Outlook: Bankers go cool on venture capital rescue bid for Energis

Dollar doldrums; Listing harmony Ê

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Dollar slides towards euro parity

UK to lose out under EU listing rules, says Davies

Few industries or activities thrive in a business downturn, but there are always some. One is corporate restructuring, which with everything else falling apart at the seams is enjoying something close to boom conditions. All big refinancings invariably turn out to be both fiendishly complex and extraordinarily expensive, as the $100m CSFB is reputed to be making out of the NTL restructuring only too plainly demonstrates. It sounds perverse, but the more deep in the mire the company, the more lucrative the restructuring. As it happens, the NTL debt-for-equity swap was agreed comparatively swiftly, helping to limit its costs. No such luck with either the Marconi or Energis restructurings, both of which have been dragging on for nearly six months now.

Marconi indicated this week that it was close to a resolution, but there seems no end in sight with Energis. For months now, banks collectively owed some £690m have been encouraging a venture-capital bid for the company which would limit their losses and provide them with some kind of a stake in any eventual recovery story. That process suffered a setback when Permira, increasingly concerned about Energis's trading numbers and the lack of a meaningful role for its own front man, Archie Norman, belatedly withdrew its support. But the remaining venture capital bidders, Apax and Carlyle, have been burning the midnight oil, and have since been back at the table with a renewed proposal which in substance isn't very different from the previous one.

Unfortunately, bankers seem in the meantime to have given up on them and gone back to the drawing board. Instead, the banks now envisage keeping the UK business for themselves by putting the group into liquidation, giving the UK business a bit more money and allowing the present management to carry on as before. Led by Royal Bank of Scotland, the 16 bank consortium reckons it stands to get more of its money back this way than through the rival venture capital proposals. Needless to say, in neither case will shareholders get anything at all. Likewise, bondholders, whose charge is limited to the residual European assets.

Royal Bank presumably knows what it is doing, but from the outside, the new approach looks an exceptionally high-risk one. There's little reason to trust the present management, whose record since Mike Grabiner left as chief executive has been abysmal. This is the same management team that cocked the whole thing up in the first place by agreeing to banking covenants dependent on trading forecasts that couldn't possibly be met. The chief executive, David Wickham, has failed to meet virtually every forecast since then too, while the belief that revenues this year can be grown from £728m to £814m seems to owe more to cloud cuckoo land than the real world, the more so since the company has failed to win a single new contract since disclosing that it was in breach of its banking covenants.

The whole thing is the most ghastly mess. You can understand why bankers might have suspected they were being taken for a ride by the vulture capitalists. Private equity outfits are in for no one's good but their own. But at least the banks would get fresh thinking and new management. With the latest approach, there's a real danger of throwing good money after bad. In the meantime, the advisers, lawyers and insolvency experts continue to make hay.

Dollar doldrums

There's no mystery about the declining dollar. Financial markets have simply lost faith in prospects for the US economy. The tech bubble has gone pop, the stock market is falling, consumption is faltering, the problem of a growing budget deficit has moved in alongside the pre-existing one of the trade deficit, there's been a crisis of confidence in standards of corporate probity, governance and accounting, and to cap it all, the now not so new administration seems hell bent on declaring world war three. No wonder a certain disillusionment has set in.

Paul O'Neill, the US Treasury Secretary, reckons markets have got it hopelessly wrong, and that both the stock market and the dollar will bounce before too long. On the first of these assumptions he may be right. The US economy is a remarkable resilient thing, its companies still lead the world in the application of management and technology, and as this column has observed before, the US legal and administrative system has moved with impressive speed and decisiveness in dealing with the fall out from Enron and other corporate scandals. The economic triumphalism widely trumpeted by business and political leaders in the US just a few years back is looking more than a little deflated, but examine the alternatives – sclerotic Europe, crisis-ridden Latin America, still pole-axed Japan and the volatile emerging market economies of the Far East and former Soviet Union – and there's not much to chose from. Where Mr O'Neill has got it wrong is in believing the underlying strengths of the US economy will soon refind favour with financial markets. This is by no means assured, and in itself that means the turbo charged nature of the last boom isn't easily going to re-establish itself. It will be some years before the US economy is firing on all cylinders again.

Listing harmony

Sir Howard Davies, chairman of the Financial Services Authority, doesn't much like the idea of European proposals to harmonise listing requirements across Europe, so that there is a single passport within the European Union for issuers. To date, most British opposition to the plans has focused on the dangers of unduly onerous prospectus conditions, of the type that might kill off the London eurobond and AIM markets.

Sir Howard's concern is rather the reverse. He worries that the proposed harmonised directive is one of those rare examples of de-regulation from Europe – that it doesn't go far enough in its disclosure requirements. In the UK, for instance, the listing requirements contain a model code on directors' share dealings and corporate governance. Also missing from the European proposals are the London provisions concerning class transactions, requiring particularly large acquisitions and disposals to be approved by shareholders.

Rightly in some respects, Sir Howard thinks that in the light of Enron and other corporate scandals, this is an odd time to be dismantling such key parts of the regulatory infrastructure. However, as Sir Howard concedes, there are plenty of ways of skinning a cat, and if the London market truly believes that such requirements add to its attractions as a financial centre there's no reason why the London Stock Exchange shouldn't re-introduce them as admission of trading rules.

There would be a certain irony in such an outcome, since it is only a few years ago that the Government forceably removed responsibility for the listing requirements from the stock exchange and instead made the FSA the responsible authority. As it turns out, this was a quite disastrous development for the then beleaguered LSE, effectively castrating the organisation at a time when it could least afford any loss of authority. What goes round comes round, and it seems somehow appropriate that a now resurgent London Stock Exchange should be given a renewed say over the governance of companies traded on its systems.

jeremy.warner@independent.co.uk