What to watch: HSS sinks on fundraise, stocks sell-off, and The Hut Group sales soar

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·4-min read
A HSS Hire shop sign in Vauxhall, London, as the tool rental firm said it was on track to open new branches at a rate of almost one a week, after floating on the stock exchange earlier this year.
A HSS Hire shop sign in Vauxhall, London. Photo: PA

Here are the top business, market, and economic stories you should be watching on Monday in the UK, Europe, and abroad:

HSS shares sink on fundraise plan

Shares in tool hire group HSS Hire (HSS.L) sunk on Monday after the company announced plans to raise £54m ($70.3m) to keep its lenders at bay.

HSS said on Monday it was hoped to raise new funds by selling shares to investors through a rights issue. The company said three of its major shareholders had already agreed to kick in £43.5m as part of the plan.

The funds will be used to bolster HSS’s balance sheet and ensure it does not breach any debt covenants, HSS said.

“This capital injection will enable the group to further reduce its leverage - one of our foremost objectives - and gives us a strong platform from which to continue to implement change and drive growth,” chief executive Alan Peterson said in a statement.

The company blamed the COVID-19 pandemic for putting it in this position, but said business had recently performed strongly.

Shares will be sold at 10p a piece in the rights issue, a 52% discount to Friday’s closing price. The stock sunk as much as 15% on Monday morning.

Stocks sell-off

Stocks sold-off sharply on Monday, after a sharp increases in COVID-19 cases in the west and heightened restrictions introduced across much of Europe.

The US reported its highest ever daily total of new COVID-19 cases on Friday, hitting 83,757. The daily tally was almost matched on Saturday.

France recorded a new daily case high on Sunday, announcing 52,010 positive results recorded in the previous 24 hours. A 9pm curfew covering two thirds of the country came into effect on Friday night.

Italy and Spain announced tighter restrictions on their populations on Sunday, including business closures and curfews. A state of emergency has been declared in Spain.

Stock markets across Europe fell sharply on Monday morning. The FTSE 100 (^FTSE) opened down 1.1% in London, the DAX (^GDAXI) dropped 2.7% in Frankfurt and the CAC 40 (^FCHI) fell 1.4% in Pairs. In Milan, the FTSE MIB (FTSEMIB.MI) dropped 1.5%, while the IBEX (^IBEX) shed 1% in Madrid.

US futures were sharply lower, pointing to a sell-off when Wall Street opens later today. S&P 500 futures (ES=F) were down 1%, futures attached to the Dow Jones Industrial Average (YM=F) were 1% lower, and Nasdaq futures (NQ=F) were off by 0.8%.

The Hut Group sales soar

Newly floated e-commerce company The Hut Group (THG.L) has reported strong quarterly sales in its first update since going public.

The Hut Group, which listed on the London Stock Exchange last month, said sales grew over 38% in the third quarter of 2020. Almost all parts of its business saw double digit percentage growth, with the highest registering growth of over 70%.

“Our strong organic revenue growth across all divisions, numerous THG Ingenuity partnership deals, and the recent acquisition of luxury skincare brand Perricone MD, demonstrates our strategic direction and progress in the period,” chief executive and founder Matthew Moulding said in a statement.

The company raised its profit forecasts and margin guidance in response to the knock-out third quarter performance.

The Hut Group also announced the appointment of three new non-executives to its advisory panel, responding to criticism in the press that Moulding had too much control over the business without enough oversight. Moulding said the appointments were a “transformational step”.

Shares in the company rose 4.7%.

Oil under pressure

Oil prices tumbled on Monday, amid investor alarm over mounting coronavirus cases in the US and Europe and an expansion of output in Libya.

West Texas Intermediate Crude prices (CL=F) in the US were down 3.3%, trading at $38.54 (£29.62) shortly after European markets opened. Widely traded brent futures contracts (BZ=F) were down 3.1%, trading at $40.49 (£31.12).

Demand is expected to take a hit from rising COVID-19 cases. Meanwhile, Libya’s National Oil Corporation (NOC) on Monday said closures at its oil fields and ports had ended.

The NOC said on its Facebook page it had lifted the state of ‘force majeure’ at all sites, a contract clause halting production after the country’s civil war had seen them hit by a blockade. It had previously announced a similar easing of restrictions only at secure facilities.

The end of the restrictions in Libya mean additional supply is set to come onto the market.

Bayer in $4bn gene therapy deal

German pharma company Bayer (BAYN.DE) has acquired US-based Asklepios BioPharmaceutical in a deal worth up to $4bn (£3bn).

Bayer said that acquiring AskBio, which specialises in research, development and gene therapy manufacturing, will allow it to expand treatments for neuromuscular, central nervous system, cardiovascular and metabolic diseases including Parkinson’s and congestive heart failure. It is also carrying out early testing on volunteers of a treatment for the rare genetic disease, Pompe.

Bayer said the acquisition included $2bn upfront purchase payment and up to $2bn in success-based milestone payments.

Additional reporting by Jill Petzinger and Tom Belger

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