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Council chief hits back in £4m Old Trafford hotel loan row

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The leader of Trafford council has fought back after criticism over a potential £4m loan to Lancashire County Cricket Club for a new hotel.

The club announced that following a £5m cash injection, the plan for the four-star 150 bedroom hotel, replacing the current one at the Emirates Old Trafford, had moved a step closer.

Bosses say the £12m project will create £1m-worth of employment a year and bring in an extra £2.3m.

Greater Manchester’s combined authority has agreed to provide the £5m loan.

But the plan hinges on another loan, for £4m, from Trafford town hall. The club has already secured the remaining £3m.

Council bosses say the loan will be secured by the town hall at a preferential rate, before the cash is passed on to the cricket club.

It will be paid back, along with the combined authority loan, with interest, by 2021.

A decision will be made by the council at the end of the month.

Opposition Labour leader Andrew Western has expressed ‘concern’ over the arrangement, arguing that the council should not be taking out loans for private businesses in times of austerity.

In 2013, the council gave the club financial backing of £21m for a regeneration project by selling land to supermarket giant Tesco.

Trafford council leader Sean Anstee

Tesco bosses, struggling to secure planning permission for an extension of their Stretford store, offered to buy an unused plot at a nearby high school for £20m more than its worth – if the cash was ring-fenced for the cricket club.

The land-deal was met with fury by Labour councillors.

Coun Western said: “Once again, the council finds itself in the position of being asked to provide financial support to Lancashire County Cricket Club just a few years after gifting some £21m to the club to furnish its recent redevelopment.

“Although I appreciate that on this occasion, we would be talking about a loan rather than a gift, it does concern me that a private business should need to come to the council once more for assistance.

“If this proposal is as sound as is being suggested, the club would be able to source a bank loan for the amount required independently.

“I do not believe the council should be expected to help them out to the tune of millions of pounds yet again at a time of continued austerity.

“I would much rather see investment in the local economy used to support small and medium-sized enterprises who are struggling to access lending in what continues to be a difficult financial climate.”

The council has to cut £21.5m from the books this year.

Leader Sean Anstee said the project will create nearly 80 jobs and bring in an extra £2.3m a year for the borough.

He highlighted that the town hall will make money thanks to interest on the loan, and that council borrowing cannot be used to mitigate service cuts.

Coun Anstee, who also highlighted that the plan is backed by Labour leaders across the region, added: “The choice isn’t whether we want to borrow to fund services.

“It’s whether we use prudential borrowing to support and boost growth. We can continue in austerity and do nothing; or we can choose to lend this money, create jobs and bring an extra £2.3m in. This will cost the taxpayer nothing.”

Lib Dem leader Ray Bowker described the deal as a ‘win-win-win’.

[…]

South African govt boosts power utility Eskom with 20 bln rand cash

By Wendell Roelf

CAPE TOWN (Reuters) – South Africa will inject 20 billion rand ($1.82 billion) cash into struggling power utility Eskom, and may also convert its existing 60 billion rand subordinated loan to equity, the National Treasury said on Wednesday.

The moves highlight the gravity of the situation facing Eskom, which provides virtually all of the power to Africa’s most advanced economy but has massive funding issues as its costs are running way ahead of its revenues.

Finance Minister Nhlanhla Nene, who tabled the Treasury’s three-year economic outlook in parliament, also said that no new financial guarantees will be given to Eskom as South Africa moves to stabilize its debt load.

“Government will closely monitor Eskom’s financial position and, if necessary, could consider providing additional support to the utility by converting its existing subordinated loan to equity,” Treasury said.

The 20 billion rand injection will be raised through the sale of non-strategic state assets, such as property, direct and indirect shareholding in listed firms and surplus cash balances in public entities, the Treasury said.

No further details were provided. The ruling African National Congress is deeply divided over privatisation and the state’s role in the economy in general and protracted discussions may be needed to implement such a policy.

“Over the next two years capital injections for Eskom and funding for other state-owned companies will be raised in a way that has no effect on the budget deficit,” the Treasury said.

Last month Treasury approved a financial package to the utility which includes the company raising 50 billion rand in additional debt, over and above its original plan of 200 billion rand, as it struggles to finance an ambitious new generation program designed to overcome power shortages that have crimped economic growth.

