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Hugh Osmond - timesonline.co.uk

RESULTS FOR 2009
Ranking: 243=
Worth: £230m
Down: £120m
Source of wealth: Pubs and insurance

Hugh Osmond, 47, railed against the Labour government’s treatment of entrepreneurs last year, threatening to move his Pearl Group abroad. He made millions selling shares in pub groups such as Punch Taverns, the Spirit Group and the Wellington Pub Company.

Last year, Peterborough-based Pearl took over rival Resolution in a £5 billion deal. Allowing for reinvestment of profits, Osmond is worth £230m.

 

 

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The CV - Hugh Osmond

guardian.co.uk

Born
England; March 1962

Education
Medicine, Oxford University

Career
Brief spell working for an investment bank in Madrid; co-led the £18m acquisition and flotation of PizzaExpress in 1993 and remained a director for seven years; bought My Kinda Town restaurant chain with partner Luke Johnson in 1994; founded Punch Group in 1997 and remained as executive chairman until 2001

Family
Lives with long term partner, Lucy, and their year-old son

Interests
Skiing, tennis and shooting

 

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Business big shot: Hugh Osmond

lo2012.com

Hugh Osmond, the pubs-to-insurance entrepreneur, has always been one for the bold move. The charismatic character made his name building and floating businesses such as PizzaExpess and Punch Taverns. But yesterday Pearl, his privately owned insurance vehicle, said that it had hatched a quite extraordinary plan. The heavily indebted company, which is asking its banking syndicate to write off hundreds of millions of pounds of loans, said that it wants to list itself on the London Stock Exchange. The plan would see Pearl join Resolution, the consolidation vehicle listed by Clive Cowdery, Mr Osmond’s rival. Mr Osmond is understood to have £500 million of committed funds from institutions ready to help him to go head-to-head with Mr Cowdery in the race to consolidate the sector.

 

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Outlook: Hugh Osmond on the prowl for weapons of Bass destruction

Cartel busting; King's conversion; Cult of bonds

By Jeremy Warner

Thursday, 20 February 2003
The Independent Close

Hugh Osmond, the serial entrepreneur, has cast his rock in the Six Continents pond; now he must wait to see what waves he creates, but judging by the reaction of shareholders in the hotels and pubs group yesterday, he stands an excellent chance of success.

Hugh Osmond, the serial entrepreneur, has cast his rock in the Six Continents pond; now he must wait to see what waves he creates, but judging by the reaction of shareholders in the hotels and pubs group yesterday, he stands an excellent chance of success.

Mr Osmond's offer, if it comes off, would be largely in the form of shares in his quoted investment vehicle, Capital Management and Investment. CapMan would then be used to break the company up, with the assets sold off to a variety of different private equity and trade buyers and the money returned to shareholders. Some kind of a quoted rump might remain. Alternatively he might keep the lot, and do what Six Continents has patently failed to do - make the assets sweat.

It is hard for investors to be unequivocally positive until they know precisely what it is they are dealing with, but the level of disillusionment with Six Continents and its demerger plans is such that almost anything that doesn't obviously fleece them might be acceptable. The proposed demerger of hotels from pubs has failed to excite anyone, while the costs of the exercise - more than £200m once the early redemption of debentures is taken into account – has appaled many.

Management remains largely the same after Six Continents does the splits, prompting many to ask why bother. The demerger proposals are a deeply disappointing response to demands for value enhancement. Six Continents is a hugely asset rich company, but it's failed to deliver the goods. In such circumstances, what's required is management change, not cosmetic restructuring.

Sir Ian Prosser, Six Continents' chairman, blames the bear market for the degree of hostility he's encountering from his own shareholders, and on one level he's right. It's hard to think of a single company right now where investors are entirely happy. There's a big difference, however, between the backdrop of general disillusionment with equity investment on the one hand, and poorly performing companies like Six Continents on the other. This is a company with big, stable businesses in market leading positions which should simply be doing a whole lot better than it is.

For similar corporate raids from the past look no further than Jimmy Gulliver's bid for Distillers, or Sir James Goldsmith's junk bond assault on BAT Industries. Even so, it's hard to think of precedents for the audacity of Mr Osmond's plans. If he pulls it off from such an apparently small capital base, it would be a first. The City just loves a bid battle, but it particularly loves the cheek and boldness of assaults like this one. Let the entertainment commence.

Cartel busting

John Vickers, chairman of the Office of Fair Trading, has taken his time in using the cartel busting powers he was granted in the Competition Act nearly three years ago, but finally he's found some cartel suspects to bust, and he's hit them with fines large enough to please even the most demanding of his political masters. Mr Vickers can only hope he's got his facts straight, because both Argos and Littlewoods were vehemently disputing them yesterday, and unless they are telling porkies, Mr Vickers may have a problem making the charges stick.

The allegations of price fixing come from the US toy maker Hasbro, which apparently 'fessed up to the OFT about fixing prices with Argos and Littlewoods after being fined nearly £5m last November in a separate case involving distribution of Action Man and Sindy dolls. For this information, the OFT waived a further potential fine of £15.6m against Hasbro. Both Argos and Littlewoods say they have searched their files, examined their e-mails, interviewed their staff and listened to all their taped telephone calls, but still they can find no evidence whatsoever of illegal price fixing agreements with Hasbro.

