"PLAN A is dead, long live Plan A", was the phrase uttered by one Co-operative Group adviser as the details of its revised restructuring emerged on Monday morning.
Er, not quite. As accustomed as the mutual’s new management has had to become to putting a brave face on an ugly balance sheet, this was a piece of spin too far.
True, the Co-op Group will remain the largest single shareholder in the Co-op Bank under the new proposals.
But to proclaim – as Euan Sutherland, the group chief executive, did – that that represented a victory of sorts was profoundly disingenuous, given his repeated assertion since taking the helm that no alternative restructuring was viable.
That is particularly true given that at least some retail bondholders will fare rather better under the revised plans than they would have done previously. The fact that it took “rapacious American hedge funds” (as Co-op sources are fond of describing them) to achieve those improved terms says much about how extensive is the reputational repair job that the mutual now requires.
I suspect that once its £1.5bn capital hole is filled, the Prudential Regulation Authority will oblige Sutherland to secure the services of a respected banker (not yet quite an oxymoron) to replace Len Wardle as the group chairman.
Another consequence of the revised proposal is that an increasingly fraught negotiation between Sutherland and the Co-op’s lenders, led by Royal Bank of Scotland (RBS), is now effectively resolved because of the reduced borrowing required to smooth the passage of the restructuring. It was shaping up to be an expensive deal for the Co-op. Yet I suspect the greatest relief over its redundancy will be felt at RBS; its refusal to grant consent to a restructuring would have cast it as political and public enemy number one at a time when it can least afford it.
ROYAL MAIL SALE
Royal Mail: if proof were needed that the use of an independent adviser to set the price of an initial public offering offers no guarantee of a smooth ride, those two words provide it.
Setting aside the political hysteria surrounding the postal operator’s privatisation, Lazard’s guidance that the potential for industrial action was a threat to investor appetite can hardly be faulted in principle; imagine the reaction if the flotation had been priced at 500p and the bookrunners had struggled to get it away.
Vince Cable, the business secretary, would be well-advised to limit the fallout by stating publicly that approximately £4m of discretionary fees whose destiny is not due to be decided for several months will not be paid to the banks. Not that they will be going hungry. The demand for independent IPO advisers continues to grow, with Rothschild advising on a listing of Travelex, and, I understand, STJ Advisors being brought in to work on the flotation of Saga.
The over-50s insurance and travel brand only faces one hurdle relative to the Royal Mail IPO: it’s unlikely to have its shares ramped by a trouble-seeking opposition politician.
WH IRELAND’S BARGAIN DEAL
It’s widely accepted that WH Ireland, the City broker, got its hands on a bit of a bargain when it bought the private client business of Seymour Pierce out of administration this year. It doesn’t seem to have done too badly, either, in respect of a settlement with Paul Compton, its former chief executive, who left unceremoniously ten months ago. Insiders tell me that WH Ireland paid Mr Compton roughly £150,000 or about 10 per cent of the £1.5m he had been seeking after he sued for unfair and wrongful dismissal.
Mark Kleinman is the City Editor of Sky News @MarkKleinmanSky