given what Alan was doing behind the scenes”, said the person who follows Unilever closely.

Smith acknowledged that communications with shareholders had improved from the Polman days. He noted that he had been consulted on the GSK bid, although trying to obtain a figure for return on capital expected from the GSK deal “was like a dentist pulling a back tooth”.

But the anonymous investor accused the company of “arrogance” in communicating with shareholders, for example in failing to signal it was considering large acquisitions. “There were cultural issues under the previous CEO and I don’t think anything has changed under Jope,” the investor said.

They warned their holding in Unilever was “on the naughty step” and could be sold after several years, with much riding on the company’s planned announcements to accompany annual results on February 10.

M&A prospects fade
Unilever indicated this week that it would be open to other large consumer health deals, which could include Johnson & Johnson’s consumer business — set for a spin-off within the next 18 months — or that of Sanofi, likewise set for a split from its parent company.

Analysts have also pointed to the possibility of a deal between Unilever and Reckitt Benckiser, maker of Durex condoms and Strepsils cold medicines.

But analysts and rating agencies played down the prospect of an acquisition or merger on the scale of the GSK division after poor outcomes from other recent large consumer deals. Reckitt’s £13bn acquisition of baby formula maker Mead Johnson in 2017 resulted in £8bn of writedowns. A significant recent Unilever acquisition, the $1bn purchase of Dollar Shave Club in 2016, “rests in an unmarked grave”, according to Smith.

GSK is pressing on with its preparations to spin out the consumer division, including courting cornerstone investors so both it and Pfizer can smoothly sell their retained stakes.

The most obvious other potential bidder, Procter & Gamble, in effect ruled itself out by declaring this week that it had no plans for large M&A. Private equity buyers would likely struggle to beat Unilever’s bid, given they would not benefit from any synergies.

For Jope and the Unilever board, the alternative is to convince shareholders that management should be given time to turn round the business. “The main question now is how much damage has been done to the credibility of the board and management,” said Monteyne.

“The issue with Alan [Jope] is he is such a decent guy and he wants to help people. So investors ask him difficult questions and he tries to help . . . But you need to be a steely bastard and tell people what they don’t want to hear,” said the Unilever follower.

Jope has promised to unveil “a major initiative to enhance our performance” this month, consisting of a new organisational structure. Unilever said it would seek to grow in health, beauty and hygiene.

Some investors are optimistic. Hugh Yarrow, portfolio manager at shareholder Evenlode Investment, said in a letter to investors that it was a “sensible decision” not to pursue the GSK deal further.

“These events, and subsequent conversations with shareholders, may ultimately prove to be a helpful catalyst for progress at Unilever,” Yarrow wrote.

WSJ : China Evergrande’s International Bondholders Threaten Legal Action

China Evergrande’s International Bondholders Threaten Legal Action
Developer allegedly withheld crucial info about its liabilities and failed to engage with offshore creditors, bondholders’ advisers say

A group of China Evergrande Group’s EGRNF 8.11% international bondholders threatened to move forward with a legal enforcement plan that could potentially include liquidation of the company’s assets, after being unable to engage substantively with the troubled property developer for months.

Advisers to the group on Thursday released a strongly worded statement accusing Evergrande of withholding crucial information about its liabilities and failing to engage with its creditors despite the company’s recent pronouncements to the contrary. The bondholders, which include global funds, asset managers and distressed investors that hold Evergrande debt, are being advised by investment bank Moelis & Co. and law firm Kirkland & Ellis LLP.

Bondholders are still holding out for Evergrande to step forward and provide them with detailed financial information about the company’s balance sheet, liquidity and present operations before taking any enforcement actions, according to two people close to the bondholder group. It is hoping to discuss possible debt maturity extensions or standstill agreements so that a restructuring proposal can be formulated over the coming months, one of the people said.

If the status quo continues, legal action is likely to take place first in the Cayman Islands, although there are other jurisdictions where bondholders could assert claims, the person said. Evergrande is incorporated in the Cayman Islands, and has some subsidiaries incorporated in the British Virgin Islands, though most of its assets are in mainland China.

The group “believes it has been left with no option but to seriously consider enforcement actions,” the statement said. It said it “has received little more than vague assurances of intent, lacking in both detail and substance” from Evergrande. The group has retained Harneys, an offshore law firm, and “is prepared to take all necessary actions to vehemently defend its legal rights and protect its legitimate interests,” the statement added.

