Ailing Cattles to close car finance division

TROUBLED lender Cattles today made the decision to close its direct distribution car retailer, Welcome Car Finance, in an attempt to save cash and increase liquidity in the business.

Cattles, which has invoice financing operations in Leeds and Manchester, requested to have its shares temporarily suspended from the stock market last week.

It said consultation had begun with employees to shed around 130 jobs across the group.

Welcome Car Finance, based in Birstall, West Yorkshire, provides finance for people who have previously been refused car credit to purchase a vehicle.

Cattles said the division had traded successfully since the start of this year, selling its stocks of cars without buying any new vehicles.

“However, without additional funds to acquire new stock, the business model will become unviable and it is likely that Welcome Car Finance will start to absorb cash,” the sub-prime lender said.

The cost of closure is estimated to be £5m.

Cattles also said discussions were ongoing with its banks and the holders of its outstanding Eurobonds and US Private Placement Notes, following previous revelations that its board believes the company has been in breach of covenants under its borrowing arrangements. 

The company added: “Management is working closely with its debt providers to sustain their support for the group’s programme of action to stabilise its financial position.

“The closure of Welcome Car Finance is another step aimed at reducing costs, preserving liquidity and reshaping the group.”