Wembley is hit by absence of buyback

WEMBLEY had one of the worst falls in a weak FTSE 250 as the gaming group’s house broker expressed unease about its failure to buy back shares and the potential fallout from a US grand jury investigation.

The US broker was initially reassured by last week’s full-year results from Wembley, which showed better than expected operating profits and above-forecast current trading at its Lincoln Park racetrack in Rhode Island, which accounts for 90 per cent of earnings.

However, the broker, Merrill yesterday moved its risk rating on the shares from “medium” to “high” on concern at the company’s inclusion of a “wealth warning” in the results statement. The broker saw that caveat –– which raised the possibility that the continuing grand jury investigation into alleged financial malpractice at Lincoln Park may have “material consequences” –– as significant, given that Wembley has never previously felt the need for such a statement.

Further, Merrill is worried by the lack of share buybacks after last week’s results, given the price weakness and the company’s history of repurchases. The broker takes this as a sign that Wembley expects the shares to fall in the event of a possible indictment from the grand jury, from which further clarification is expected by the middle of next month. With Merrill downgrading the shares from “buy” to “neutral”, Wembley lost 55p at 677½p, with the FTSE 250 off 26.1 points at 3898.3.

Pilkington, down 5¼p to 44½p, came under further pressure after Friday’s downgrade by Dresdner Kleinwort Wasserstein as Credit Suisse First Boston also turned bearish. The Swiss broker believes that trading conditions in the European and North American glass industry have deteriorated over the past three months, citing decreasing demand from the automotive and construction sectors, falling flat-glass prices and rising fuel costs in the US. CSFB has cut its view from “neutral” to “underperform” with a 45p price target –– against a previous 68p –– ahead of Pilkington’s year-end trading statement on March 27.

Coats, up ¾p at 58¼p, was one of the most heavily traded mid-caps as a US fund manager sold its 12.16 million shares to Avenue Acquisition, the textile company’s agreed bidder, through Charles Stanley at 58½p. That purchase took the holding of Avenue –– a consortium backed by Guinness Peat Group and RIT Capital Partners –– to 39.16 per cent, and made its offer mandatory under the Takeover Code.

Ask Central eased ½p at 103p ahead of Wednesday’s full-year figures from the AIM-listed restaurant operator. Analysts are likely to seek further clarification from Adam Kaye, chief executive, who along with his brother, Samuel, holds 13.6 per cent, on whether he has plans to reduce his stake further.

Planit Holdings, the maker of software for furniture design, fell ½p to 20½p, despite a declaration that Bob Morton, its former chairman, has bought a further 1.1 million shares, lifting his interest to 4.38 per cent.

Ashtead Group, the plant-hire specialist, which was steady at 28½p, faces a sell-off this morning after it gave warning on profits after-hours following the discovery of accounting discrepancies in its US Sunbelt Rentals subsidiary.

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