The next steps the advisers are considering are accelerating debt, filing a type of bankruptcy document known as a winding-up petition and beginning a liquidation process, according to a person familiar with the matter. Under liquidation, control of the company would shift to a legal controller, subject to court supervision, the person said.

Evergrande said in a regulatory filing on Friday that a risk-management committee at the company is “actively looking for solutions and communicating with its creditors.” The committee also proposed to engage China International Capital Corp. and BOCI Asia Ltd. as financial advisers and Zhong Lun Law Firm LLP as a legal adviser. Evergrande said they plan to address creditors’ demands and deal with the company’s debts “on a fair and equitable basis.”

The developer last year hired a unit of U.S. investment bank Houlihan Lokey Inc. as an adviser.

Thursday’s statement from the bondholder group came after the company reached an agreement with mainland creditors earlier this month to stave off a potential onshore default.

The 25-year-old property giant had amassed around $300 billion in liabilities as of last June, including around $20 billion in outstanding U.S. dollar bonds. Evergrande has struggled to meet its obligations since the summer, and has missed final deadlines for interest payments on several U.S. dollar bonds. All three major credit-rating companies have declared it to be in default.

Foreign bondholders have claims to a number of Evergrande’s offshore assets in the event that the company cannot repay them, including the company’s property management arm and an electric vehicle startup that Evergrande founded in 2018.

Some analysts have said the Chinese government is unlikely to support a restructuring where foreign bondholders are left out in the cold.

“China’s household savings rate isn’t enough to sustain China’s growth, so the country needs foreign capital to grow the economy,” said Bo Zhuang, senior analyst at Loomis Sayles & Co. in Singapore. “While foreign investors are definitely at the low end of the hierarchy, they will have a seat at the table before a restructuring is finalized.”

In early December, Evergrande said it had turned to its provincial government for help in dealing with its liquidity crisis. The government of Guangdong has dispatched a working group to help the company manage its risks, and Evergrande has set up a risk-management committee that includes its top executives and representatives of several state-backed entities.

The company said in regulatory filings in December and January that it planned to engage with its creditors, and that it would work with them to formulate a restructuring plan for its offshore indebtedness. Evergrande also said publicly that it would protect the legitimate interests of the various parties.

The international bondholder group said Thursday that hasn’t happened. “The overriding impression is that contrary to the group’s public words, which may at this point be construed as an attempt to stall any enforcement actions from the creditors, the group has disregarded its offshore creditors and the legal rights of its creditors,” their statement said. Evergrande has also ignored a request to pay the fees of its creditors’ advisers, a standard practice in a restructuring process, according to two people familiar with the matter.

Advisers to the committee of bondholders are concerned that the company might also have additional off-balance-sheet debt that it has not disclosed and that it might be in worse financial health than previously thought.

While Evergrande’s international bondholders have been left hanging, the developer has so far avoided defaulting on its yuan-denominated public debt onshore. Last week, Evergrande secured investor backing to delay making payments on one of its onshore bonds.

FT : El Salvador’s bitcoin bet is not working

El Salvador’s bitcoin bet is not working
The job of a Latin American sovereign-debt is not done in all-caps. It’s a staid profession involving numbers and spreadsheets and slowly explaining yourself to investors and journalists.

That is, unless you’re Jaime Reusche at Moody’s. Reusche had the temerity to call a Bloomberg reporter and tell him, sensibly, that El Salvador’s debt was getting riskier because of all the bitcoin the country has been buying. Which prompted this outburst on Monday:

That is indeed Salvadoran president Nayib Bukele tweeting that his country doesn’t give a fig about a Moody’s downgrade that, in fact, happened back in July. Whether Bukele (or Investing.com’s social team) was aware of the timeline is not clear.

To recap the story so far:

  • June 2021 — Bukele announces at a Miami crypto convention that he will make bitcoin an official currency. Less than a week later, his promise is passed into Salvadoran law.

  • July — Moody’s downgrades the country’s debt from “high” to “very high” credit risk, citing risks to debt-relief talks with the IMF. IMF directors gently warn that making bitcoin official currency is “inadvisable”.