Now it could be that the OFT has got some kind of smoking gun that the two retailers are unaware of. Let's hope it's a bit more impressive than the evidence so far produced of Saddam's weapons of mass destruction, for Mr Vickers should know as well as anyone that any case based solely on Hasbro's say so, without corroborating evidence, won't hold water. It's all very odd, but then making unsubstantiated allegations seems to be becoming a bit of a habit with government.

King's conversion

We've already had the main explanation for that unexpected quarter point cut in interest rates; last week's Inflation Report revealed that the Bank of England has significantly reduced its long term forecast for growth. Minutes of the Monetary Policy Committee meeting, published yesterday, none the less still held a surprise. Mervyn King, the Bank's arch hawk, has apparently joined the doves.

The MPC was split on the rate cut decision earlier this month, but for a change, Mr King voted with the majority for reduced rates, even though two colleagues wanted them left on hold. I say for a change, but in fact Mr King has voted with the dovish tendency before when the Committee was split.

However, it's a rare event and on previous occasions it's nearly always been when there was a maverick swing voter on the MPC. For instance, it happened on a couple of occasions when Willem Buiter, an economist with a tendency dramatically to change his view from one month to the next, was on the committee. Most recently, it happened in the aftermath of 11 September when one member of the Committee preferred a quarter point cut to the half point imposed.

No one else has come even remotely close to challenging Mervyn's position as king hawk, so why's he changing tack? One explanation might be that in preparation for taking up the position of Governor of the Bank of England next July he's already shifting to a more consensus driven approach to decision making. The more plausible one is that the case for a cut simply became overwhelming, with confidence falling and growth prospects deteriorating.

Even so, you would normally find Mr King in the wait and see camp. Two MPC members argued strongly for no change and on past form, Mr King should have been with them. Only last autumn, he gave a keynote speech in which he warned of the dangers of a nasty demand shock to the economy if something wasn't done to halt the soaraway housing market. There have since been signs of a slowdown, especially in London, but nationally prices are continuing to motor at an alarming rate.

The minutes don't say as much, but there was always a pre-emptive feel about that rate cut. With both war and higher taxes looming, something had to be done to support confidence, which is ebbing away. This was it, and although he may have had to swallow a bit in doing so, Mr King was right to align himself with the doves, not that he would accept such a description, of course.

Cult of bonds

Financial journalists aren't much good at bonds, as I learned to my cost in Tuesday's column by confusing the gross redemption yield on a gilt, or yield to maturity as it is sometimes known, with the running yield. I stand corrected by a reader who e-mailed to point out that if the yield on a 10-year gilt rises 2 percentage points from the present 4.25 per cent, you wouldn't be down 30 per cent on your capital, as I wrote, but by just under 15 per cent. This is because by convention the yield on a gilt takes account not just of the annual coupon, but also the capital gain to redemption. All clear now? Let's hope it is, because if it is true that the cult of equity is dead, we should all be throwing away our training in equity valuations and become experts on bonds instead. Not as much as fun as equities, I fear.

 

 

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Business big shot: Hugh Osmond

timesonline.co.uk - Miles Costello

Hugh Osmond makes a formidable sparring partner. The 45-year-old father of three is a groundbreaking entrepreneur, best-known for developing the PizzaExpress business with his friend Luke Johnson.

While Mr Johnson went on to a high-profile career, including a newspaper column, Mr Osmond has concentrated on business ventures, emerging into the public eye when a big deal is involved.

After amassing a fortune from the 1996 flotation of PizzaExpress – since bought and sold several times – Mr Osmond has been in several adventures, not least as chairman of Punch Taverns. Having bought out the former Bass tenanted pubs, he made Punch one of Britain’s biggest landlords via acquisitions. This led to a 1999 battle with Whitbread for the estate being sold by Allied Domecq. After tit-for-tat bids with Whitbread, Punch finally paid £2.75 billion for 650 Allied pubs to add to its 1,500. Acquisitions of assets such as Center Parcs followed. However, Mr Osmond has not always won. In 2005, an audacious attempt to buy Six Continents, the hotelier and brewer, from under its management’s nose was voted down by shareholders.

Now the target is Resolution, Clive Cowdery’s consolidator of closed life funds, which Mr Osmond’s Pearl Assurance is trying to buy for almost £5 billion. Even as Pearl appears to be ahead in its battle with Standard Life for the insurer, Mr Osmond has kept a low profile, letting his advisers speak for him. Perhaps this is because he has clashed with Mr Cowdery several times before. Mr Osmond’s Sun Capital vehicle, launched in 2004 and which subsequently bought Pearl, successfully bid for HHG’s closed funds business, in the teeth of efforts by Mr Cowdery. Rumour had it that Mr Cowdery’s intervention made Mr Osmond to pay £1 billion extra. Similarly, Pearl tried and failed to buy Abbey Life, the mortgage bank’s closed life business, bought by Resolution for £3.6 billion last year. Mr Osmond has no plans to lose this time.

 

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Hugh Osmond to lose £200m on Pearl

Iain Dey and Ben Marlow - timesonline.co.uk

ONE of Britain’s best-known entrepreneurs, Hugh Osmond, is to lose up to £200m of his paper fortune through the restructuring of his Pearl Group insurance empire.

