BT Group Pension Deficit Drags London Stocks

123jump.com Staff
12 Feb, 2009
New York City

Stock fell 0.8% after BT Group projected that pension deficit will soar to

[R]1:00PM New York, 6:00PM London- Rio Tinto in US$19.5 billion deal with Chinalco. BT forecasts pension deficits of £1 billion next year.[/R]

London stocks fell 0.8% led by BT Group after the phone company projected that pension deficit will soar to £1 billion next year. The company also reported that operating profit in the third quarter ended December 31 plunged 62% to £277 million from a year ago.

In London trading FTSE 100 index dropped 0.8% or 32.02 to 4,202.24.

Of the FTSE 100 index stocks, 27 advanced, 72 declined, and 3 were unchanged. ICAP Group led gainers in the index shares with a rise of 7.3% followed by Smith & Nephew increasing 7.3%.

Rio Tinto, Chinalco in $19.5 billion Deal

Rio Tinto and Chinalco agreed for investment terms on a $19.5 billion deal to create strategic partnerships in aluminium, copper, and iron ore. The deal will provide access to scarce raw materials to China based company and critical cash to Rio to lower its large debt load.

Through the deal, China will invest in aluminum, copper and iron ore joint ventures worth $12.3 billion, while Rio will issue subordinated convertible bonds in two tranches with conversion prices of $45 and $60 in each of Rio Tinto plc and Rio Tinto Limited for a total consideration of $7.2 billion.

The subordinated convertible bonds will increase Chinalco''s current shareholding to 19% in Rio Tinto plc and 14.9% in Rio Tinto Limited.

Chinalco will nominate two new non-executive Board members to add to the fifteen current Board members of Rio Tinto.

Rio Tinto''s chairman Paul Skinner said, “This transaction will deliver superior value for Rio Tinto shareholders. Chinalco''s cash investment of $19.5 billion will strengthen Rio Tinto''s balance sheet, increase our flexibility to deliver growth as markets recover and position Rio Tinto for the next decade and beyond.”

BT Group Revenues Rise 5% to £5.4 billion Q3

BT Group reported today that the revenues increased 5% to £5.4 billion in the three months ended December 31 from £5.1 billion in the same period a year ago buoyed by acquisitions.

Operating profit in the review period dropped 62% to £277 million from £737 million a year ago after the company took a one-off charge of £336 million on financial and contract reviews in BT Global Services.

The Phone Company also reduced its headcount by 9,500 in the three quarters ended December 31.

BT Group chief executive officer Ian Livingstone said he expects pension deficit payments to be over £1 billion next year.

Gainers & Losers

ICAP led advancers in the FTSE 100 index shares with a rise of 7.3% followed by increases in Smith & Nephew of 7.3%, in Wolseley of 5.7%, in Lloyds Banking of 4%, and Thomas Cook of 3.3%.

Thomas Cook advanced after crude oil prices fell $3 to $34.80 per barrel.

BT Group led decliners in the FTSE 100 index shares with a decline of 7.8% followed by losses in Legal & General Group of 7%, in Inmarsat Plc of 6.4%, in Intercontinental of 6.3%, and Prudential Plc of 5.9%.


Commodity related stocks fell after metal prices declined. Gold prices shed 20 cents to $943 per ounce and copper fell to $1.5215 per ton. Anglo America declined 3.9% and Antofagasta tumbled 3.5%.