Bloomberg News

Cookson Tumbles to 21-Year Low as Funds Disclose Short Sales

February 24, 2009

Cookson Group Plc (CKSN), part-way through a 255 million-pound ($371 million) rights offer, slid to a 21- year low as Susquehanna International Group LLP and a dozen other investors disclosed bets that the shares will fall.

Susquehanna and investors Davidson Kempner European Partners LLP and Guevoura Fund Ltd. have disclosed short positions in Cookson since the rights offer began Jan. 29, regulatory filings show. The company is selling shares to existing investors for 10 pence. The stock fell 12 percent to 11.25 pence in London trading today.

The world’s biggest maker of ceramic linings for metal smelters is raising the money to pay down 706 million pounds of debt amassed to fund its takeover of Foseco Plc two years ago. The recession is forcing steelmakers to cut back production as demand from automakers and builders slumps. Global crude steel output tumbled 24 percent in January from a year earlier, according to the World Steel Association.

“People are very cautious right now,” said Michael Blogg, an analyst at Arbuthnot Securities in London, who has a “buy” rating on Cookson. “At what point investors will feel more comfortable with the outlook for the company we just don’t know.”

A spokesman for London-based Cookson, John Olsen at Hogarth Partnership Ltd., said by telephone there was “absolutely” broad support from Cookson’s investors for the rights offer.

Underwriters JPMorgan Chase & Co. and Merrill Lynch & Co. have committed to buying stock investors don’t want, guaranteeing Cookson will raise the money it needs. Officials at JPMorgan and Merrill Lynch declined to comment.

Typically underwriters seek to pass on some of their risk by paying some of their fees to so-called sub-underwriters to guarantee part of a sale. Sub-underwriters can include existing investors of a company or new investors.

Under rules introduced by Britain’s securities watchdog last year, investors must disclose their positions when they short 0.25 percent or more of a company’s shares if that company is selling stock in a rights offer.

Susquehanna said in a filing today it had a 0.43 percent short position in Cookson as of yesterday. David Kempner Partners and Simba HTTS Global Macro also said they had short positions on the stock.

To contact the reporters on this story: Elisa Martinuzzi in Milan at; Scott Hamilton in London at

To contact the editors responsible for this story: Edward Evans at; Andrew Noel in London on

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