The 47-year-old tycoon is thought to be close to agreeing a £3 billion debt-for-equity swap with a consortium of banks, led by Lloyds Banking Group.

The move will lead to £500m of new equity being pumped into the business from Liberty, a private-equity fund listed in Amsterdam.

Osmond, ranked No 243 on the Sunday Times Rich List, is expected to see his personal stake in the business almost wiped out as part of the deal.

Liberty is expected to buy most of the shares that the banks acquire in Pearl through the debt-for-equity swap.

Sources close to the negotiations said a deal could be announced by the end of this week, bringing an end to more than two months of talks.

Pearl’s debt pile ballooned last year through its £5 billion acquisition of Resolution, run by rival insurance entrepreneur Clive Cowdery.

Pearl has more than 7m policyholders, who originally bought their policies from household names such as Abbey National, Scottish Provident, Cornhill, London Life and Britannia Life. The heavily-leveraged deal has come under scrutiny from the Financial Services Authority, which raised concerns about the debt structure in the company.

The collapse in the stock market has also wiped out some of Pearl’s capital base, forcing it into talks with its banks, which are understood to want to leave Osmond in control.

Osmond, who made his first fortune in the pubs business, is said to be sanguine about any loss he will make.

“Hugh doesn’t spend money he doesn’t have,” said a friend.

 

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Hugh Osmond fears entrepreneur exodus

By Damian Reece, Mark Kleinman, and Dominic White - telegraph.co.uk
Published: 12:01AM BST 11 May 2008

Hugh Osmond, one of the UK's most successful entrepreneurs, gave warning this weekend that he and other business owners are considering leaving Britain because of worsening relations with the Government and HM Revenue & Customs.

Osmond, who has amassed a £350m fortune through businesses such as Pizza Express and Punch Taverns, is increasingly worried at the way he believes entrepreneurs are being targeted by the taxman.

He said: "Forget non-doms and multinational companies threatening to leave the UK, it's your home-grown entrepreneurs which the country risks losing. Everybody I speak to has got a report on their desks about where they could be based as non-residents. People are looking at the practicalities of basing themselves in places such as Monaco, Luxembourg or Switzerland. The Government doesn't seem to realise that people... can operate from anywhere."

His comments will add to the pressure on Alistair Darling, the beleaguered Chancellor, amid a growing revolt from the business community.

This weekend, The Sunday Telegraph can also reveal that:

the review of Britain's corporation tax regime overseen by the Treasury is likely to include representation from a top official at the Trades Union Congress;

• Paul Richardson, the finance director of WPP, one of the companies threatening to move its tax base offshore, is being lined up to join the review team;

• a secret report commissioned by Britain's top finance bosses warned the Government as long ago as February that its tax proposals would have a detrimental impact on the business community.

The 100 Group, representing finance directors of FTSE100 companies, told the Treasury that its proposals to overhaul the corporation tax regime would create extra taxation, despite the Government's insistence that the plans were revenue neutral.

The group surveyed 80 of its members, most of whom are FTSE100 finance directors. It found that the Government would increase the tax take even if it enacted only two of its three planned changes: to introduce dividend participation exemptions and cap the tax relief companies enjoy on their interest payments.

The finance chiefs therefore called for the scrapping of the third and most controversial proposal, which would drag more of the overseas earnings made by British companies into the fiscal net.

A string of large companies, including WPP, have threatened to follow Shire and United Business Media in redomiciling in protest at the proposal.

The Chancellor is under intense pressure to back down on these proposals ahead of a consultation paper on the subject in June.

 

This site is for Mr Osmond  

 

 

 

Hugh Osmond, CMI Bet $8.7 Billion On Hotels And Bars

Six Continents NEW YORK - Hugh Osmond, who has launched a hostile takeover bid for hotel and pub owner Six Continents valued at $8.7 billion, has been known as the enfant terrible of British business--though, at 41, it has been suggested recently that he is no longer an enfant. He is, however, raising the stakes and taking a page from 1980s-era raiders like the late Sir James Goldsmith in England and Carl Icahn in the U.S.
Osmond's bid is through his investment vehicle Capital Management and Investment. He is offering 36 shares of CMI for each share in the much larger Six Continents (nyse: SXC - news - people ), owner of Inter-Continental hotels and All Bar One cafe/bars. An alternative offer includes some cash in addition to the shares.

More on Six Continents
Tear Sheet

 

"I am sure this will be a long fight but an interesting one,'' Osmond told Reuters. The would-be titan made his name in the 1990s as the force behind PizzaExpress restaurants and with the $4.3 billion deal for Allied Domecq's (nyse: AED - news - people ) pubs. That transaction, which was also quite hostile, put Osmond in what The Observer calls "The Beerage."

By offering mainly his shares in exchange for theirs, Osmond, a one-time medical student, has his work cut out for him in convincing Six Continent's shareholders that he can create value by splitting the company in pieces and selling them off.

Six Continents has presented its own plan to shareholders to "demerge," as the British say, its Inter-Continental and Holiday Inn hotel businesses and its All Bar One and O'Neill's British Pubs chains into two separately traded companies. Under the plan, Six Continents would also issue a $1.1 billion dividend to shareholders, less than the cash component of Osmond's bid. Osmond has said his bid is conditional on the demerger being delayed or the shareholders voting it down.

