WorldCom: Prada scraps flotation

ITALIAN fashion house Prada has dropped its plans for a share float, blaming the turmoil inflicted by the WorldCom scandal. Its decision raised fears that UK firms such as Yell and Burberry might be forced to follow.

Prada blamed 'the bad conditions of the financial markets'. Others are hoping that the shakeout will be shortlived, but if prices keep falling, they may have to reconsider. 'I can't see how a share offer can take off in these markets,' says Ian Jenkins at Cantor Index. 'The outlook is so bearish that it will overshadow any float.'

Investors reckon Yell's float could be pulled within days, though the phone directory firm insists it is 'business as usual'. Its directory service has inevitably been tarred with the telecoms brush. It is due to price its shares on Tuesday, but insiders are exploring whether it makes sense to push the timetable back.

Canto's grey market price for Yell is 300p to 310p. That is within Yell's 270p to 345p price range, but investors are increasingly jittery.

Prada's advisers Morgan Stanley are lead bankers on the Burberry float. Burberry's owner GUS insists Prada's decision makes no difference, and says its own 'plans are still very much on track' for mid-July.

Burberry will offer up to 25% of the shares at around 230p to 290p a share. They are 267p to 277p in the grey market.

DIY retailer Focus Wickes plans to price its shares on Monday and start trading on Friday. It is encouraged that City investors 'are still asking for meetings'. The 'grey' price is 252p to 257p, well within its 230p to 290p range. Focus says: 'It has been priced to reflect market turbulence. The roadshow has gone well.'

The market turmoil could also make it more tricky for cable firm Telewest to negotiate a refinancing package with bondholders. 'Everyone will want to let the dust settle first,' said a bond dealer. Defying the gloom, public services consultant Mouchel got its share placing away within its target price range, valuing it at £77.5m. It placed 24m shares at 125p each.

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