  • August — Anti-bitcoin protests rage in San Salvador, the country’s capital.

  • September — Bukele announces the state has bought the dip to the amount of 400 bitcoin, then worth about $21m. Bitcoin legal tender law comes into force.

  • November — Bukele plots a $1bn bitcoin bond issuance, to fund a low-tax “bitcoin city” abutting the coastal Conchagua volcano. The IMF sternly warns against the bitcoin law.

  • December — El Salvador buys its 1,391st bitcoin by one estimate. Purportedly this was done on Bukele’s phone.

  • January 2022 — Bukele meets with Turkish president Recep Tayyip Erdogan, with many expecting him to evangelise for bitcoin amid Turkey’s lira crisis.

Consequences have come quickly for El Salvador, which has all but lost access to credit. Swap markets are pricing in a 42 per cent chance of default in the next decade. A picture tells the story in miniature. Here is the yield on El Salvador’s earliest-dated bond, due January 2023, since Bukele appeared on stage in Miami:

And that’s just the 2023 bond. Even if the country somehow pays it off, it is staring down years and years of hefty debt repayments. From Reusche and his Moody’s colleagues:

Bukele’s $1bn bitcoin “volcano bond” has not yet launched, but his marketing presentation told of a 10-year bond with a 6.5 per cent coupon. $500m of investor money will be locked into bitcoin during the first five years, with profits taken over the latter five years. Half of those profits will flow back to investors. The whole ordeal is premised on bitcoin hitting $1m by 2026.

That all sounds far-fetched, but there is one piece that certainly isn’t. The bond will be sliced into $100 increments, perfect for your bitcoin bull or meme-bond ape. With El Salvador starved of capital markets access, Bukele has dreamt up a workaround. A successful $1bn capital raise, while far from guaranteed, could buy him time until the next bond is due in January 2025. He is up for re-election in 2024.

However, as interest in El Salvador’s bonds has grown, data has been drying up. A government that was once happy to talk to investors has gone mum. As Reusche told me:

Now, it seems that they’re not as responsive. We ourselves can say that our communication channels have deteriorated with the government since the downgrade.

You see a lot of the fiscal data not being as accessible as before. The ministry of finance website has become more confusing. It’s become harder to access any fiscal data. And on the central bank website, we are starting to see some data series drop off and not being maintained.

In fairness to Bukele, he didn’t promise good tidings for Salvadoran creditors. Rather, he promised bitcoin would make for cheaper remittances — which make up a quarter of the country’s gross domestic product and which the vast majority of Salvadoreans receive. The chart below shows the value of remittances through to the end of November 2021. They have boomed alongside the hot US labour market, but bitcoin’s impact since September is hard to spot:

The post-pandemic remittances windfall, while good for Salvadoreans, may have emboldened Bukele to gamble, Reusche believes. The sudden rush of liquidity could have convinced him to snub the IMF and go it alone. Remittance costs, which have been falling for a decade, don’t seem to have suddenly become much cheaper either.

What little data we do have on El Salvador’s bitcoin use comes from researchers at Chainalysis, who shared their latest figures with Unhedged. Tracking crypto trading patterns by country, Chainalysis finds that bitcoin payments under $1,000 — a proxy for remittances — jumped to $7m from $4.5m in the month after the cryptocurrency went official, but have since returned to normal:

The clearest sign of all may be the central bank itself, which publishes nearly all of the useful data on El Salvador’s economy. As Bukele doubles down on bitcoin, the central bank would have every incentive to publicise data showing the cryptocurrency driving remittances. It has not done so.

Bukele’s defenders say big changes take time. But time is running short — and creditors will hardly be feeling merciful.

