Ratners 'to pay 58m pounds bond cash'

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The Independent Online
RATNERS, the troubled jewellery chain, has decided to pay out pounds 58.5m to the holders of its pounds 44m Euro-convertible bonds from Friday, when they are entitled to demand the money, according to sources close to the negotiations, writes Rupert Bruce.

The decision is said to have been taken at a board meeting last week.

But James McAdam, executive chairman, said yesterday that no decision had yet been taken. He expected to make an announcement tomorrow.

Ratners has the money to pay the bondholders because it has kept within the restrictions of its renegotiated banking covenants. These relate to profit margins and the headroom in its banking facility.

'They have got the money and they have met the underlying covenants. The trading is not too abysmal,' a source said.

The jeweller reached an agreement with its banks last August enabling it to repay bondholders providing it did not breach the new covenants. The banks also agreed to extend borrowing facilities until next June.

A business plan was agreed to take the stores upmarket and close 180 stores in the UK and 150 in the United States over the next three years.

Costs savings of around pounds 50m a year are being made and working capital is being cut to release cash.

In addition, the upmarket Watches of Switzerland chain was sold to Asprey for pounds 23.2m cash last June.

Ratners made losses before tax of pounds 122.3m in the year to 1 February compared with profits of pounds 112.1m. Sales rose marginally to pounds 1.13bn compared with pounds 1.11bn because of the inclusion for a full year of Kay, the US chain bought late in 1990.

In the six months to 1 August pre-tax losses increased to pounds 30.6m from pounds 17.7m. Sales fell to pounds 365m from pounds 450m.

Ratners shares fell 0.5p to 9p yesterday.