CHIP HORNSBY, the boss of building-materials group Wolseley, was in fine form when I met him last year, insisting City fears about his group’s exposure to the shaky-looking American housing market were overdone.

He might have been right, but shareholders have voted with their feet. Wolseley shares, which closed the week at 532p, have halved in value over the past 12 months, and underperformed the FTSE All-Share index by 18% in the last three months. Last week the buzz round the company got even worse, with some analysts questioning whether the company might be in danger of breaching its loan covenants, and also whether Wolseley’s lack of financial firepower would prevent it from buying up smaller competitors, a practice that has been the engine of its growth. The speculation was doubly damaging in that it came only a few days before Wolseley’s interim results, out tomorrow.

The news from Hornsby is unlikely to be as dire as the gloom mongers predict. He is understood to have reassured analysts that the company has about £1 billion of headroom before loan covenants become a problem - although it is an issue the company is obviously wary of. He is also likely to report results in line with expectations, with profits of just over £300m.

He is, however, swimming against the tide. The startling problems at US bank Bear Stearns last week only underlined the parlous state of the American housing market, and while Hornsby will argue that Wolseley’s direct exposure to the US building materials market accounts for only 15% of revenues, most investors won’t see the need to chance their arm before they are sure the bottom has been reached.

Capital & Regional

LAST week The Sunday Times revealed that Martin Barber, chief executive of Capital & Regional, one of the UK’s biggest shopping-centre and retail-park owners, had been ousted more than a year ahead of his proposed retirement date.

Now my City spies tell me Barber is expected to pocket a total pay-off exceeding £600,000. The cash will include a year’s salary - equivalent to £320,000, and a fair chunk of his maximum discretionary annual bonus, even though shares in the property company have slumped by more than 70% since last year.

The payments are expected to be confirmed in Capital & Regional’s 2008 annual report, which will be published in the next few months.

Barber left after a bust-up with Tom Chandos, the group’s nonexecutive chairman, who has been agitating for changes at the top for several months.

Mere mortals may be happy to bank the cash and head off into the sunset, but Barber, who has made a fortune from other business deals - including floating a US real-estate investment trust, will not be placated by mere money.

As the founder of Capital & Regional, he is said to be fuming about the way he has been treated by Chandos. Last week rumours swirled that he may consider a bid for the company. Inquiries about whether this was true were greeted by a resounding “no comment” from Barber. Such an outcome - whether he is planning it or not - seems a little farfetched, given that debt markets are so tight.

More likely is that other predators will use the company’s difficulties to start stake-building. Watch this space.

jenny.davey@sunday-times.co.uk

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