Ratners negotiates to pay bondholders 58m pounds
Saturday 01 August 1992
A company announcement to the Stock Exchange said: 'The group is at an advanced stage in finalising negotiations with its lenders to continue their existing facilities, and expects these negotiations to be concluded shortly.'
Gary O'Brien, finance director, said the report and accounts for the year to 1 February 1992 - which, under Stock Exchange requirements, were due on 1 August - were being delayed until the talks ended. That should enable Ratners to be more 'explicit' to shareholders, and the accounts to be signed without qualification.
The 4 per cent convertible bonds rose five points to a basis price of 105-115 in what one dealer said was a 'risk-averse' market. They have traded as low as 79 in this calendar year, but if the imminent payment was beyond doubt they would be trading in the high 20s.
The terms of the bonds give holders the right to sell them back to the company on 30 October at 133 per cent of the principal amount of pounds 44m.
Mr O'Brien said a tombstone advertisement that appeared yesterday notifying bondholders of their rights was required under the terms of the bond issue. This did not indicate that talks with the banks were complete.
Last week all but three banks were understood to have agreed to lift the funding standstill. One in particular, said to be a Japanese bank, was holding out.
If the money is released it is likely to be dependent on Ratners fulfilling various conditions on a month-by-month basis. They might relate to gross profit margins or headroom in the banking facility.
Relations with the banks improved when Watches of Switzerland was sold to Asprey, the Bond Street jeweller, for pounds 23.2m cash last June.
The sale helped to raise cash for working capital, and towards meeting obligations to the convertible bondholders. Furthermore, there was little synergy between the upmarket chain and Ratners' other stores.
The standstill on bank facilities began when Ratners issued a profits warning in January and predicted an exceptional item of pounds 45m. That is now expected to have doubled.
A full refinancing may be put in place in 1993 after the peak Christmas trading period and when the strategy of cutting costs and changing the name of Ratners stores is more advanced.
Ratners shares fell 1p to 8p.
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