Source Forbes.com

 

 


 

Hugh Osmond's $8.7 Billion Bar Bet

Dan Ackman, 03.03.03, 8:46 AM ET - forbes.com

NEW YORK - Hugh Osmond, who has launched a hostile takeover bid for hotel and pub owner Six Continents valued at $8.7 billion, has been known as the enfant terrible of British business--though, at 41, it has been suggested recently that he is no longer an enfant. He is, however, raising the stakes and taking a page from 1980s-era raiders like the late Sir James Goldsmith in England and Carl Icahn in the U.S.

Osmond's bid is through his investment vehicle Capital Management and Investment. He is offering 36 shares of CMI for each share in the much larger Six Continents (nyse: SXC - news - people ), owner of Inter-Continental hotels and All Bar One cafe/bars. An alternative offer includes some cash in addition to the shares.

"I am sure this will be a long fight but an interesting one,'' Osmond told Reuters. The would-be titan made his name in the 1990s as the force behind PizzaExpress restaurants and with the $4.3 billion deal for Allied Domecq's (nyse: AED - news - people ) pubs. That transaction, which was also quite hostile, put Osmond in what The Observer calls "The Beerage."

By offering mainly his shares in exchange for theirs, Osmond, a one-time medical student, has his work cut out for him in convincing Six Continent's shareholders that he can create value by splitting the company in pieces and selling them off.

Six Continents has presented its own plan to shareholders to "demerge," as the British say, its Inter-Continental and Holiday Inn hotel businesses and its All Bar One and O'Neill's British Pubs chains into two separately traded companies. Under the plan, Six Continents would also issue a $1.1 billion dividend to shareholders, less than the cash component of Osmond's bid. Osmond has said his bid is conditional on the demerger being delayed or the shareholders voting it down.

Osmond will also have to sell off the 2.6 million Six Continents shares he has already accumulated owing to British takeover laws, which prevent a bidder from profiting on a situation of his own making. Osmond's announcement to that effect sent Six Continents' shares down slightly in early trading.

Osmond said his CMI management team has a proven record of creating shareholder value and that the demerger idea was a loser. "Our message is simple. Vote down Six Continents' demerger. Accept CMI's better alternative. Realize value in our business," Osmond said. He also said shareholders would "receive private-equity levels of returns." The cash in the deal is being supplied by Credit Suisse Group's (nyse: CSR - news - people ) Credit Suisse First Boston and Lehman Brothers (nyse: LEH - news - people ).

Osmond accused Six Continents of being a poor operator of hotels and pubs as well as a lousy dealmaker. He said it sold its bingo parlors and betting shops too cheap. "Almost $9.5 billion of net investment has left operating profits lower than ten years ago,'' Osmond said.

Six Continents, which has noted the unsolicited offer but which has made no formal response, said its own spinoff plan would better enable its shareholders to realize value.

Osmond has been mocking that idea. "What I really object to is the idea that they'll change their spots," he told The Observer recently. "They say that the demerger will enhance shareholder value and make the businesses more biddable separately, but I believe they are only doing it to preserve their own roles--and are actually making it less biddable. Who can go hostile on a pub or hotels bid? You need to see the figures. They are no more demerging to make them more biddable than turkeys vote for Christmas."

 

 

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Pizza king Osmond to get through downturn

Benedict Moore-Bridger, Evening Standard
30 October 2008, 2:50pm

Former Pizza Express owner Hugh Osmond has been nominated as the best credit crunch survivor in Esquire's 2008 Man At The Top Awards.

The entrepreneur has been shortlisted with Flybe owner Jim French, fashion firm Asos, and online gambling service Betfair.

Mr Osmond, a 46-year-old father of three, developed Pizza Express with friend Luke Johnson.

The ex-medic made a fortune when it was floated on the stock exchange in 1996. In his next role as chairman of Punch Taverns he won a battle against brewing giant Whitbread for the estate of Allied Domecq. He later acquired Pearl Assurance and in March 2004 bought Camden Palace for £4 million.

Arsène Wenger is nominated for Esquire's Most Influential Business Thinker award after becoming the only Premiership manager to turn a profit in the transfer market last year.

Elle Macpherson, founder of The Body/Elle Macpherson Intimates, is up for the Woman At The Top prize.

Sam and Jonny Fianu could win the Young Entrepreneur gong.

Winners will be announced on 3 November. December's Esquire is out on 6 November with a business and style supplement.

 

 

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Hugh Osmond eyes life fund buys in Europe

By Carmel Crimmins - tiscali.co.uk

LONDON (Reuters) - Entrepreneur Hugh Osmond will look at buying up closed life funds in Europe in the medium term, once he has sealed more deals in Britain, Osmond’s adviser Fiona Clutterbuck says.

Osmond, who has made his fortune through pizzas and pubs, clinched his first closed life fund deal, and Britain’s largest, on Monday when shareholders in fund manager HHG voted in favour of his 1.07 billion pound bid for the company’s life business.

"There should be potential for doing something similar in continental Europe in the next 4-5 years," Clutterbuck, a managing director in the financial institutions group at ABN AMRO, which has partly underwritten Osmond’s bid for the HHG units, told Reuters in an interview.

