Cattles shares suspended

SHARES in Cattles have been temporarily suspended from the stock market by the Financial Services Authority at the request of the crisis hit lender.

The Leeds-based firm said it had requested the move because of fears it would not be in a position to publish its annual figures for the year ended December 31, 2008 by April 30, as talks to refinance its debt continue.

Cattles said that it feared that failure to adhere to the deadline would have led the FSA to suspend the company’s shares and bonds from trading on May 1.

Earlier this month Cattles said it would have to declare a further £700m in impairment provisions.

The sum will be additional to £400m already identified and confirms the Leeds firm’s earlier fears of a “significant” pre-tax profit loss for the year ended December 31.

It has previously said an investigation by  law firm Freshfields Bruckhaus Deringer  and business advisers Deloitte had confirmed “there has been a breakdown of internal controls which has resulted in the group’s impairment policies being applied incorrectly”.

As a consequence, not only will last year’s accounts need to be restated, but Cattles has warned that previous year’s financial statements may also need to be adjusted as a result.

Today Cattles said the review of the impairment underprovisioning was not expected to be completed until the outcome of discussions with its debt providers became clearer and that those discussions were continuing.

“The company is making every effort to conclude a satisfactory agreement with all the parties involved to secure the refinancing it requires as soon as possible,” Cattles said.

“However, these are complex negotiations which  are likely to continue for some time and the Company’s external auditors are not expected to be able to complete their audit of the 2008 financial statements until those negotiations have been concluded.

“Therefore, in order to avoid a disorderly market and to protect investors, the company has today requested an immediate suspension of trading in its securities pending publication of its audited report and accounts for the year ended 31 December 2008.”

Cattles, which is in breach of covenants under its borrowing arrangements, announced in February that its results would be delayed pending the outcome of a forensic investigation into its operations.

Since then, six senior executives of the group including two Cattles directors have been suspended pending the final outcome of the investigation.

Cattles has said that the board has not yet in a position to provide a definitive explanation for the breakdown in internal controls, which resulted in the group’s impairment policies being incorrectly supplied.

Can Cattles bounce back from this latest setback? Please leave your comments below.