FT : British Gas, Eon and SSE named and shamed over energy tariffs

British Gas, Eon and SSE named and shamed over energy tariffs
UK regulator highlights groups with highest proportion of customers on standard rates

British Gas, Eon, SSE and Utility Warehouse have the highest proportion of customers on expensive standard energy rates, according to new data, as the government heaps pressure on utilities to drive down bills.

A league table comparing average bills for households on “standard variable tariffs” — which tend to be more expensive than fixed deals — was published on Wednesday for the first time by Ofgem, the UK energy regulator, as part of a drive to encourage customers to switch to cheaper rates.

Ofgem also shows the proportion of each provider’s customers on standard rates. About 20m, or 66 per cent of all households, are currently on these tariffs.

Extra Energy, an independent supplier based in Birmingham, Co-operative Energy and Scottish Power have the most expensive standard rates on average, although the percentage of their total customers on those tariffs is relatively low compared with rivals at 14 per cent, 42 per cent and 50 per cent respectively. Extra Energy customers on the standard tariff pay on average £1,130 a year, according to the regulator.

Utility Warehouse, a London-based provider of energy and telecoms services, has the highest proportion on standard tariffs, at 94 per cent or 503,955 customers, followed by “big six” provider SSE at 91 per cent, or more than 3.8m households.

Ofgem said 74 per cent of British Gas customers, more than 6.6m households, are paying standard rates. The regulator has calculated those customers could save £174 a year by moving to another, cheaper deal on the market.

Npower has the biggest differential between its standard variable tariff and its cheapest rate.

Supplier Customers on
standard variable tariffs
Utility Warehouse 94%
SSE 91%
British Gas 74%
Eon 73%
Npower 59%
EDF 56%
Scottish Power 50%
Co-operative Energy 42%
Ovo 35%
Extra Energy 14%
First Utility 9%
The move follows Theresa May, prime minister, and Philip Hammond, chancellor, naming retail energy as a “key market” that the government wants to make function fairly. Ministers are understood to believe that measures announced by the UK competition watchdog in the summer do not go far enough.

The Competition and Markets Authority announced a price cap in June for customers with pre-payment meters, following a two-year investigation, but stopped short of widespread price controls.

Related article
Regulator warns that guaranteed electricity may come at a cost
Senior partner at Ofgem says UK could become two-tier market because renewables are less reliable
Greg Clark, business and energy secretary, said on Wednesday that millions of Britons “continue to pay too much for their energy”.

He added: “The measures announced today are a positive step to help more people benefit from increased choice and competition.”

But the move is unlikely to appease consumer groups, which want energy companies to spell out how they are encouraging disengaged customers on expensive standard tariffs to switch.

Alex Neill of the consumer group Which? said: “Publishing more information about the amount that people could save from switching is unlikely to make much difference to the millions of people paying over the odds on expensive standard tariffs. Instead, we need to see much more action by energy suppliers this winter to genuinely engage with their customers on poor value deals.”

A spokesperson for SSE acknowledged the company had a “high proportion” of customers on the standard rate but said its profit margin had averaged at around 5 per cent in “recent years”, suggesting those customers are “getting a fair deal”.

Utility Warehouse called the data “highly misleading”. “As a multi-utility supplier, we offer a range of separate evergreen tariffs which reduce in price based on the combination of services that our customers take from us,” it said in a statement.

Separate figures published on Wednesday by Energy UK, the trade association that represents utility companies, suggested more than 4m households changed supplier in 2016, the highest level for three years.

(ZeroHedge) Jeff Gundlach Warns 10Y Yields Above 3% Will "Punish Markets", Would

Jeff Gundlach Warns 10Y Yields Above 3% Will "Punish Markets", Would Mark End Of Bond Bull

Having previously noted the 10Y yield bogeys by SocGen, Goldman and JPM, above which the S&P would start to groan, which are at 2.60%, 2.75% and 2.75%, respectively, overnight we got yet another datapoint to add to this series: that of Jeffrey Gundlach, who during yesterday's webcast to DoubleLine investors said 10Y rates may climb to 3% by next year as deficits and inflation rise under the Trump presidency, "a move that would hurt markets." The 10Y is currently trading just below 2.50%


“We’re getting to the point where further rises in Treasuries, certainly above 3 percent, would start to have a real impact on market liquidity in corporate bonds and junk bonds,” Gundlach said on Tuesday as reported by Bloomberg.

