FTSE 250 movers: Gamma, Close Bros surge; Oil stocks slump

(Sharecast News) - FTSE 250 (MCX) 22,404.84 3.94%

Gamma Communications rallied, having confirmed after the close on Tuesday that it is in preliminary talks with a number of interested parties about a potential offer.

Responding to recent press speculation, the company said it was in talks "with a view to establishing whether such potential offerors might be willing to put forward a proposal that would deliver greater value to shareholders than pursuing a standalone independent strategy".

Gamma said talks with the interested parties are at an early stage and as such, there can be no certainty that an offer will be made, nor as to the terms on which any such offer might be made.

"A further announcement will be made if and when appropriate," it said.

Close Brothers said on Wednesday that the motor finance redress scheme is set to cost the company around £320m, but shares surged as the merchant bank said this could be "comfortably absorbed".

The merchant bank said this was "broadly similar" to its existing provision of £294m. It also said the cost of the scheme can be "comfortably absorbed" by existing capital resources, leaving the group well positioned to continue delivering its strategy.

The redress scheme is expected to reduce the group's CET 1 capital ratio by around 25 basis points to 14% but Close Brothers said this remains "comfortably ahead" of its medium-term target of 12% to 13%.

The company's estimate assumes around 720,000 UK regulated motor finance loans between 6 April 2007 and 1 November 2024 qualifying for redress under the scheme. This includes about 640,000 loans written under Discretionary Commission Arrangements (DCAs) and a further 80,000 non-DCA loans which are likely to meet the "tied" arrangements and/or "high commission" criteria as defined by the FCA.

It also assumes an average redress payment of approximately £500 per customer, including compensatory interest. This is below the FCA's average estimate of £829 and reflects the relatively smaller loan sizes and lower commission levels of Close Brothers' motor finance loan book.

The group expects an estimated claim rate of 75%, in line with the FCA's assumption. It said that a 5% absolute increase or decrease in the assumed claim rate would result in a circa £18m increase or decrease in the estimate.

Delivery costs are estimated at around £66, Close Brothers said. This excludes circa £14m of costs already incurred against the existing provision.

"At this stage, no provision changes have been recognised," the company said. "The group's existing IAS 37 provision remains under review.

"The group will continue to closely monitor any further legal, regulatory and industry developments and is considering its next steps."

At 0945 BST, the shares were up 16.1% at 452.20p.

Broker Shore Capital said: "Following the significant increase in FirstRand's provision yesterday and continued commentary from Viceroy suggesting a far larger outcome for Close Brothers, potentially threatening solvency, we believe the market is likely to be materially reassured by today's update."

Travel and airlines were all higher on the ceasefire agreement between the US and Iran. Wizz Air, easyJet and Carnival all surged. On the flip side oil stocks fell in line with a plunging crude price, with Ithaca Energy, Harbour and Diversified Energy registering large falls.

FTSE 250 - Risers

Gamma Communications (GAMA) 853.20p 16.55% Close Brothers Group (CBG) 446.40p 14.63% Wizz Air Holdings (WIZZ) 959.00p 11.18% Carnival (CCL) 2,069.00p 10.36% easyJet (EZJ) 393.00p 10.19% TBC Bank Group (TBCG) 4,756.00p 10.15% Bellway (BWY) 2,046.00p 9.82% Vistry Group (VTY) 358.20p 9.45% Marshalls (MSLH) 147.60p 9.10% RHI Magnesita N.V. (DI) (RHIM) 2,595.00p 8.81%

FTSE 250 - Fallers

Ithaca Energy (ITH) 238.80p -7.52% Harbour Energy (HBR) 269.20p -7.25% Diversified Energy Company (DI) (DEC) 1,206.00p -6.96% Energean (ENOG) 836.00p -4.69% Senior (SNR) 286.25p -1.72% Tate & Lyle (TATE) 345.40p -0.72% AEP Plantations (AEP) 1,910.00p -0.10% Tami Senior Securitisation 2 Ltd Cls A-2 Mb Fxd Rte Nts 31/12/23 (Reg S) (BP00) 0.00p 0.00% HICL Infrastructure (HICL) 122.20p 0.00% Oxford Nanopore Technologies (ONT) 115.80p 0.09%