The embattled doorstep lender Cattles – which specialises in high interest loans to people on low incomes – yesterday bought itself a lifeline with a £70m deal to sell off of its invoice finance division.
The company, which is struggling to tackle a £2.4bn debt mountain and is in breach of its banking covenants, said the proceeds of the sale – to private equity firm AnaCap Finanical Partners – will be used to pay down debt.
The company will receive £10.4m in cash together with the repayment of inter-company loans of £59.4m. The unit provides financing to small and medium sized businesses, allowing them to receive the proceeds from invoices which often take some time to be paid.
Cattles has been locked in crisis for months and in February auditors questioned its provisioning against bad loans. The group has subsequently fired several directors and the Accountancy and Actuarial Discipline Board (AADB) has launched an investigation into PricewaterhouseCoopers' audit work. Cattles said the sale of the business would help provide certainty.
The group has issued a string of profit warnings and its shares have been suspended since April. The company's 2008 accounts have still not been filed as directors battle to get a grip on its problems.Reuse content