Cattles creditors reject wind-up petition proposal

CATTLES shareholders have been told that the company’s creditors have rejected the idea of issuing a wind-up petition.

At the Batley-based sub-prime lender’s general meeting last week a resolution was proposed by a shareholder to request financial creditors to sanction up to £500,000 to fund a wind-up petition.

It was passed by a show of hands.

At the meeting, Cattles chairman Margaret Young said the board didn’t believe
that a winding up of the company would be in the interests of any of its stakeholders and would be inconsistent with directors’ duties to preserve value for creditors.

She said it would also be contrart to the objective of achieving a consensual restructuring.

Commenting on the today’s announcement she said: ” “We appreciate the disappointment felt by shareholders but there can be no case for winding up the company when this would be highly detrimental to the interests of all of our stakeholders.”

Shareholders have also been told that the lender is unable to recommend a business plan to its financial creditors that would allow Welcome Finance to lend to existing or new customers.

Cattles enviages that collection could take two to three years and that during the period the group’s cost base will contract to reflect the reducing size of the loan book.

The group’s smaller businesses Shopacheck and The Lewis Group will continue to trade as normal. The board is still exploring the scope to develop these businesses further.

In November, Cattles revealed it made a £555.3m loss in 2008. Bad debt charges totalled £778.9m last year.

The lender also lost £374.4m in the nine months to the end of September this year.

In 2007, for which its results have now been restated, it made a profit of £22.7m, after earlier guidance of a £165.2m profit.

Last month the belagured lender confirmed that it had secured a “standstill and equalisation agreement” (SEA) from its key creditors, the banks, bondholders and noteholders, who are owed around £2.7bn.

The deal will give Cattles a chance to restructure and means its creditors will not force it into administration or demand the cash they are owed until July 2011.

Cattles said the SEA meant the group would have a better chance of stabilising its financial position.

The group has been hit by accounting failures, which meant bad debts were not properly accounted for.

Cattles had previously warned it would need to make a provision of up to £850m for previously unaccounted bad debts, which it has now included in its accounts.

Shares in the firm were suspended in April and will remain suspended until further notice.

However, it said that shareholders should be aware that in view of the latest decision regarding Welcome and the substantial negative value of shareholders funds that its shares are likely to have “little or no value”.