Because of the impact on growth and on key sectors such as mining, the government is keen that Eskom bridge its funding gap, estimated at around 225 billion rand over the next four to five years, without raising its rates too high.

The energy regulator recently approved a tariff hike which will help fund the building of new and expensive coal-fired power plants.

Labour strikes and shoddy workmanship have delayed the commissioning of the new power plants, although the first of six units at the new Medupi plant will link up to the grid in December.

In March, the utility was forced to impose rolling blackouts for the first time in six years to prevent the national grid from collapsing, a situation that underscored just how precarious the balance is between power supply and demand.

(1 US dollar = 11.0105 South African rand)

Politics & GovernmentBudget, Tax & EconomyEskomSouth AfricaNational Treasury […]

Anger over Cash Converters leaflet in Bolton Council's newspaper


Anger over Cash Converters leaflet in Bolton Council’s newspaper

Cllr Roger Hayes with the council newsletter Bolton Scene and the Cash Converters leaflet

THE delivery of a Cash Converters leaflet at the same time as Bolton Council’s newspaper has been branded “unacceptable”.

Cllr Roger Hayes has raised concerns vulnerable people in Smithills would have received the leaflet with the Bolton Scene — and inadvertently thought Bolton Council was endorsing the company, which is a pawnbroking franchise firm, as well as a retail store.

A council spokesman said it was investigating how it had happened.

Cllr Hayes, of Park Cottages, Smithills, noticed the Cash Converters advertisement reading: “Looking For A Little Loan – Look No Further” was pushed through his door at the same time as the newsletter.

Bolton’s Liberal Democrats leader said: “I understand the council pays a premium for the Bolton Scene to be delivered to residents as a solo delivery.

“It’s very concerning. For somebody who doesn’t know, they might think the council was recommending Cash Converters. They were the only two things that came together through my letterbox that day.

“It’s associating the council with a company that I don’t think it wants to be associated with.”

The council blocked access to payday loan websites from public computers in August last year, and has dedicated £1 million to tackle poverty in the town, including measures to stop people going to the companies which charge huge amounts of interest.

A council spokesman said the two publications should not have been delivered together.

He added the council had not received anothercomplaint about Bolton Scene being delivered alongside a Cash Converters leaflet.

The spokesman said: “The contract for the delivery of Bolton Scene is for sole delivery independent of other materials.

“The delivery of the leaflet was not authorised by the council and we were first made aware of this when Cllr Hayes asked if the council newspaper is delivered on its own.

“We have spoken to the distribution company to make sure it doesn’t happen again.”

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Halesowen pay day loans Google search figures second in UK …

New figures have revealed residents of Halesowen are the second highest online searchers for Wonga in the UK this year.

Data released by Google also showed residents of the town the second most interested in finding out about payday loans.

Google measures search traffic on a scale from 1 to 100.

From January to July this year the Black Country town’s residents’ interest in the term ‘payday loan’ was scored at 88 with the search ‘wonga.com’ clocking up a mammoth 94 points.

In both cases the town was second only to Altrincham, in Manchester, which scored the full 100 points for each of the searches.

Nearby Birmingham was the fifteenth highest Google searchers of ‘payday loans’ with a score of 52 but did not appear among the top seekers of wonga’s website.

• Get more news from where you live by clicking here

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Poage Bankshares, Inc. Reports Final Merger Consideration For Town Square Financial Corporation Shareholders

ASHLAND, Ky., March 25, 2014 /PRNewswire/ — Poage Bankshares, Inc. (PBSK) (the “Company”), the holding company for Home Federal Savings and Loan Association (“Home Federal”), today announced the cash/stock election results for its acquisition of Town Square Financial Corporation (“Town Square”) and Town Square Bank on March 18, 2014.

Under the terms of the merger agreement, 55% of the outstanding shares of Town Square common stock must be converted into Company common stock and the remaining 45% of the outstanding shares of Town Square common stock must be converted into cash. A shareholder cash/stock election was conducted and completed on March 18, 2014 wherein Town Square shareholders were provided the opportunity to select their preferred form of consideration, subject to the allocation and proration procedures contained in the merger agreement and the total mix of cash/stock merger consideration available. Town Square shareholder cash elections exceeded the 45% limitation established in the merger agreement. Consequently, Town Square shareholders electing to receive cash were subject to the allocation and proration procedures and are receiving a portion of their merger consideration in Poage common stock and in cash as noted below.

