Troubled Cattles explores the sale of its invoice finance operation

Troubled Cattles explores the sale of its invoice finance operation



Published Date: 06 May 2009
By Ros Snowdon
City Editor
CATTLES, the troubled sub-prime lender, is looking at selling its Cattles Invoice Finance operation, a small but profitable non-core part of the business.

Batley-based Cattles said it is exploring options in relation to Cattles Invoice Finance, including a potential disposal. It added that no firm decision has been reached and a further announcement will be made when appropriate.

The division, whichADVERTISEMENT

buys debts from Cattles' customers and then collects them, employs 170 staff in Manchester.

Cattles declined to say whether it is already in talks with potential buyers. The group said earlier this year that it would look to sell non-core parts of the business as it struggles to cope with the recession. Cattles Invoice Finance made a £3m profit in 2007 on turnover of £17m.

Cattles' shares were suspended last month because of delays in publishing its annual results. The group has already warned of significant losses and faces a bill of up to £850m to plug holes in its accounts.

The Financial Services Authority (FSA) temporarily suspended Cattles' shares at 6.9p, valuing the company at about £36m.

Delays to Cattles' 2008 results hinge on "complex negotiations" with its banks to refinance some of its £2.4bn debt. With £635m of bank debt due to expire this year, the company's status as a going concern is in jeopardy.

However, the Yorkshire Post understands its banks are now willing to roll over some of the group's debt, which could allow auditors to sign it off as a going concern.

The suspension of shares was the latest in a steady trickle of bad news from Cattles, which lends to people with poor credit ratings who struggle to borrow from traditional high street banks.

The group has breached its banking covenants by warning of significant losses from 2008.

It has closed its main Welcome Finance operating division to new customers, with the loss of 1,000 jobs, including 400 in Hull. Six senior executives, including two board directors, have been suspended after Cattles discovered failures in the way it accounts for bad debts.

Last week, the company said it proposed to close its direct distribution car retailer, Welcome Car Finance, to preserve cash and improve liquidity,