“Also, a 10-year Treasury above 3 percent in my view starts to bring into question some of the aspects of the stock market and of the housing market in particular.”
Bonds are 'cheapest' to stocks in over two years...
In just under 5 hours, the Fed is expected to raise its Fed Funds rate by 0.25% for the first time this year and only the second time since the 2008 financial crisis.
Gundlach said on the webcast that he will be looking after the meeting for signs that Fed members are growing inclined to raise rates more aggressively in the next couple of years as the economy heats up.
Gundlach also said that he has increased the average duration of holdings in his fund as rates have risen since July, while still holding debt with a shorter duration, and lower risk, than the benchmark Bloomberg Barclays U.S. Aggregate bond index.
It certainly appears bond yields have run up relative to inflation expectations post-Trump...
In a follow up call with Reuters, Gundlach repeated that "3 percent is a problem. If the 10-year goes above 3 percent, you would also have to say unequivocally you have seen the end of the bond bull market."
Gundlach also said it is reasonable to be nimble and do some purchasing of Treasuries. "I think it is an okay buy right now," he said. "We hate the market less. We are a little bit less defensive," Gundlach said. When bond prices are down, DoubleLine likes it more, he said.
If the 10-year yield exceeds 3 percent next year, high-yield "junk" bonds will drop into a "black hole of illiquidity," Gundlach said.
Gundlach said the Standard & Poor's 500 Index, which is up 6.5 percent since the election, could reverse their solid momentum at the latest by Trump's Jan. 20 inauguration. Gundlach said he thinks the dollar is going to soften in the weeks ahead as "bullishness in the dollar is pretty entrenched."
For those who missed it, Gundlach's full presentation from yesterday's webcast is below.

>>> JPMorgan, Goldman Sachs expected to lead Altice USA listing: sources

JPMorgan, Goldman Sachs expected to lead Altice USA listing: sources


Investment banks JPMorgan (JPM.N) and Goldman Sachs (GS.N) are in pole position to be mandated to lead the initial public offering (IPO) of shares in Altice USA, three sources familiar with the matter said.
In October Reuters exclusively reported that Altice USA, the cable operator that Dutch-based Altice NV [ATCA.AS] put together by acquiring Cablevision and Suddenlink Communications was planning an IPO with the company valued at between $25 billion and $30 billion.
The two investment banks declined to comment. Altice was not immediately available.

>>> Steinhoff and Shoprite in talks to combine assets in South Africa

Steinhoff and Shoprite in talks to combine assets in South Africa
http://www.sharenet.co.za/v3/sens_display.php?tdate=20161214123000&seq=27
South Africa-based retail giants Steinhoff International Holdings NV [SHF:SJ] and Shoprite Holdings Ltd [SHP:SJ] have disclosed that they are negotiating merging their retail units in Africa under a deal led by billionaire Christo Wiese.
To effect the combination, Shoprite would buy Steinhoff's African retail businesses, the companies stated, and then Shoprite would issue stock to Steinhoff, providing it with "significant" equity in a larger Shoprite. Steinhoff could ultimately take control of the business, the companies stated.
The merged businesses would be known as Retail Africa and have ZAR 200bn (USD 14.6bn) in revenue.
Steinhoff's financial advisor is Rand Merchant Bank and its sponsor is PSG Capital.
Shoprite's sponsor is Nedbank and its legal advisor is Werksmans Attorneys.
Steinhoff's legal counsel is Cliffe Dekker Hofmeyr and Linklaters.
Press release:
Shareholders of Steinhoff and Shoprite are hereby advised that the largest shareholders of both
companies, namely the Public Investment Corporation SOC Limited (“PIC”) and Titan Premier
Investments Proprietary Limited (“Titan”) (a company ultimately controlled by a family trust of Dr.
Christo Wiese) have initiated and facilitated discussions between the Steinhoff and Shoprite boards
of directors regarding the potential combination of their respective African retail businesses, with the
objective of establishing a diversified African retail business of significant scale and international
geographical reach that could be regarded as the retail champion of Africa (“Retail Africa”)
(“Proposed Transaction”).
The vision to create Retail Africa, which will be a formidable entity, having its roots firmly entrenched
in Africa, is shared by both the PIC and Titan. Accordingly, both shareholders have indicated that
they are fully supportive of an initiative which could lead to the creation of Retail Africa.
In terms of the Proposed Transaction, it is envisaged that Shoprite will acquire Steinhoff’s African
retail operations, consisting of:
- Pepkor Africa: Pep SA, Ackermans, Speciality Group, including Shoe City, John Craig,
Refinery and Dunns, as well as the Pep and Ackermans African operations;
- JD Group: Russells, Bradlows, Rochester, Incredible Connection, Hi-fi Corporation,
Sleepmasters and financial services;
- Steinbuild, including Buco, Pennypinchers, Timbercity and Hardware Warehouse; and
- Tekkie Town (collectively known as “Steinhoff Africa Retail”).
Shoprite will issue new ordinary shares to Steinhoff in consideration, pursuant to which Steinhoff will
receive a significant equity interest in Shoprite. The value for Steinhoff Africa Retail will be negotiated
taking into account the best interests of both Steinhoff and Shoprite shareholders.

