Does the hedge give Olayan, with its strong Saudi connections, any kind of an interest in the National Grid? Who does James Capel plan to sell them to? And is this a transaction that qualifies for normal market-making privileges? The situation demands further explanation, even if the answers ultimately prove entirely satisfactory.Littlechild goes out on his ownHere’s a conundrum. Coincidence?Why yes, says Hanson’s Chris Collins, who insists that his company has no remaining beneficial or economic interest in the shares whatsoever.That’s what he says, so we must believe him, but there is still puzzlement in the City as to why James Capel should want to tie up pounds 400m of its capital in the National Grid, hedged though the position may be. It just so happens that one Niven Duncan, a consultant to Olayan, used to be a non-executive director of Eastern Electricity, Hanson’s electricity arm. The questions start with why Hanson should be disposing of these shares at all at this price. Hanson is on record as believing that they are worth a lot more while the company’s planned demerger apparently solved the problem of the Government’s insistence that it must dispose of the shares within a year of the National Grid’s flotation.
The buyer is James Capel, which says it has hedged the position with the Olayan group of companies, a privately owned Athens-based concern that likes to dabble in derivative transactions of this sort.

Both Hanson and James Capel were protesting their innocence loudly last night, but from this side of the fence it is hard to treat yesterday’s pounds 400m disposal of a 12.5 per cent stake in the National Grid with anything other than the utmost suspicion. The Government may be faced with a bill running into millions of pounds if it is to meet its target of allowing all 23 million domestic electricity customers to choose their supplier from 1998, it emerged yesterday. His father was killed when Revolutionary United Front (RUF) rebels attacked and burned his village in the interior. Separated from his mother, whose whereabouts is unknown, Safia attached himself to an army unit which trained him to spy on rebel positions. He was captured by the rebels last year while on a mission.There are thousands of child soldiers like Safia in Sierra Leone, which has been riven by civil war since 1991. The RUF and the government last month agreed to extend a ceasefire first signed in March but a peace accord has yet to be reached.Unicef, the United Nations children’s fund, estimates there are 2,500 child combatants in Sierra Leone, whose law proscribes enlistment of soldiers under the age of seventeen-and-a-half.

Most child fighters are on the rebel side; only 370 of them have been officially demobilised by the army, though another few hundred left of their own accord. Analysts said the figures provided further evidence that consolidation among ferry operators was only a matter of time.
P&O said the number of tourist vehicles using its Dover-to-Calais service fell by 23 per cent in the first three months of this year, and the number of ferry passengers carried dropped by 17 per cent.”Carryings continued to fall as Eurotunnel’s Le Shuttle service approached its natural share of the market,” the company said.The news came as P&O denied reports that it was planning to merge its cross-Channel operations with its rival, Stena Sealink, in a bid to meet the increasing challenge of Eurotunnel head-on.”We have absolutely no plans at present for such rationalisation,” a P&O spokesman said.But P&O has not ruled out the possibility of forming cost-cutting alliances at a later date. “We have always said rationalisation is inevitable on the cross-Channel route,” the spokesman added.Stena Sealink also dismissed the stories, but its managing director, Gareth Cooper, recently said fierce price competition from Eurotunnel may force leading ferry companies to restart merger talks.The Government originally blocked such a move between Stena and P&O three years ago, but market conditions have changed considerably since the tunnel was opened two years ago.. The shipping, property and construction group P&O yesterday reported a sharp drop in traffic on its cross-Channel ferry route in the face of increased competition from Eurotunnel. But the bank now wants somebody else put in charge of renegotiation of the debt.In a statement, a NatWest spokesman denied that Mr Byatt, the corporate lending chief who is in charge of the Eurotunnel negotiations, was the executive leading the campaign to unseat Sir Alastair.The bank also said the matter was not discussed at last Sunday’s weekly meeting of the bank steering group, which is held alternately in London and Paris.However, it is understood that the issue of whether Sir Alastair should quit early has been discussed recently by leading banks. Sir Alastair has told them he intends to fight for the rights of shareholders under French law, which gives less weight to bank creditors in a financial rescue.NatWest is one of four lead banks on the steering group handling negotiations on restructuring pounds 8.1bn of Eurotunnel debt.

