Cattles sells invoice finance business
TROUBLED sub prime lender Cattles has secured a deal to sell its Cattles Invoice Finance subsidiary for £70m.
The Birstall-based group is selling the business to AnaCap Financial Partners for £10.4m in cash and £59.6m for the repayment of loans.
AnaCap is a specialist private equity fund focusing on pan-European investments in the financial services sector. Based in London, the fund has around £800m under management and is backed by institutional investors including Morgan Stanley, Goldman Sachs, Honeywell, Allianz and Adams Street Partners.
The future of doorstep lender Cattles is in the balance after an £850m black hole was found in its accounts.
The business, which had its shares suspended in April, owes its bondholders £850m and its syndicate of 22 banks led by Royal Bank of Scotland another £500m.
Cattles said that the proceeds of the sale of the invoice finance arm will be used to help repay its bank borrowings.
Cattles Invoice Finance had pre-tax profits of £2.3m on income of £17m in the year to December 31, 2007 and had net assets of £11.8m and gross assets of £108.2m.
In the six months to June 30 last year its unaudited results included total income after interest of £9m and pre-tax profits of £1m.
David Jones, CIF regional managing director in Yorkshire, said: “The deal marks an exciting new chapter in our business’s development. It is our intention to launch a fresh new brand as soon as possible which builds on our current strengths and incorporates the innovations we plan to implement over the coming months.”
In a statement Cattles said: “The directors believe that the Disposal currently provides the best opportunity to realise an attractive and certain value for the CIF Group, whilst allowing Cattles to focus on its core businesses and on working closely with its debt providers to sustain their support for Cattles’ programme of action to stabilise its financial position and with a view to achieving a formal standstill agreement with its key financial creditors.”
The deal is expected to be finalised in mid-September and is conditional on the approval of Cattles’ shareholders at a general meeting on August 27.
AnaCap’s existing portfolio companies include Syscap, the UK’s leading independent IT finance provider, Aldermore, a UK bank, Mediterranean Bank, a Maltese private bank, Conduit, an independent institutional securities dealer with a specialist focus on structured financial assets, Apex Credit Management, a contingency collector of prime debt for major financial institutions and Credoma, a residential mortgage provider in the Czech Republic.
Cattles Invoice Finance, whose senior management will transfer with the business, has its head office in Manchester with offices around the UK, including Yorkshire, and provides invoice finance, factoring and credit protection services to SMEs across the UK with turnover from £50,000 to £20m.
Cattles was advised by Ernst & Young and law firm Walker Morris.
Peter Cartwright and Andy Wynn, partner and head of credit respectively at AnaCap, will now join CIF’s board, led by chief executive, Doug Crawford.
Mr Crawford commented: “This deal is welcome news for the clients and staff of Cattles Invoice Finance, and we are excited by the opportunity to build a stronger business with the support of an experienced parent. Over recent years, we have operated increasingly autonomously from Cattles plc, as it has focused on consumer lending, and AnaCap’s combination of analytical and operational expertise will provide our existing, experienced management team with the resources needed for continued expansion.
“The deal sees our funding line increase significantly, allowing us to retain our independence while strengthening our focus on the enormous potential for further growth and development of the SME market. The invoice finance industry is enjoying unprecedented growth in the current financial climate, and we intend to capitalise on the opportunity that this provides to fund more of the right kinds of deals and develop more tailored products and services in line with the changing needs of the market.
“In the short-term, we will continue to trade as Cattles Invoice Finance, after which we will undergo a significant re-branding process that will build on our current strengths and incorporate the innovations we plan to implement over the coming months. We look forward to unveiling our new corporate identity in due course and continuing our already impressive growth as the UK’s leading independent business funder.”
Chris Patrick, mergers and acquisitions partner at AnaCap, added: “We are excited about the future prospects for CIF, and pleased to be providing continuity for the company’s staff and clients. The deal will provide vital continuity for CIF’s staff and clients. Putting CIF on a more stable footing is very good news for the small and medium-sized business sector, which has suffered as its traditional sources of finance have dwindled.
“The business has a strong platform and an excellent management team. With our support and backing, the company will be able to further expand its operations in the SME funding market.”
