Po Na Na in crisis talks after shares dive 48%

Shares in Po Na Na halvedyesterday after the bar and nightclub operator admitted it was in crisis talks with its bankers over extending an £8m loan facility.

Delays in selling off some of its underperforming sites has meant Po Na Na, which made a name for itself by hosting school disco-themed nights, needs to extend the loan facility as well as restructure repayments.

The company has so far sold 14 sites and now operates 43 clubs and bars around the country, including the Bondai and Embargo nightclubs in London. A further three sites are currently on the market.

Po Na Na said yesterday it remained in discussions with the Royal Bank of Scotland "concerning ongoing funding facilities which, if extended, would require a restructuring of the company's finance arrangements." The shares closed down 3.75p, or 48 per cent, at 4p, valuing the business at just £1.2m.

The company said it was considering all its options including expanding its disposal programme despite the tough property market that has hindered sales so far. "The commercial property market is very difficult. The country is just awash with pubs and clubs which are on offer," a spokesman said.

Po Na Na insisted yesterday, however, that its core business continued to trade profitably and said it would issue a trading update once it had completed talks with RBS. It is thought Po Na Na has drawn down about £7.7m of its facilities to date.

Analysts at WestLB Panmure said the company has had "limited positive news over the last year – during which the management team has reduced in size and has failed to complete the disposal of the tail-end of the estate, despite requests and promises." They thought it possible the bank could force the company to sell assets.

The alert comes just three months after Po Na Na warned that sales across all divisions over the Christmas and New Year period were "marginally below expectations".