Albemarle on borrowed time as cash call fails

Pawnbroker Albemarle & Bond has just a month to save itself from collapse after emergency efforts to raise £35 million from investors broke down.

The firm, which has 230 High Street shops, saw its shares tumble another 31%, or 22p, to 47p as talks with leading shareholder EZCorp over underwriting the deeply discounted rights issue announced on Monday broke down. Albemarle’s business has been hammered by a tumbling gold price this year, putting the firm on course to breach bank covenants linking earnings to its £51 million debt pile.

The firm, which has lost two-thirds of its value in a frenetic three days of trading, said it “has not been able to conclude these negotiations to the satisfaction of the board”. It has been given a month’s grace on meeting the covenant test by lenders Barclays and Lloyds but is also rushing to appoint a chief restructuring officer, who will consider all the options for the business.

These are likely to include administration or a sale to EZCorp, the US pawnbroker that already owns 29%.

The lenders has also cancelled undrawn funds under Albemarle’s  £65 million lending facility, slashing it to £53.5 million and giving the firm  just £2.5 million of headroom until  the end of the month. New chief executive Chris Gillespie does not start until next Monday.

Shore Capital’s Owen Jones said: “The news is clearly disappointing and worrying for existing shareholders. The fact that EZCorp is no longer involved in a potential rights issue, to us, points to acutely difficult trading conditions in the UK pawnbroking arena. A&B has said it will be working closely with its lending banks over the coming weeks in order to find a solution. However, we believe that bank forbearance may be beginning to taper.”

The latest sell-off leaves Albemarle with a market value of just £25 million, down from £150 million at the end of February. The company was founded in Bristol in 1983 with one shop, and listed on AIM in 1995. It bought rival Herbert Brown in 2007.