>>> US After Hours Summary: LLNW +6% rises while NFLX -20%, RBBN -17% decline on

After Hours Summary: LLNW +6% rises while NFLX -20%, RBBN -17% decline on earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: LLNW +6.4%, NBHC +0.8% (also increased quarterly dividend)

Companies trading higher in after hours in reaction to news: KURA +4.3% (received FDA authorization to proceed with KOMET-001 Phase 1b study)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: NFLX -20.0%, RBBN -17.1%, ISRG -5.4%, PPG -3.5%, CSX -2.3%

Companies trading lower in after hours in reaction to news: SNPO -5.6% (announced acquisition of Staub Electronics), ROKU -5.1% (lower in sympathy with NFLX results), DIS -3.9% (lower in sympathy with NFLX results), HOOD -1.3% (announced launch of roll-out of crypto Wallets to waitlist), PRDO -1.1% (appointed Andrew Hurst as CEO), PTON -0.9% (extends volatility after closing lower by 24%; to delay opening of Ohio factory, according to NY Post)

>>> US Close Dow -0.89% S&P -1.10% Nasdaq -1.30% Russell -1.88% VIX 25.59 +7.3%


SPX Today                                                    SPX this week

Closing Stock Market Summary

The S&P 500 declined 1.1% on Thursday in another disappointing session, as investors doubled down on the inclination to sell into strength. The benchmark index faded a 1.5% gain and closed the session down 7.0% from its all-time high. 

The Nasdaq Composite fell 1.3% after being up 2.1% intraday. The Dow Jones Industrial Average fell 0.9% after being up 1.3% intraday. The Russell 2000 fell 1.9% after being up 2.0% intraday.

Ten of the 11 S&P 500 sectors closed lower after all 11 traded in positive territory in the morning. The consumer discretionary (-1.9%), materials (-1.4%), and information technology (-1.3%) sectors led the retreat, while the utilities sector (+0.1%) eked out a gain. 

The bullish bias in the morning was attributed to a belief that the market was oversold on a short-term basis and was due for a bounce. Both the Nasdaq Composite and Russell 2000 entered the session in correction territory, or down at least 10% from a recent high. 

Investors waited a little longer than yesterday to sell into strength, which ultimately diminished confidence in the market and scared away potential buyers on the fear that the dip will keep on dipping. The S&P 500 briefly topped the 4600 level around 10:00 a.m. ET before running into negative headlines later in the day. 

Selling interest picked up after CNBC reported that Peloton (PTON 24.22, -7.62, -23.9%) is temporarily pausing production of its bikes due to waning consumer demand. Later, The Wall Street Journal reported that the U.S. gave approval for Estonia, Lithuania, and Latvia to send arms to Ukraine. 

The Peloton story served as reminder of the risks that many story stocks still face if their stories don't play out as intended. The Ukraine story was more of a negative geopolitical headline in the middle of a market downturn, meaning the market was less disturbed by the report and saw it more as a convenient selling excuse. 

The latter theory was supported by the lack of a safe-haven trade in Treasuries and gold ($1842.60/ozt, unch). The 10-yr yield increased just one basis point to 1.83% while the 2-yr yield rose four basis points to 1.05% on continued expectations for a more hawkish Fed. The U.S. Dollar Index gained 0.4% to 96.85. WTI crude futures fell 0.7%, or $0.57, to $86.29/bbl.

Pivoting to earnings news, United Airlines (UAL 42.88, -1.52, -3.4%) and American Airlines (AAL 16.76, -0.55, -3.2%) were swept up in the downturn after providing cautious near-term outlooks. Travelers (TRV 165.18, +5.11, +3.2%) and Union Pacific (UNP 242.07, +2.58, +1.1%) were two earnings standouts. 

Reviewing Thursday's economic data:

  • Initial claims for the week ending January 15 increased by 55,000 to 286,000 (consensus 211,000) while continuing claims for the week ending January 8 increased by 84,000 to 1.635 million. 
    • The key takeaway from the report is that it is apt to be construed as a sign of the negative impact the Omicron variant is having on the labor market since it is the highest initial claims number since October; moreover, this report includes the week in which the survey for the January employment report was conducted, so the higher print could dial down expectations for the gain in January nonfarm payrolls.
  • Existing home sales declined 4.6% m/m in December to a seasonally adjusted annual rate of 6.18 million ( consensus 6.42 million). Total sales in December were down 7.1% from a year ago. Total home sales in 2021, however, reached 6.12 million, which was up 8.5% year-over-year and the highest annual level since 2006.
    • The key takeaway from the report is that prices remain high as inventory remains extremely tight. The supply constraint is crimping sales growth in the existing home market, as are increasing affordability pressures created by the high selling prices and rising mortgage rates.
  • The Philadelphia Fed Index for January increased to 23.2 (consensus 20.0) from 15.4 in December.