Clutterbuck said Life Company Investor Group, the company set up by Osmond’s Sun Capital Partners and TDR Capital, another private equity firm, had not yet decided which European markets to target. But she said there would be a flurry of deals in Britain.

"I expect there to be brisk activity over the next year to 18 months and I would hope that we would be a part of it."

Tougher funding rules and rough investment returns have encouraged around a fifth of Britain’s long-term insurance market, or nearly 200 billion pounds of assets, to close to new business.

 

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Tory donor Hugh Osmond criticises David Cameron on bank bonuses

David Cameron's stance on bank bonuses has come under fire from a Conservative business backer.

By James Kirkup, Political Correspondent - telegraph.co.uk

Hugh Osmond, who has given more than £80,000 to the Tories, said Mr Cameron's opposition to some bankers' bonuses was a sign the Conservative leader does not understand the current financial crisis.

Mr Cameron on Sunday upped the political ante on bonuses by saying that no one at banks that have taken money from the taxpayer should be paid a bonus worth more than £2,000.

The Tory leader has also suggested that bankers should do charity work to apologise for the credit crunch and called for more "morality" in the market.

"I don't think that the Tory response to date shows a real attempt to understand either the genesis of the crisis or how to fix it," Mr Osmond said, suggesting Mr Cameron was missing the more important issue of financial regulation.

"Bankers' bonuses are like footballers' wages. You can have a view that they incentivise the wrong sort of behaviour, but they're not at the root of the issue

Mr Osmond's criticism of Mr Cameron's economic credentials is particularly stinging as it comes from one of the UK's most successful entrepreneurs. Mr Osmond has amassed a £350m fortune through businesses such as Pizza Express and Punch Taverns.

Privately, some senior Conservatives are also uncomfortable with Mr Cameron's apparent enthusiasm for publicly criticising financiers, not least because several members of the Tory front bench work part-time for City banks.

Ed Balls, the Children's minister, has launched a strong personal attack on Mr Cameron over his "Broken society" rhetoric.

Mr Cameron has argued that under Labour, basic social norms have weakened and too many people lack a sense of personal responsibility.

Mr Balls, writing in a Tribune, a Labour newspaper, says that Mr Cameron's views are "not only highly offensive to the vast majority of parents who do a great job bringing up their kids; they are also totally unfair on the vast majority of law-abiding young people who work hard at school, play by the rules and, in my experience, deeply resent these attacks."

 

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Osmond to move Pearl outside of UK to lower-tax base

DATE: 12/05/2008 - execdigital.co.uk

Hugh Osmond is considering relocating Pearl Assurance, his financial services group, outside the UK, joining a host of other companies who are said to be considering overseas moves.

Speaking to The Times, the serial entrepreneur said that Pearl was already likely to list some if its investment funds offshore.

He said that it would be relatively simple to transfer other functions, including the head office, outside the UK to lower-tax locations, such as Dublin or Geneva.

Tax base

Pearl Assurance is part of a growing list of companies, including WPP, the advertising group, and Aberdeen Asset Management, the fund manager, who are considering moving out of Britain for tax purposes.

United Business Media Plc., the publishing and events group, said last month that it would move its tax base to Ireland. The firm said it will benefit from lower corporation taxes, which stand at 12.5 percent in Ireland, compared to 28 percent in the UK.

Shire, the pharmaceuticals group, has also said that it is leaving Britain.

Treasury review

Companies such as Shell, Experian and Invesco have already revealed plans to move to Ireland and a number of others are considering their options.

A possible move by Pearl will put further pressure on the Treasury to address its treatment of foreign profits.

The government is understood to be preparing revised corporate tax rules. It was reported yesterday that representatives from the TUC would be included in the review, which would include senior business figures, including CBI boss Richard Lambert.

 

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Taking on the inn crowd

Simon Bowers
The Guardian, Saturday 8 March 2003 10.51 GMT

At 8am yesterday, Hugh Osmond was the model of relaxed composure. With one arm slung over the back of his chair, tieless and the top button of his shirt unfastened. He showed no sign of exhaustion despite having spent the past week pitching his £5.4bn hostile takeover of hotels and pubs group Six Continents to about 30 investment houses.

A shareholder vote will decide next week whether investors want Six Continents to take a closer look at Mr Osmond's proposition or to press ahead with their own plans to demerge the hotel operations from Six Continents' pubs and restaurants businesses.

Mr Osmond plans to use the shell of a failed dotcom business to take over Britain's 34th biggest quoted company. Through its hotel operations, which include the Intercontinental, Crowne Plaza, Holiday Inn and Posthouse brands, Six Continents is the world's largest hotels operator. Through its pub operations, which include the O'Neils, All Bar One and Edwards chains, Six Continents is the largest pub management business in Britain. It runs more than three times as many pubs as Wetherspoon's.

By contrast, Mr Osmond's investment vehicle, Capital Management & Investment, is an empty shell. Its board members, none of whom draws a salary, are a handful of Mr Osmond's closest business partners, who have a long history of working together. If they pull it off, their bid will be the largest reverse takeover the City has witnessed - by a country mile.