It is understood that two key French banks on the steering committee, Credit Lyonnais and BNP, have not been pressing for Sir Alastair to leave early.It also emerged that a decision last week by Eurotunnel to switch brokers from SBC Warburg to Kleinwort Benson was the final move in a complete severance of the company’s connections with the investment bank.Comment, page 21. The talks with the banks are due to start later this month and may last well into the autumn.Mr Byatt and other senior figures in NatWest including John Melbourn, a main board director, believe that Sir Alastair was the right man to push through construction of the tunnel. The banks have no direct power to remove a co-chairman.Sir Alastair’s contract expires in October but he made clear earlier this year that the Eurotunnel board has asked him to stay until the negotiations have been completed. NatWest appeared to be in retreat yesterday on its behind-the-scenes attempt to unseat Sir Alastair Morton, co-chairman of Eurotunnel. This followed the disclosure yesterday that Roger Byatt, deputy chief executive of NatWest Markets, had suggested to Sir Alastair several times that he should quit early to smooth the path of debt negotiations with the banks.
Sources close to the negotiations said that leaks of NatWest’s position were likely to forestall any attempts by Eurotunnel’s leading banks to pressurise the company’s board to drop Sir Alastair early. Speculative inflows are misplaced and unwelcome.”The general reaction to our decision has been surprisingly positive.”. Unfortunately, what we have found is that when you set limits like that it tends to make people think there is something going on and they try even harder to open an account.”The inflow simply wasn’t normal.

Rather than raise expectations, we have decided to stop people opening accounts with us,” the spokesman added.A Derbyshire spokesman said his society, the 17th-largest with some 310,000 savers and 50,000 borrowers, was determined to remain mutual.”We have introduced measures to discourage speculative account openers and allow us to focus on a quality service to our proper customers in our own region,” he said.”A general measure is that we will not open any accounts for people resident outside the society’s normal operating area outside the wider Midlands.”The spokesman added that the society’s seven city-centre branches would bar new openings other than its Crown account, with a pounds 1,000 minimum, or Capital Bond, with a pounds 15,000 minimum, to anyone other than existing customers or those connected to them.National Counties’ move to send cheques back to prospective members came after it was forced last month to close its doors to all new accounts.The society, which has 15,000 savers and 5,000 borrowers, had been inundated by a speculative flood of money following reports that if it were taken over, members might be entitled to payments worth up to pounds 4,500.John Milton, general manager at National Counties, said yesterday: “We have been overwhelmed in recent months by applications for new accounts. The move is aimed at deterring speculative account-holders from disrupting the service offered by each society to existing members.
The decision by Derbyshire and Cheshire comes as the tiny National Counties, with just one branch in Epsom, Surrey, also said it was sending back cheques to hundreds of prospective account-holders.A spokesman for Cheshire, the 19th-largest UK society with 60 branches, said: “Recently, we decided that we would raise the balance needed to open an account to pounds 2,500 for anyone living outside our core Granada TV area, where most of our customers live.”Local people were still able to open an account for pounds 100. Derbyshire and Cheshire building societies yesterday joined a growing list of mutuals fighting back against “carpetbaggers” by announcing they would refuse to open new accounts from investors outside their regions. Approvals are an important indicator of actual borrowing in six to eight weeks’ time.The BBA’s figures came as a separate survey by TSB showed that since the new year the average cost of buying a home has dropped by 5.6 per cent, based on the cost of a typical mortgage for each pounds 100 of take-home pay.. After overshooting forecasts by about pounds 10bn last year, public borrowing in 1997/8 will remain well above the 3 per cent of GDP set by Maastricht, said Gavyn Davies, chief economist at the investment bank Goldman Sachs and one of the the Treasury’s six “wise persons”.The main UK banks yesterday dented hopes of a rapid end to difficulties in the housing market, announcing that net mortgage lending in March, at pounds 632m, was lower than the previous month.However, the British Bankers Association added that the number of new approvals rose 26 per cent to 31,630 in March.