Looking ahead, investors will receive the Conference Board's Leading Economic Index for December on Friday.

  • Dow Jones Industrial Average -4.5% YTD
  • S&P 500 -6.0% YTD
  • Russell 2000 -9.9% YTD
  • Nasdaq Composite -9.5% YTD

FT : Eddie Jordan pulls out of race to buy Playtech

Eddie Jordan pulls out of race to buy Playtech
Former F1 team boss concerned that group of Asian investors would block deal

Former Formula One team boss Eddie Jordan has pulled a potential bid for Playtech, the gambling company, because of concerns that a group of Asian investors that recently bought into the company would block the deal.

Jordan’s acquisition vehicle, JKO Play, had been set to propose an offer of 750 per share for Playtech, which provides back-end technology to gambling companies such as Entain. JKO plans to publish a statement on Friday morning announcing its intention to pull out, said three people involved in the process.

Its bid would have put it in competition with Australia’s Aristocrat Leisure, whose offer had been recommended to shareholders by Playtech’s board.

Earlier this month, the UK Takeover Panel extended the deadline for JKO to make an offer from January 5 to January 26, after it announced its interest in November.

Aristocrat’s offer at 680p per share is below Playtech’s current share price, which has surged about 72 per cent since Aristocrat’s bid was accepted by the board last October because of competing interest from the Hong Kong-based asset manager Gopher Investments and JKO.

Gopher abandoned its bid for the company in November.

Two advisers working on the deal separately said JKO had decided not to go ahead with its offer over concerns that a block of Asian investors, who have been building stakes in Playtech since October and now own about 27 per cent of the company, would obstruct any deal that did not meet their perceived value of the company.

“In these circumstances, the economics become tricky for any bidder,” one said.

JKO and Playtech declined to comment.

As part of its offer, JKO had intended to sell Snaitech, Playtech’s Italian business, to Entain in order to help fund the bid, two people involved in the process said. Entain’s rival Flutter bought the Italian gaming company Sisal in December.

The takeover battle is the latest in the gambling sector where companies are increasingly looking to consolidate or find greater financial heft in order to deal with tighter regulations, as well as enter fast-growing new markets such as Latin America and the US.

Playtech, which was founded by the Israeli billionaire Teddy Sagi in 1999, owns the right to acquire a large stake in the Mexican gaming company Caliente and has been steadily expanding its US operations, launching two live casino facilities, through which it streams casino games, in Michigan and New Jersey in December.

Aristocrat intends to go ahead with its bid at the current price, which values Playtech at £2.7bn, despite concerns over the potential for the Far Eastern investors to act together and block any deal, a source working on the offer said.

Aristocrat declined to comment

FT : Kwarteng blocks £1.2bn subsea cable project backed by Tory donors

Kwarteng blocks £1.2bn subsea cable project backed by Tory donors
Plans for interconnector with France faced opposition in Portsmouth where cable would have come ashore

Business secretary Kwasi Kwarteng has rejected a controversial £1.2bn undersea cable project backed by two tycoons born in the former Soviet Union, who have given £1.5m to Britain’s ruling Conservative party.

Aquind, the company behind plans for a 148-mile subsea, electricity cable linking the French and British power grids, said it would consider seeking a judicial review.

The decision was made at ministerial level after the government designated the scheme, which would have had the capacity to import enough electricity to meet up to 5 per cent of UK demand, a “nationally significant infrastructure project” four years ago.

The decision was greeted with jubilation by local opponents in Portsmouth, where the cable would have come ashore. The project would have required major works to channel the interconnector along one of three main roads into the city.

Gerald Vernon-Jackson, the Liberal Democrat leader of the city council, said the plan had been a “really stupid idea”, adding: “Everyone knows you do work on one (main road) and the whole city grinds to a halt”.

In a statement, Kwarteng noted the scheme would have had adverse impacts on a “very densely populated” urban area. Inspectors found the project could cause harm to the Fort Cumberland Scheduled Monument and a Grade-II listed cottage as well as some sports pitches. It could also have delayed work on a coastal defence scheme.

The UK grid is planning to expand its reliance on interconnectors, as part of its plans to reach 100 per cent clean electricity by 2035. Interconnectors with France, Belgium, and Norway already supply about 10 per cent of the UK’s electricity — a figure that could double by 2026 with four more under construction or development.