'Track record'

So why should Six Continents shareholders hand over their company? "I would emphasise our plan is not just to buy the business, break it up, and sell it quickly," Mr Osmond explains. "It is to release value, which requires some improvement in the operating performance." He resents the suggestion that he is an opportunistic corporate raider. "That is nonsense. This is not an asset strip or a break-up to leave behind nothing but scorched earth. If you look at our track record we have always left behind businesses that are functioning better."

PizzaExpress, which he ran in the early 90s with his then business partner, Luke Johnson, and Punch pubs, which he grew and prepared for its flotation last summer, are cited as examples. Mr Osmond freely admits he knows nothing of running hotels, but is confident that experienced international operators can be found to manage Six Continents' chains should he take over. His main goal is to release as much as he can of the £7.6bn in primarily freehold as sets he believes are sitting idle on Six Continents' balance sheet.

Some analysts suspect that Mr Osmond is planning to sell as much of Six Continents as he can, leaving a securitised US hotels franchise and a securitised pubs business in Britain. "I think that is a huge over-simplification," he says. "Securitisation has become a pejorative word, but you wouldn't know if you went into a pub whether or not it was securitised - it is just a way to be able to afford to pay for debt at very advantageous rates over the very long term."

Perhaps the most controversial aspect of Mr Osmond's bid is the proposed bonus arrangements he is demanding for himself and his inner circle. None will draw a penny in conventional salary but they are promised a substantial slice of any returns generated for Six Continents shareholders, through four incentivisation schemes. One analyst this week said Mr Osmond and his team could expect to earn payouts of £1bn over three years if their bonus plans were accepted.

"Yes, if we really knock the ball out of the park," says Mr Osmond. "If analysts are saying we are going to make a lot of money, that implies we are not only going to turn around the company, we are going to turn it around big time and make huge amounts for shareholders as well." He admits that the bonus scheme could have been better structured. "The case for simplification is quite strong. As it happens, it was always our intention that it should be relatively simple but in order to try to align our interests with those of shareholders our various advisers made it perhaps a little bit more complicated than it need have been."

Money, he says, is not what gets him out of bed in the morning. "Apart from the money we may make, I believe strongly there are a lot of big companies out there which are seriously under-performing due to bad management. It bothers me when I see something like that. I enjoy the idea of taking something that is doing badly and fixing it." From his student days in Oxford, where he first teamed up with Mr Johnson and plunged his entire grant into night club promotions, his entrepreneurial ambitions have amazed.

After making his name at PizzaExpress he moved into pubs and thrashed Whitbread in a battle to acquire the 3,500-strong pub estate of Allied Domecq. In his idler moments Mr Osmond, who read medicine at university, has talked of how he would love to get his hands on the NHS. "It is not a real ambition but you do look at the appalling shambles of it and think it is inconceivable that the thing can work. I have various relatives who are doctors and you hear things that make it sound like all the worst big companies you've ever come across rolled into one."

After a falling out with Mr Johnson over a business deal in the late 90s, Mr Osmond says the two men are back on speaking terms. "We are not working together but relations are cordial." Asked if he thought Mr Johnson's recent £263m offer to buy back PizzaExpress was undervalued, Mr Osmond, who himself came close to bidding for the company earlier this year, says: "As it happens, no. I understand where shareholders are coming from when they say the price doesn't look very high, but it is a higher price than we would have been prepared to pay. I think it reflects the performance of the business as it is. I don't particularly see a prospect of shareholders getting greater value than Luke's bid. I think he has done well to put it together."

Some disenchanted Six Continents shareholders agree with Mr Osmond that existing management under chairman Sir Ian Prosser has lost its way, but suggest a wholesale sacking of the board would be a cheaper and more effective strategy than selling the business. "In essence, that is exactly the same as our proposal," Mr Osmond argues.

'A vote about choice'

Nor does Mr Osmond believe Sir Ian's plans to demerge the company, which go to a shareholder vote next Wednesday, will open the hotels and pubs divisions to a rush of bidders. "It is extremely unlikely that people will bid for the company after the demerger. What you've got now is a one-off disclosure of information [required by law for the demerger plans to proceed] from a company that is extremely unhelpful to people looking to bid for it. This is the only time when they have released this information and all their material contracts are on display." Not all institutional shareholders are persuaded. He stresses that a vote against the demerger is not an acceptance of his offer. "This is a vote about choice. It is about keeping your options open. The point of Wednesday is not to let the board railroad the company into demerger." He will, of course, be attending the meeting. He has done his research. He ate at a branch near Newbury of the company's budget price family restaurant chain Harvester two weeks ago. "As far as I could see the menu was stuck in the 1980s. The only thing I can remember eating was the coleslaw, which wasn't bad."

 

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Hugh Osmond bids for Six Continents with US$11 billion

BLOOMBERG, LONDON - taipeitimes.com
Tuesday, Mar 04, 2003,

Hugh Osmond, founder of the Punch Taverns Plc pub chain, offered to buy Six Continents Plc, owner of the InterContinental and Holiday Inn hotels, for £7 billion (US$11 billion) in cash and assumed debt.

Osmond offered 36 new shares of his Capital Management & Investment Plc holding company for each Six Continents share, valuing the UK hotelier at 648 pence a share, compared with 619 pence Friday. Alternatively, investors may take 643 pence a share in cash and stock, Osmond said in a Regulatory News Service statement.