Based on the final election results and applying the proration provisions set forth in the merger agreement, Town Square shareholders will receive the following based upon their election:

Town Square shareholders will receive 2.3289 shares of Poage common stock for each share of Town Square common stock for which they made a valid stock election; Town Square shareholders will receive approximately 0.23289 shares of Poage common stock and $30.47 in cash for each share of Town Square common stock for which they made a valid cash election; and Town Square shareholders who expressed no preference as to cash or stock consideration or who did not make a valid election will receive 2.3289 shares of Poage common stock for each share of Town Square common stock tendered.

Under the merger agreement, fractional shares of Poage common stock will not be issued. Instead, Town Square shareholders will receive cash in lieu of fractional shares based on the average closing price of Poage common stock of $14.0517 for the five consecutive trading days immediately preceding the closing date of March 18, 2014.

On or about March 26, 2014, the Company’s exchange agent will distribute on the cash consideration and a confirmation of the number of shares of Company common stock owned by former shareholders of record of Town Square common stock to such shareholders. Questions about the distribution of merger consideration should be addressed to the Company’s exchange agent, Registrar and Transfer Company, at 1-800-368-5948.

About Poage Bankshares, Inc.

Poage Bankshares, Inc. is the savings and loan holding company for Home Federal Savings and Loan Association (the “Association”). The Association, originally chartered in 1889 and headquartered in Ashland, Kentucky, conducts its operations from 10 full-service banking offices located in Ashland, Flatwoods, South Shore, Louisa, Greenup, Nicholasville, and Catlettsburg, Kentucky.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” or similar terms, variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products, and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company does not assume any duty to update forward-looking statements.

Contact: Amanda Gillum
(606) 324-2914

[…]

Goldman Cautious on Leveraged Loan Flows

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For a while now, it has seemed as though exchange traded funds holding senior bank loans have among the toasts of the town in the bond ETF universe.

Not only do ETFs such as the PowerShares Senior Loan Portfolio (BKLN) offer high yields, but these funds also feature diminished interest rate risk because bank loans act like floating rate notes to an extent because the rates on the loans are reset every month or two months. [Bank Loan ETFs Continue to Thrive]

Despite the advantages of bank loan ETFs, not all market observers are convinced go-go days for these funds will last forever.

“I would just caution those that are involved in the loan space to be mindful of the fact that they’ve been beneficiaries of inflows for 88 straight weeks and the tide can turn,” said Justin Gmelich, the head of credit trading at Goldman Sachs Group, in a video on Goldman’s web site.

Bank loans have “seen unprecedented demand with the funds that purchase the debt receiving deposits every single week since the summer of 2012. That enabled speculative-grade companies to raise $676 billion last year of bank debt, with more than 80 percent of that used to escape maturing debt deadlines,” writes Sridhar Natarajan for Bloomberg.

Indeed, investors have warmed to bank loan ETFs in noticeable fashion. PowerShares tracks flows data for its ETF over 12 months, year-to-date, the past 90 days, 30 days and week. Over each of those time frames, BKLN ranks as the second-best PowerShares ETF in terms of inflows. The fund now has $7 billion in assets under management, $4.6 billion of which has come into the ETF in the past year.

A pair of actively managed rivals to BKLN debuted last year, each quickly gaining assets. The SPDR Blackstone/GSO Senior Loan ETF (SRLN) is just 11 months old and already has $616.5 million in assets. First Trust Senior Loan Fund (FTSL) debuted in early May 2013 and has nearly $164 million in assets. [New ETFs Off to Fast Starts]

Some investors have questioned the liquidity of the bank loan market. Others have warned that the trading rate risk for higher credit risk is not worth it because bank loans would be vulnerable in the event of a U.S. recession.

That has not stopped cash from pouring into these funds. Retail inflow to loan mutual funds for 2014 was $4.6 billion as of Feb. 20, Bloomberg reported, citing Bank of America.