Aquind argued that its interconnector would have helped the UK meet its “net zero” climate target as well as reduce spiralling energy bills. The scheme would have included a large data pipe containing 180 fibre-optic pairs for use by companies such as banks, technology firms and telecoms companies.

Trade minister Penny Mordaunt — a local MP — wrote in a submission in December that the project would have “an extremely concerning impact on our security” because France could easily cut off energy supplies to the UK, in reference to threats made by Paris last year during the dispute over post-Brexit fishing rights.

The co-owners of Aquind are both British citizens but were born in the former Soviet Union. Viktor Fedotov is a Russian-born oil tycoon, while Alexander Temerko is a Ukrainian-born former arms executive and one-time director of Russian oil company Yukos.

Temerko was on the board of Yukos before it was seized by the Kremlin, after which he moved to the UK in 2004 and became a British citizen in 2011. He has publicly criticised Russian president Vladimir Putin over the conflict in Ukraine. But he has spoken of his links to another senior Kremlin figure, security council secretary Nikolai Patrushev.

Fedotov previously controlled a separate company that was a contractor on a major oil pipeline project in the mid-2000s for Transneft, Russia’s state oil pipeline monopoly, according to a report by the Guardian and BBC as part of the Pandora Papers offshore leaks.

Stephen Morgan, Labour MP for Portsmouth South, described the decision as a “victory for the people of Portsmouth” after years of uncertainty and “Tory cronyism.”

The Conservative party has received a total of £1.5m in donations from Aquind — jointly owned by the two tycoons — and from Temerko himself and a company linked to him called ONG. The funds were channelled to 33 MPs or their local constituency parties.

Jeremy Hunt, a former leadership contender, received £72,500 from Aquind. Other recipients include cabinet ministers such as chancellor Rishi Sunak (£5,000 to his Richmond constituency) and chief secretary to the Treasury Simon Clarke (£20,000).

Lord Callanan, who is currently a junior business minister, was a non-executive director of Aquind from 2016 to 2017. He was recused from this week’s decision.

WSJ : Fed Launches Review of Possible Central Bank Digital Currency

Fed Launches Review of Possible Central Bank Digital Currency
Officials solicit public comment, but are unlikely to decide soon whether to issue a government-backed cryptocurrency

WASHINGTON—The Federal Reserve on Thursday launched a review of the potential benefits and risks of issuing a U.S. digital currency, as central banks around the world experiment with the potential new form of money to keep pace with private-sector payments innovations.

Fed officials have been divided on the matter, making it unlikely they will decide soon on whether to create a digital dollar. Unlike private cryptocurrencies like bitcoin, a Fed version would be issued by and backed by the U.S. central bank, a government entity, as are U.S. paper dollar bills and coins.

The central bank described Thursday’s long-awaited report as the first step in a discussion of whether and how a U.S. digital dollar could improve the safe and effective domestic payments system. The paper doesn’t favor any policy outcome, and the Fed said the release of the report isn’t meant to signal any imminent decision.

“We look forward to engaging with the public, elected representatives, and a broad range of stakeholders as we examine the positives and negatives of a central bank digital currency in the United States,” Federal Reserve Chairman Jerome Powell said in a statement.

The Fed will collect comments on the report for 120 days. The Fed said it would move to adopt such an offering only with the support of the nation’s elected leaders.

Advocates say a Fed digital dollar could make it faster and cheaper to move money around the financial system, bring into it people who lack bank accounts and provide an efficient way for the government to distribute financial aid.

Another motivating consideration: keeping up with other major jurisdictions considering a digital currency for domestic and international payments, Fed governor Lael Brainard said in remarks before the National Association of Business Economics in September.

“It’s just very hard for me to imagine that the U.S., given the status of the dollar as a dominant currency in international payments, wouldn’t come to the table in that circumstance with a similar kind of an offering,” she said.

However, Mr. Powell has indicated he sees reason for caution. He said last year that it is more important to get the digital dollar right than to be first to market, in part because of the dollar’s critical global role.

He and other Fed officials have said the Fed’s research is early and exploratory. He said at a Sept. 22 press conference that they would only consider issuing a so-called central bank digital currency—or CBDC—if they believed there were “clear and tangible benefits that outweigh any costs and risks.”