The 40-year-old Osmond, who amassed more than 100 million pounds by investing in British bars, real estate and restaurants, wants to break up Six Continents, owner of 3,200 hotels and 2,000 pubs. The acquisition would be the biggest ever in Europe's lodging and bar industries.

Shares of Six Continents were down 12 pence, or 1.9 percent, to 607 pence at 8:53am in London, giving the London-based company a market value of £5.3 billion.

Along with InterContinental and Holiday Inn, Osmond would acquire the Crowne Plaza hotels as well as Britain's fourth-largest pub chain, with venues such as All Bar One. Six Continents has businesses in almost 100 countries, from the US to China.

Osmond has said he aims to thwart the company's plan to spin off bars from hotels, and gain all the assets in one transaction.

Six Continents already has rejected approaches from Osmond.

Under Six Continents' intended spinoff, scheduled for next month, shareholders would gain 50 shares in each of the two listed companies, for every 59 Six Continents shares held. They would also be paid £700 million, or 81 pence a share.

With the division of the company, Six Continents has estimated it would reap about US$100 million in cost savings at the hotels business this year and US$10 million at the pubs company. Six Continents also is nearing the end of a five-year, US$1 billion revamp to overhaul InterContinental hotels including Le Grand, a 19th century building opposite Paris' main opera house.

Profitability at the hotels is under pressure, particularly in the US and Europe, because of faltering economies and prospect of war in Iraq, Chairman Ian Prosser has said.

Six Continents said in December, when it posted a 24 percent decline in second-half profit, that it expects corporate room rates at its InterContinental and Crowne Plaza chains to be unchanged or decline this year.

Osmond said Feb. 20 he intends to increase the value of Six Continents by breaking it up and selling parts of the business.

He is worth £134 million, according to the Sunday Times 2002 Rich List. Osmond made much of his fortune by buying and selling pubs, starting with the creation of Punch Taverns Group Ltd in 1997 and the spinoff of Punch Taverns last year.

In 1999, he led Punch Taverns Group to victory in a takeover battle for Allied Domecq Plc's 3,500 pubs, knocking out bidding rival Whitbread Plc. His £2.75 billion offer was a combination of cash, assumed debt and shares of Bass Plc, which agreed to buy about a fifth of the pubs.
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Hugh Osmond launches £5.5bn takeover bid for Six Continents

business.scotsman.com

Published Date: 23 February 2003
By ROBERT BAILHACHE
HUGH Osmond, the corporate raider, will this week launch an audacious bid to take over Six Continents with an offer that values the operator of the Holiday Inn and Crowne Plaza hotel chains at more than £5.5bn.
Advisers working on the hostile bid are meeting today to put the finishing touches to an offer that will be made through Osmond’s takeover vehicle, Capital Management and Investment (CMI). The proposal will be tabled by Friday.

Under the scheme, CMI would promise to release the substantial value locked within Six Continents. The group’s shares trade at a big discount to the aggregate value of the assets owned by the company.

Shareholders are to be offered an all-paper and a cash-and-shares alternative under the terms being prepared by CMI. Osmond’s advisers think most investors are likely to prefer the paper offer because the restructuring gains will be greater.

CMI is to transfer its listing from London’s small Alternative Investment Market to the main board of the London Stock Exchange, enabling institutional shareholders to accept paper in the bid vehicle.

Osmond is expected to promise an immediate shareholder handout of up to £1.4bn to sweeten the big institutional owners of Six Continents that will be vital in winning shareholder support for any takeover.

Six Continents has promised to return £700m to investors under the terms of its own proposed demerger of its hotel and leisure operations, which include bars and restaurants such as the All Bar One, O’Neills and Harvester chains.

Osmond is to make the postponement of an extraordinary shareholder meeting on March 12 to approve the demerger a condition of his offer.

CMI aims to create shareholder value by selling the group’s hotel property, leasing back the sites, and securitise revenues from the pub and restaurant businesses.

People familiar with the terms said this weekend that CMI has secured loan guarantees worth at least £1.5bn.

Advisers Credit Suisse First Boston and Lehman Brothers have agreed to provide acquisition and principal finance.

Pressure on Six Continents intensified on Friday after group chairman Sir Ian Prosser was forced to qualify a performance claim by the group’s existing management, many of whom are already discredited across the City of London.

In response to CMI’s confirmation that it was considering a bid for Six Continents, Prosser had to retract a claim that Six Continents had outperformed the FTSE 100 over the past five and 10 years, which was wrong.

Sources close to CMI said the retraction was symptomatic of a management team that had consistently "bluffed and delayed" fundamental restructuring, even though it was clearly in the best interests of shareholders.

On Friday, some of the biggest shareholders in Six Continents indicated that they would be willing to accept paper in CMI so long as the Osmond management team was able to demonstrate it had the financial clout to execute the restructuring.

Some shareholders said they would only take a formal bid from Osmond seriously if he were able to show that he had secured irrevocable undertakings by trade or financial buyers to acquire some of the hotel assets.

Osmond, 41, shot to prominence by defeating drinks giant Whitbread in a battle for 3,500 pubs owned by Allied Domecq in 1999.

He later sold the buyout vehicle Punch Taverns, now listed on the London Stock Exchange, to Texas Pacific.

