European Business News (EBN), 96-10-28

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated October 28 1215 CET

CONTENTS

[01] Huge demand for shares in Italy's state energy firm ENI

[02] UK CE Electric Offers £651 million For Northern Electric

[03] US dollar hits 42 month high against the Yen, Sterling at four year high

[04] France's Alcatel to lay off 1,600 workers before the end of 1998

[05] German Retail Sales up 2.5% on year

[06] Rolls-Royce win £25 million order to supply Portugese Power Station

[01] Huge demand for shares in Italy's state energy firm ENI

Treasury Minister Carlo Azeglio Ciampi announced Saturday the details of the outcome of the placement, which he said was the largest equities sale ever undertaken in Italy.

The Treasury fixed a price per share of 7,161 lire for institutional investors, equal to the official closing price for ENI shares on Friday. Small shareholders, who were the Treasury's major target for this placement, paid 6,910 lire per share after a discount of 3.5%.

Demand for shares was so great that the government decided late last week to increase the offering by 57%.

Altogether, 1.1 billion new shares, or 14% of the company, are to begin trading today. The state already sold 15% of ENI in an initial public offering last November. If an option to sell still more shares is exercised by the coordinators, the state's ENI holding will be cut to 69%.

Some 383,000 Italians put in bids for shares, including 42,000 ENI employees. Some 700 million new shares will go to small investors.

[02] UK CE Electric Offers £651 million For Northern Electric

CE Electric, a unit set up to make the bid, said its offer of 630 pence per ordinary share represents a 21.2% premium to Northern Electric's closing price on Friday of 520 pence. Around 0832 GMT, the stock was quoted at 615 pence a share, up 95 pence or 18%. David Sokol, chairman and chief executive officer of Cal Energy, told Dow Jones the total value of the offer is more than 1 billion pounds. In addition to 651 million pounds for the ordinary share capital, the offer includes 103 pence for each preference share, totaling about 111 million pounds, and Northern Electric's 300 million pounds of existing debt. Under the offer, Cal Energy would acquire 70% of the company and Peter Kiewit Sons, a U.S. construction, mining and telecommunications concern, would take the remaining 30%. The acquisition will be 35% equity financed with the remainder by bank debt that has already been negotiated, Sokol said.

Northern Electric issued a statement urging investors to take no action in response to the offer and said it planned a fuller statement later Monday. Sokol said the companies had been in talks for only about 10 days and had agreed on everything except price. He said he was hopeful the premium offered for the company would induce Northern to agree to the offer. BZW, Northern Electric's brokers, recently put a valuation on the stock of 484 pence a share.

[03] US dollar hits 42 month high against the Yen, Sterling at four year high

The dollar also witnessed a resurgent sterling as sterling rose to $1.6124, a 16 month high. In Asia the dollar was helped through the key Yen/Dollar rate of 113.60 Bentsen Ceiling by a market belief that the Japanese interset rates will remain low for some time. Traders named the barrier after US Trade Secretary Lloyd Bentsen said that he would not countenance Japan using a weaker Yen weaker than 113.60 to export its way out of recession. Meanwhile the dollar's gains against the mark are seen limited by yen weakness against the German currency. Around 0837 GMT, was trading at 1.5238 marks little changed from 1.5235 marks at 0530 GMT in Tokyo and up from 1.5207 marks late Friday in New York. The dollar was also at 113.86 yen, down slightly from its intraday and 41-month high of 113.95 yen at 0530 GMT, but still well bid and above 113.40 yen late Friday in New York. Monday, the dollar is expected to trade between 1.5180-1.5280 marks, dealers in Frankfurt said.

Dealers cited remarks by Deutsche Bundesbank President Hans Tietmeyer that Germany's official interest rates won't be lowered for the time being, as supporting mark and dollar buying against the yen. Low Japanese interest rates were also seen as a factor.

Tietmeyer said in a radio interview with a Frankfurt-based station Sunday that the Bundesbank needn't cut rates in the foreseeable future. The radio station late Friday had released a press statement on the interview. Meanwhile, Bank of Japan Governor Yasuo Matsushita Monday was quoted as saying that the positive recovery mechanism in Japan is steadily falling into place, but the economy still lacks momentum to reach the next stage of growth.

And although further gains of the dollar against the mark are seen limited, not the least by sterling buying against the dollar, dealers see room for further gains against the yen after the dollar has broken key resistance levels. 'We're significantly through 113.00 yen and now the next target is 114.00-114.50 yen,' said a dealer with British bank in Frankfurt.

[04] France's Alcatel to lay off 1,600 workers before the end of 1998

In a press release, the company said it was slashing its workforce of 9,400 through deep job cuts at its factories in Lannion and Ormes, though neither plant was slated to close.

A liaison committee of Alcatel CIT management and workers planned to meet on November 5 to examine in detail the company's planned layoffs, part of a restructuring announced in September 1995.

Alcatel CIT said it expects to post losses of roughly 500 million francs for 1996.

[05] German Retail Sales up 2.5% on year

In the seven-months from January to July, Germany's retail sales declined a real, or inflation-adjusted, 0.9% from the comparable period the previous year, the federal statistics office said. This corresponds to a 0.1% decline on the year in nominal terms. Most individual retail branches reported sales increases in July 1996. The statistics office singled out the mail-order sector in particular, where sales increased a real, or inflation-adjusted, 19.2% compared to the year-earlier month. This represented a nominal rise of 20.4% on the year.

The statistics office noted that specialized food, beverage and tobacco retail outlets were the only stores to post a decline in sales on the year in July. This sector said sales fell a real, or price-adjusted, 6.2% in July from the same period the previous year, equivalent to a year-on-year drop of 5.4% in nominal terms.

[06] Rolls-Royce win £25 million order to supply Portugese Power Station

Derby-based International Combustion will convert up to four coal-fired boiler units for plant owner Companhia Portuguesa de Producao de Electricidade (CPPE). Work will start on the burners almost immediately, with plans to have them operational by the second quarter of 1997. 'This represents an important vote of confidence in the long-term future of the company,' said Managing Director Brian Roulston.

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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