Ashtead crashes 68% after default on interest payment

Ashtead, the equipment rental company which revealed accounting irregularities on Monday, saw its shares plunge 68 per cent yesterday after it defaulted on a bank loan.

Ashtead, the equipment rental company which revealed accounting irregularities on Monday, saw its shares plunge 68 per cent yesterday after it defaulted on a bank loan.

The company, which has over-stated profits by £5m over the past two years, had been due to make an interest payment on its £431m bank debt yesterday. But the company said it had decided not to make the payment "for the time being".

It added: "A meeting of the bank group will be called at the end of next week to review the position with a view to developing a proposal to resolve the situation."

Emma Ormond, at Oriel Securities, said yesterday's announcement "makes the position of the board pretty untenable".

George Burnett, Ashtead's chief executive, and Ian Robson, the finance director, declined to comment yesterday.

Ashtead said on Monday an accounting irregularity in its US division might put it in breach of its banking covenants.

In a statement issued an hour and a half after the stock market had closed the company said a senior member of the finance department at its Sunbelt subsidiary had been suspended over an accounting "mis-statement" over the past two financial years.

Ashtead has appointed external advisers to investigate the Sunbelt irregularities. Sunbelt has been hit by the uncertainty in the United States caused by the looming war with Iraq as well as poor weather in the north-eastern states in January and February. Monday's statement included a warning that Sunbelt would not meet its profit forecasts.

Ashtead bought BET USA three years ago for £322m to expand in America. In September last year the company rejected an approach from two venture capital firms, who offered between 60p to 75p a share, valuing Ashtead at £115m. The business is now valued at just £8m.

Ashtead was founded in 1947 and rents industrial equipment such as wood chippers and mechanical diggers. It renegotiated agreements with lenders and cut debt last year after demand in the US slumped. The group's shares were down 5.25p at 2.5p.