From Shoprite’s perspective, the Proposed Transaction is expected to position the combined
businesses of Retail Africa as the leading multi-format discount retailer on the African continent.
Retail Africa, locally bred, will have the required size and scale to compete with any other
international retailer, making it a compelling value proposition for Retail Africa’s value conscious
African customer base. As the largest retailer in Africa, Retail Africa will employ approximately
186,000 people. It is expected that the Proposed Transaction will further enhance Retail Africa’s
position as an employer of choice and it is also anticipated that the Proposed Transaction will not
result in any job losses. The combined group’s growth plans could lead to future job creation in
various countries.
In addition to the above, Steinhoff has entered into an in principle agreement with the PIC and Titan
to acquire their interests in Shoprite as part of the Proposed Transaction in the form of a Steinhoff
share-for-Shoprite share exchange, subject to an exchange ratio to be agreed (“the Exchange
Ratio”) which may ultimately result in Steinhoff acquiring control of Retail Africa. This Exchange
Ratio will be negotiated taking into account the consideration price for Steinhoff Africa Retail on the
basis that the Proposed Transaction will not be earnings dilutive to Steinhoff shareholders.
In addition, Steinhoff may be required to extend a mandatory offer based on the same Exchange
Ratio to other Shoprite shareholders to acquire their Shoprite ordinary shares (“Offer”). If this is the
case, such Offer will be in the form of a Steinhoff share-for-Shoprite share exchange, at the
Exchange Ratio. Shoprite shareholders will, however, at all times have the election right to retain
their exposure to listed Retail Africa directly or be free to choose to accept the Offer, should it be
made.
The boards of directors of both Shoprite and Steinhoff remain fully supportive of maintaining Retail
Africa’s separate listing on the Johannesburg Stock Exchange and are committed to the preservation
of an appropriate free float of Retail Africa ordinary shares.
Rationale
The Proposed Transaction will result in Steinhoff’s African exposure being held through a strategic
interest, within a separately listed entity with sufficient liquidity, which can be independently valued
as an African retail champion. Additionally, through Retail Africa, Steinhoff’s African assets will be
exposed to additional growth opportunities. The Proposed Transaction would allow Steinhoff, as a
group, to strengthen its exposure and relevance to the African consumer, through the diversified
global retail platform that would include Africa’s leading fast moving consumer goods, household
goods and furniture retailer.
It is expected that Retail Africa’s value proposition will provide its shareholders with a sustainable
business where the growth and margin improvement opportunities are greater than the current
individual businesses. The collective product ranges, expertise, infrastructure and size of Retail
Africa will provide a unique and differentiated customer value proposition, operating in South Africa
and in 14 African countries in which established infrastructure sharing will take place.
These benefits would be likely to include: infrastructure and services sharing; product specialisation;
product diversification; supply chain optimisation; customer loyalty, choice and convenience; and
people management and benefits, such as, access to additional skills, and attracting retail talent.
On a pro forma combined basis, Retail Africa would have had revenue and EBITDA of approximately
ZAR 200bn and ZAR15bn respectively, for the twelve month period ended 30 June 2016, with
a strengthened balance sheet structure to support further organic and acquisitive growth in its
diverse, but complementary constituent businesses.
Cautionary
The boards of directors of Shoprite and Steinhoff have agreed to enter into formal negotiations with
regard to the Proposed Transaction which negotiations, if successfully concluded, may have a
material effect on the price of both companies’ securities. Accordingly, shareholders of both
Steinhoff and Shoprite are advised to exercise caution when dealing in their securities until further
details pertaining to the Proposed Transaction are announced. Any forecast financial information
contained in this announcement has not been reviewed or reported on by the companies’ external
auditors.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: ARNC -0.7%, (guidance at Investor Day)

M&A news: SNY -1.7% (said to be in talks with Actelion)

Select metals/mining stocks trading lower: HMY -4.1%, GFI -2.3%, CLF -1.9%, AU -1.6%, VALE -1.5%, RIO -0.5%

