Furniture group's shares suspended

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The Independent Online

Shares in crisis-hit home furnishings group Courts were suspended today after banks failed to grant it additional funding.

Shares in crisis-hit home furnishings group Courts were suspended today after banks failed to grant it additional funding.

The troubled firm, which is struggling to restructure a debt of £280 million, said its lenders had also refused to let it defer payments.

Shares had fallen 8 per cent to an all-time low of 13.5p before the announcement - down from 335p in January - after troubles at the UK division and the impact of Hurricane Ivan on its Caribbean arm hit the business.

In a brief statement Courts said shares had been suspended while it sought to clarify its financial position.

A spokesman added that talks were still taking place with banks and that it was continuing to trade.

The stock plunged by half on Friday when Courts outlined plans for a financial overhaul that would lead to a "significant dilution" of shareholder value.

Courts, which has 350 stores worldwide, is still waiting to hear from banks on this proposed restructuring, which it is believed could involve a debt-for-equity swap aimed at wiping out its debt.

On Friday the group also said it hoped the banks would grant it extra funding and let it defer certain debt payments.

But it said today: "The board has been informed that the principal lenders will not grant waivers for the covenant breaches likely to occur shortly, nor will they provide immediate additional funding required."

It follows a string of profit warnings during the year amid flagging sales in the UK, where consumers have been cutting back spending on big ticket items.

Earlier this month Courts revealed same-store sales at the UK division were 20 per cent lower, meaning the arm would be loss-making in the second half of its current financial year.

Courts has been trying to overhaul the UK division through measures such as strengthening its management team.

The impact of Hurricane Ivan on its 91-strong chain of stores in the Caribbean also contributed to the most recent profits warning.

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