Cattles rescue talks collapse
TALKS aimed at restructuring beleaguered doorstep lender Cattles broke down yesterday as the company’s bondholder creditors walked away from the discussions.
The company issued a statement to the stock market in which it said it would continue discussions with those creditors that remained in order to find a solution.
The bondholders own around one third of the nominal value of the lender whose shares were suspended in April 2009 at 6.88p having traded at over 200p the year before. The collapse in share price followed the revelation that the lender’s bad debts had been incorrectly reported.
That led to Deloitte being called in to conduct a full scale audit. Seven directors were removed with immediate effect and the chairman and chief executive resigned.
The lender was then forced to close its doors to new business while restructuring negotiations took place.
In June this year Cattles announced that one of the options being discussed with its creditors was a proposal under which shareholders would be offered 1p per share in the newly incorporated company.
Cattles said it still believed “that it remains in the interests of all parties to reach an agreement.” The biggest problem its creditors face is the fact that the lender owes more to them – £2.4bn – than it is owed by its own customers.
While the bondholders could put the company into administration they would face an uphill struggle to recover any of the money owed to the lender by customers if the company ceased to exist, possibly one reason why they have not done so yet.