Select oil/gas related names showing early weakness: SDRL -3.4%, ESV -2.8%, WLL -2.6%, YNDX -2.3%, OAS -2.1%, SDLP -1.8%, CHK -1.6%, COP -1.6%, RIG -1.2%

Other news:

  • ANW -9.4% (prices $150 mln of convertible senior notes due 2021 in a private offering to qualified institutional buyers, $50 mln more than previously announced)
  • EGLE -5.7% (announces $100 mln private placement of approx 22.2 mln shares of common stock at a purchase price of $4.50 per share)
  • PBF -4.3% (prices 10 mln shares of common stock for gross proceeds of $277.5 mln)
  • HTZ -4.3% (announces Kathryn Marinello to become President and Chief Executive Officer effective January 3, 2017; announced that its three longest serving directors, Non-Executive Chair Linda Fayne Levinson, Compensation Committee Chair Carl T. Berquist and Financing Committee Chair Michael J. Durham have chosen to leave )
  • CPE -4% ( subsidiary buys acreage in core southern Delaware Basin for $615 mln in cash; upsizes and prices 40 mln shares of common stock for gross proceeds of $656 mln)
  • GM -3.4% (may be attributed to China Daily details that China plans to fine an unnamed US automaker for alleged monopolistic behavior)
  • WFC -1.2% (FDIC/Fed Reserve agencies jointly determined that Wells Fargo did not adequately remedy two of the firm's three deficiencies)
  • TLRD -1.1% (appoints Jack Calandra as CFO effective January 3, 2017 )
  • OTEX -1% (prices 9.25 mln shares of common stock at $61.00 per share)
  • GWR -0.9% (prices 4 mln shares of common stock at $75.00 per share)

Analyst comments:

  • QCOM -1.6% (downgraded to Neutral from Overweight at JP Morgan)

>>> USGapping up

Gapping up
In reaction to strong earnings/guidance: BPMX +11.7%, NDSN +7.9%, FSFR +1.7%, RICK +1%, ESRX +0.8%

M&A news: NSR +20.4% (to be acquired for $33.50 per share by Golden Gate Capital)

Other news:

  • VCEL +65.4% (FDA approves first autologous cellularized scaffold for the repair of cartilage defects of the knee)
  • BCLI +27.3% (announces new data from its Phase 2 study of NurOwn)
  • REXX +19.2% (announces that Nasdaq has accepted Rex Energy's request for continued listing )
  • SKIS +15.8% (announced USCIS approved the first I-526 Petition submitted by an investor in Mount Snow's EB-5 offering, allowing the funds raised in the offering to be released from escrow immediately)
  • PLX +14.7% (Co received a letter from Fundação Oswaldo Cruz detailing intended purchases by the Brazilian Ministry of alfataliglicerase to treat Gaucher patients in Brazil of approximately $24 mln)
  • ADHD +11.7% (announces it recently held a face-to-face meeting with the FDA to discuss their decision to place a full clinical hold on the development programs of Metadoxine Extended Release)
  • ENT +10.7% (Global Eagle discloses in a filing that they entered into a new supply & services agreement with Southwest Airlines)
  • DRWI +5.5% (receives extension from NASDAQ until April 17, 2017 to regain compliance)
  • VTGN +5.3% (signs an exclusive sublicense agreement with BlueRock Therapeutics for VistaGen's rights)
  • DSX +5.2% (Ironwood Trading discloses a 22.2% active stake)
  • PRTO +4% (modestly rebounding following yesterday's weakness)
  • RDHL +3.1% (Co and IntelGenx (IGXT) sign an exclusive license agreement with Pharmatronic for the commercialization of RIZAPORT in South Korea)
  • ONVO +2.1% (announces an exclusive distributor agreement with Cosmo Bio for its NovoView Preclinical Services in Japan)
  • WNC +1.6% (ticking higher, reinstates dividend; intends to pay a quarterly dividend of $0.06/share )
  • VRX +1.2% (Pershing files amended 13D disclosing 7.8% active stake that reflects the sale of more than 3 mln shares)
  • DBD +1.2% (Atlantic Investment discloses 5.1% active stake)
  • H +0.6% (announces new authorization of $250 million in share repurchases)

Analyst comments:

  • NI +2.2% (upgraded to Buy from Neutral at Citigroup)
  • NVDA +1.3% (upgraded to Buy from Hold at Evercore ISI )
  • KLAC +1.3% (upgraded to Strong Buy at Needham)
  • FFIV +0.8% (upgraded to Buy from Neutral at Citigroup)
  • AKAM +0.8% (upgraded to Outperform from Perform at Oppenheimer)