PowerShares Senior Loan Portfolio

bkln

ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

ETFsLoansbank loansGoldman Sachs Group […]

Cash-strapped council could give £5.8m loan to turn empty buildings into new hotel


Cash-strapped Middlesbrough Council could give £5.8m loan to turn empty buildings into new hotel

Ray Mallon looking out onto Centre Square, Middlesbrough from the rooftop gallery of Mima art gallery with the Cleveland Centre on the far left of the picture

A CASH-strapped council is poised to hand over a loan of almost £6m to create a new hotel in a last ditch attempt to bring empty town centre buildings back to life.

A Holiday Inn Express with 138 bedrooms is earmarked for the Cleveland Centre in Middlesbrough with views over Mima art gallery and the historic central library.

The town centre is already served by two hotels, the Thistle on Fry Street and a Travel Lodge at Cannon Park.

To ensure the redevelopment at Cook and Endeavour House on Albert Road goes ahead – buildings which have been predominantly vacant for 20 years – Middlesbrough Council is acting as a bank by giving a secured commercial loan over eight years.

At its executive meeting on Tuesday members will be asked to follow the officers’ recommendations and approve the £5.8m loan to developers Ashall Projects Limited for the new hotel, which is expected to cost £12m to build and employ 100 staff.

Financial cuts totalling £85m will need to be made in Middlesbrough over the next five years, it has been estimated.

The town’s elected mayor Ray Mallon has also confirmed the loss of 300 council jobs this year, while another 300 will be transferred to other organisations contracted to carry out some council services.

A report prepared for Mr Mallon and his executive to consider next week stated: “In these times of significant budget cuts imposed on the council, investing such a significant amount of money into such a scheme would be a significant undertaking.

“However, it is clear that there is unlikely to be alternative resources available for the re-use of these buildings from either the private sector or Government-based regeneration funds.

“The proposal would appear to be the only feasible way by which these buildings will be brought back into use.”

It is just one of a series of major initiatives to be considered at the meeting.

Other proposals include the permanent closure of Southfield Road for the next phase of Teesside University’s campus and the management transfer of Mima art gallery to the university.

Mr Mallon said: “In challenging economic times, this council has been forced to transform the services it is able to deliver and the way it delivers them, and the impact of those cuts is hitting every part of the town.

“That is why it is more important than ever that we continue to invest in the sort of initiatives that will ensure Middlesbrough has a secure and prosperous future.”

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[…]

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[…]

Middlesbrough Council blocks access to payday loan websites on …

Rocketing amounts of personal debt in Middlesbrough – a staggering £10m – have inspired a plan to tackle the problem.

Middlesbrough Council today unveiled plans to help drive down debt and promote affordable credit in the town.

The local authority’s latest step has been to block access to the most used 51 payday loan websites from its computers and to appeal to its partners to follow suit.

This means all computers used by staff and council computers used by the public – for instance, in libraries – will be affected by the ban.

A report presented to the council’s Executive revealed data provided by the Citizens Advice Bureau showing that total debt for the 1,300 people in MIddlesbrough seeking the service’s help – including residents from every ward in the town from Nunthorpe to Grove Hill – is in excess of £10m.

More than £8m of that figure is a result of payday loans, credit cards, overdrafts and unsecured loans.

The figures do not take into account people seeking help from other agencies or those struggling in silence.

The Executive agreed to support the recommendations of the report.

Councillor Tracy Harvey, Executive lead for welfare reform, said: “It is hugely important that we take steps immediately to kickstart the fight against what I believe is one of the biggest issues facing people today.

“One of the main problems we are seeing is where members of the public, needing money to tide them over, turn to payday loan companies and soon become trapped in a cycle of having to pay back obscene amounts.

“Blocking payday company websites on our computers may not address the underlying issues, but I believe will go some way to show we are prepared to make a stand and begin tackling this problem.”

John Daniels, manager of Middlesbrough Citizens Advice Bureau, said: “In the last two years we have seen an explosion in the number of people coming to us with payday loans.

“These companies are targeting the most financially vulnerable people and causing them further hardship, trapping them in a debt spiral.”

But Redcar and Cleveland Council has taken a different stance on the issue. Staff and residents using its computers to access payday loan websites will be first directed to an informative page.

Councillor Norman Pickthall, cabinet member for corporate resources, said: “We did not want to block access to payday loans firms altogether because we were anxious that people who had already taken out loans might need to service them, via a council computer.”

[…]