Queens Moat Houses bucked the weak trend in the hotel sector yesterday thanks to speculation that veteran property entrepreneur and 25% shareholder Jack Petchey is to launch an offer for the debt-laden group.
Dealers were left scratching their heads on Tuesday when Mr Petchey’s investment vehicle, Trefick, lifted its stake in Queens Moat from 19% to 25%. With the company struggling under pounds 650m worth of debt they could not see how the entrepreneur could afford to make a bid.
However, according to yesterday’s gossip Mr Petchey has joined forces with a distressed debt specialist to make a 12p-a-share offer for the company. Yesterday the shares closed up 0.25p to 7.75p. Sector specialists note that Mr Petchey and several large investment banks, including Merrill Lynch and Citigroup, have been quietly building positions in Queens Moat’s pounds 228m junior debt facility over the past couple of weeks.
Mr Petchey has built up stakes in several hotel groups this year. He owns 29% of Jarvis Hotels , unchanged at 132p, and amassed a 50% holding in Hanover International , steady at 125p, before launching a 125p a share offer for the group.
Elsewhere in the sector things were not so bright. InterContinental Hotels Group lost 13.5p to 500.5p after rival Hilton Group , off 4p at 198p, warned that it had seen few signs of a recovery in demand.
Leading shares fell back below the 4,200-point level for the second time this week. Dragged down by a lacklustre opening on Wall Street the FTSE 100 index closed 8.4 points off at 4,198.
The FTSE 250 index eased 5.6 points to 5,569, but the FTSE Small Cap index rose 3.2 points to 2,398.5.
Vodafone , up 0.25p at 117.5p, was the day’s most actively traded stock followed by Lloyds TSB , down 4.75p at 420.75p, and BT Group , 1p higher at 186.75p.
Over in the bond market, gilts tracked a rally in US treasuries to end the day higher. The benchmark 10-year gilt ended at 127.25, yielding 4.592%.
Allied Domecq , the world’s second biggest spirits group, was among the day’s biggest blue chip fallers after ABN Amro advised its clients to take profits ahead of Monday’s year-end trading update. The Dutch broker expects the group to cut its 2004 earnings forecast after the update is published. It reckons trading in South Korea will weaken over the next 12 months and Allied will face stiff competition in the US wine market, as rivals discount. Allied shares, up 33% since February, fell 7.5p to 384p.
Despite reporting first-half profits at the top end of expectations Rexam , the world’s biggest maker of drinks cans, fell 9.75p to 411.5p. Dealers said the stock had been unsettled by a report in French newspaper La Tribune which claimed Rexam was one of a number of groups interested in mounting a “white knight” offer for aluminium group Pechiney.
Cruise operator Carnival shed 44p to pounds 20.45 after non- executive Stuart Subotnick said he had sold 58,000 shares.
Mining groups Xstrata and Rio Tinto gained 14.5p to 485p and 22p to pounds 13.70 respectively after rival BHP Billiton , up 9.5p to 413p, posted a strong set of preliminary figures.
Hedge fund specialist Man Group gained 17p to pounds 12.27 after Morgan Stanley upgraded it to overweight from equal weight, but Marks & Spencer eased 6.25p to 304.25p despite buying its own shares for the first time in three weeks.
Lower down the market, Chrysalis was the biggest FTSE 250 riser as a large line of stock was cleared and dealers heard that UBS had held its 2003 earnings forecasts following a year-end round-up meeting with the media group. The broker is also said to have told its clients that the Chrysalis Radio business continues to trade strongly. The shares rose 11.5p to 200p.
UBS was also making its presence felt among the small caps. Incepta, the owner of the public relations company Citigate Dewe Rogerson, shed 2p to 19.75p after the Swiss investment bank removed the stock from its buy list. Incepta is due to issue a trading update on Monday and while UBS believes the pick up in global equity markets and investor confidence will eventually help the company it does not think it will be evident in its figures yet. “We will need to see evidence of underlying trading improving for the shares to justify further progress in the short term,” UBS said.
Cambridge Antibody Technology , the biotech group that failed in its bid for Oxford GlycoSciences earlier this year, firmed 29.25p to 545p. The shares were supported by speculation of an upbeat announcement on Humira, its treatment for rheumatoid arthritis.
Morgan Sindall rose 17.5p to 375p on talk that its Lovell’s division, which specialises in building low-cost, affordable housing, had won a big contract from a city council.
Peacock , the discount clothing retailer, marked time at 163.5p despite Numis Securities advising clients to buy. Numis reckons the strong trading performance seen in the first half of the year – like- for-like sales were up 11% – has continued into the second half and margins at its Bon Marche business have continued to improve.
Austin Reed rose 3p to 150.5p on talk that one of the predators that took a look at the group earlier this year had renewed its interest.
On the AIM, Armour Group , the audio electronics outfit, firmed 3p to a year high of 45.75p, on talk that full-year results will top expectations.
