Cattles’ shares plunge on profits warning

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The Independent Online

Cattles, the doorstep lender which had already lost 95 per cent of its value in the past year, issued a profits warning yesterday and postponed publication of its 2008 preliminary results.

The group, which offers loans to so-called sub-prime clients, said its results would be delayed “pending completion of a review of the adequacy of … impairment provisions”, without advising on when the numbers might be issued. The shares dropped by another 74 per cent, closing at just 3.5p.

Bad debts are just one of the problems facing the embattled company. It failed to secure a banking licence last month, which would have enabled it to take deposits from customers, rather than having to rely on the illiquid wholesale funding market.

The lender also has £2.6bn of debt, £500m of which needs to be refinanced by July. A spokesman said that negotiations with its banks were “ongoing”, but one industry analyst warned that “it is not going too good”, adding that a debt for equity swap was likely.

Cattles’ three biggest shareholders, Standard Life, Barclays and UBS, which would be the biggest losers of any such deal with the banks, and between them own 28.1 per cent of the company, refused to comment.