 

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Osmond’s plan no joke for Pearl bondholders

Posted by: Neil Collins - blogs.reuters.com

– Neil Collins is a Reuters columnist. The opinions expressed are his own –

By Neil Collins
LONDON, April 9 (Reuters) - Is Hugh Osmond having a laugh?
The answer is obviously yes, except that Osmond doesn’t do jokes, and if he can persuade the banks that have lent to his leveraged insurance vehicle, Pearl, with his reconstruction arithmetic, he’s the one who will end up with the biggest grin.
He’s talking of floating shares in the disparate collection of closed life assurance companies he put together only last year, because “the debt funded acquisition model that served Pearl and others so well in the past is no longer appropriate.”
It may have served him well, but the holders of a 500 million pound ($736.5 million) sterling eurobond, issued by a company that is now a Pearl subsidiary, are not laughing.
Rather, they are spitting tacks after Osmond said last month that he wasn’t going to pay the coupon on the bond, even though he had the money.
The price, already weak in anticipation of bad news, has collapsed to 5 pence in the pound bid, 10 pence offered.
The holders have formed themselves into an action group, and forced Pearl to agree to meet them next month.
Legally, they are on weak ground, since the deed allows payment to be deferred, but if Osmond is serious about flotation, their position looks much better.
The holders range across the usual spectrum of UK life offices and pension funds, who would be the natural buyers in the share issue.
There is more at stake here than the loss of 90% of the bond’s value. If Osmond can effectively turn this issue into a perpetual zero-coupon bond, plenty of others will try to do the same in this $100 billion market.
Where the bondholders’ lawyers look likely to fail, institutional pressure may well force better behaviour - assuming Osmond really is serious about coming back to market.
(Editing by Timothy Heritage)

 

 

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Hugh Osmond in talks on £3billion Pearl debt

business.timesonline.co.uk

Insurance group boss may put in his own money to clinch agreement with banks
Ben Marlow and Iain Dey

HUGH OSMOND is talking to banks over restructuring the £3 billion debt pile in his Pearl Group insurance empire.

The negotiations could lead to a partial debt-for-equity swap agreed with the firm’s lending banks, Lloyds Banking Group, Dresdner Kleinwort and Royal Bank of Scotland.

Osmond, who made his name with the Pizza Express restaurant chain and founded Punch Taverns, is also considering pumping more of his £350m personal fortune into the business to clinch a deal, which would be expected to involve private-equity group TDR.

The talks come amid pressure from the Financial Services Authority (FSA) over the structure of Osmond’s £5 billion takeover of Resolution Life from rival insurance entrepreneur Clive Cowdery.

The debt probe is separate to an FSA investigation into Cowdery and four other directors of Resolution over share sales leading up to the sale.

Pearl Group has £2.2 billion of debt in Impala, the bid vehicle that bought Resolution, and a further £800m across the rest of the business.

The debt is ringfenced from Resolution’s life-insurance companies, which include policies originally sold by Abbey National, London Life, Britannia Life, Scottish Provident and Cornhill. Pearl has more than 7m policyholders in total.

Under the structure of the deal, the debt pile is serviced using cash flow from the life companies.

However, the regulator is tightening rules on insurance-company capital in light of huge falls in the stock market and the collapse of corporate bonds.

The FSA may not allow the capital to be released. This means that Pearl would be unable to make interest payments to its banks.

Pearl has not breached any of the covenants on its debt, according to banking sources. Under the structure of the deal, the banks do not have any power to demand money from the life funds.

Although the FSA is thought to be weeks away from working out how to deal with the issue, Osmond has already begun discussions with his bankers. The talks are expected to accelerate this week.

It is understood that all parties are keen to restructure the deal, which was negotiated as the bull market was in its death throes. The deal followed a hotly-contested auction that sucked in a number of the UK’s life-assurance companies.

Resolution originally agreed a merger with Friends Provident. Osmond then began to build a stake in Resolution, and eventually launched a cash takeover offer.

That prompted a bidding war with rival life assurer Standard Life, which countered with a share-based offer for Resolution. The former mutual backed out of the race after news of the approach triggered a collapse in its share price.

Resolution revealed last week that it is being investigated over events related to the period from October 2007 to May last year, when the deal completed. The deal had been scheduled to close in March last year.

All of Resolution’s directors apart from Mike Biggs, then the company’s chairman, sold shares in December 2007.

 

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Osmond could suffer ?200m hit if Pearl deal goes through

By Daily Mail Reporter

Hugh Osmond could suffer a major blow to his fortune in the impending overhaul of his insurance empire.

The entrepreneur, whose career took him from pubs and Pizza Express to 'zombie' life insurance funds, is close to an agreement over the restructuring of Pearl Group.

A ?3billion debt-for-equity swap could reportedly lead to Osmond losing up to ?200million of his paper fortune.

Pearl could not be reached for comment.

Pearl is in talks with its banks, led by Lloyds Banking Group, after being hit by falling share values and paying a hefty ?5billion for rival Resolution.

The deal will reportedly involve ?500million of new equity being injected into the firm by private equity firm Liberty.

Osmond's stake in the business is expected to be almost erased in the deal.

A deal could be announced by the end of this week.

CMI Bet $8.7 Billion On Hotels And Bars
Business big shot
H. O. eyes life fund buys in Europe

 

 
 
Could you forward this site to Hugh Osmond