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Pentos banking decision shortly

Pentos, the Dillons bookshops and Rymans stationery group, is drawing towards the close of refinancing talks with its banks, Midland and Barclays, writes Diane Coyle. Preliminary discussions were completed last week and the bankers are expected to reach a decision by the end of the month.

The group denied that it had run out of credit to pay its suppliers. Pentos said yesterday that the company was operating within its credit limits and is confident that the banks will agree to a refinancing.

Athena, the greeting card subsidiary, went into receivership in December and there have been no acceptable offers. Pentos is also open to offers for Rymans, whose disposal would allow it to concentrate on the book stores.

At the end of last year Pentos's debts were thought to be about £46.5m and last month the company confirmed that it had been forced to reschedule £4.2m of debts.

It was unable to repay loans to two European banks when they fell due, but the banks agreed not to call them in.

The group's total debt will increase to more than £60m in the first quarter, when it has to pay publishers for supplies. Pentos said it is in talks with suppliers to calculate the level of returns.

In the past Dillons has had one of the worst records of paying suppliers, for which management blamed its old computer system. A new system is planned for later this year.